Trefftz, E. (2011). 50 años de la ley de reforma urbana en Cuba. En el aniversario del cambio de paradigma. Revista INVI, 26(72), 19-62. Como citar este artículo
Revista INVI - 50 years of the urban reform law in Cuba. The anniversary of the paradigm shift

doi 10.4067/S0718-83582011000200002

 

50 years of the urban reform law in Cuba. The anniversary of the paradigm shift1

 

Erich Trefftz2

2 Cuba. BA in Economics, Otto-Friedrich University of Bamberg. MA in Architecture, option in Social Housing, Polytechnic José Antonio Echeverría, with a thesis on "Politics and Home Ownership in Cuba, a Historical and Comparative Analysis". Doctorate student, Faculty of Architecture, Polytechnic José Antonio Echeverría.


Abstract

This paper provides an overview of the pre-revolutionary housing conditions in Cuba and especially in Havana. It explains the first revolutionary measures regarding housing and the Urban Reform Law, the latter transforming the Cuban housing system. This paper also analyzes today's results and contradictions. Additionally, the outcomes of a survey conducted between March and June, 2010 to almost a hundred experts are presented and discussed. Finally, the survey findings are contrasted with the changes introduced by the new guidelines for economic and social policies passed in the last party congress.

KEYWORDS: CUBA; URBAN REFORM; HOUSING POLITICS; HOUSING MARKETS.


 

In its first part, this paper offers a brief description of the prerevolutionary situation of habitat. The second section of this article explains the first measures of the housing policy, as well as the Urban Reform Law (URL), enacted on October, 1960, which is regarded as the major revolutionary achievement. The decisions of principle of the URL greatly influenced Cuba's housing policy until 2010. The following part of this paper analyses the results of a survey conducted between March and June, 2010, which included about 100 housing experts addressing socio economic measures to improve housing in Havana.

The official paradigm shift started during the 50th anniversary of the URL; after 50 years of political prevalence over economic affairs, such a change does not seem easy. During the Sixth Congress of the Communist Party, which was held in 2011, new guidelines were approved for the economic and social policies of Cuba. The final part of this paper analyzes these changes and contrasts them with the results of the survey.

 

The Prerevolutionary Habitat in Cuba

In order to ensure a better understanding of the prerevolutionary housing situation, it is important to divide the observations into two parts: on the one hand, the housing demand taking place mostly on the few major cities lead by Havana, which concentrates a fifth of the country's population and, on the other hand, the housing situation of the rural population.

Until the first half of the XXth century, the housing situation in Havana was determined by the explosive growth of its urban population3 (demand) and the private capitalist nature of the housing supply. “The housing policy in Cuba, until the triumph of the revolution, was based on two principles related to the ideology of the prerevolutionary society: the almost complete control of the private sector over the construction of housing and freedom to rent; this latter activity was slightly regulated in the last years of this period4.

When analyzing the results of the 1953 housing census5, apart from the high levels of segregation within the urban population, it also becomes clear the large gap between the city and the countryside. According to this source of information, 75.8% of rural dwellings were classified as of bad quality or in ruins; in contrast, only 30% of urban dwellings received this qualification. Likewise, while only 9.1% of rural homes had access to electricity, 87% of urban homes enjoyed this service.

Since investors and building contractors work according to the profit maximization principle, new construction of housing was mostly delimited to houses and luxurious apartments6 aimed at well-off groups and small houses located on distant or central areas that were expected to be rented by the middle-class. By following the neoliberal Filtrado theory7, for low and middle income classes the only option was to move to large and old uninhabited colonial houses that were divided into small housing units. Today, such houses are known as tenement houses. The lower-class (which did not receive regular income) was left to its own devices. The only solution for this group was the construction of makeshift huts made out of waste materials; these houses were located on the slums that proliferated in Havana.

Tenants represented three-fifths of urban houses and three-fourths of families lived on rented houses in Havana. Moreover, this section of the population was important for political and electoral purposes. Because of its high organizational level, prior to the Revolution, this group achieved rights and protection theoretically equal to those enjoyed by most of the States within the United States8. Therefore, in the light of the Great Depression and insolvency and default of payment (rents), the Decree 2005/10.30.33 was enacted at the request of the “General Committee of Tenants”. Such decree involved an extension for eviction processes.

In December the same year, the maximum amount of evictions and eviction orders was set at 10 per day. In 1939, all rents were frozen and the right to housing and the right to remain were legally established9. However, ingenuity of tenants and the possibilities to evade these legal provisions were unlimited. Only furnished dwellings were rented so that people had to pay excessive rents for the furniture; prepayment or compensation payment was required; in some cases only a sub-leased contract was signed, in which regulations for maximum payment of rent were not applicable.

It is logical that within the framework of the housing's neoliberal system, where social interests were not taken into consideration, and where the only objective was to obtain the highest possible profit, the housing issue had an important role in the political program10 of the revolutionary movement led by Fidel Castro.

In his famous defense statement during the trial against the people who stormed the Moncada Barracks on July 26, 1953, Fidel Castro said:

“The tragedy of housing is serious, or even worse. There are two hundred thousand huts and shacks; there are four hundred thousand families from the countryside living crowded together in cabins, tenements and estates without basic hygiene and health conditions; two million two hundred thousand people of our urban population pay rents that take from a fifth to a third of their income; and two million of our rural and peri-urban population do not have access to electricity. The same happens if the State reduces the cost of renting, landlords might stop all constructions; if the State does not take any action, they will build as long as they earn high profits, after that, they will not build any more, even the rest of the population is living in the open. Others monopolize electricity by extending the lines until earning satisfactory profits, once this goal is achieved, it does not matter if people live in the dark for the rest of their lives. The State remains quiet and the population still do not have access to housing and electricity 11”.

Later on, the first concrete measures regarding housing, after the triumph of the revolution, were explained.

“A revolutionary government would solve the housing problem by halving the cost of renting, exempting from tax payment all houses inhabited by their owners, trebling taxes on rented houses, pulling down all tenements and putting up modern and large buildings and financing the construction of dwellings across the island at an unprecedented scale. The ideal is that every family living in the countryside has their own plot and every family living in the city has their own house or apartment. There is enough material and manpower to build a decent dwelling to every Cuban family. However, if we are still waiting for the miracles of the golden calf, it will be a thousand years and the problems will remain the same 12”.

Two years after the revolutionary movement, Castro announced a policy in which every tenant became owner13. To what extent did this categorical recommendation of the small property, in harmony with the tradition of Cuba's national hero Jose Martí14, represent a conscious alteration of Marxist dogmas? Such a question, which is discussed in this paper, supports the independence of the Cuban solution. In later years, Fidel Castro stated:

“It is not a Marxist action. It is the expression of a developing thought, a series of ideas that have been part of the revolution… 15

 

The First Revolutionary Laws, the Urban Reform Law and the Development of the Housing Policy

According to Hamberg “… post-revolution housing policies were influenced by different factors, such as the dramatic differences in terms of quality of life between the city and the countryside and between social classes within the urban area; lease control coexisting with high rents; and the right to remain established by law along general evictions.”16.

The previous paragraph indicates that prior to the triumph of the revolution, the housing issue was one of the most urgent problems faced by the population. Together with an unmet demand, there was insufficient construction activity, which was inaccessible for most of the population. In addition, the demand for housing meant the increase in the cost of renting and evictions to tenants17.

Shortly after the triumph of the revolution, the first important laws regarding housing were enacted. These laws were about the end of evictions and eviction orders (Law Nº 26/01.26.1959), maximum costs and the forced sale of urban building sites in order to face speculation (Laws Nº 218/04.07.1959; Nº 691/12.23.1959 and Nº 892/10.14.1960) and the anticipated law regarding the reduction of renting costs (Law Nº 153/3.101959), which meant the decline in the rent of dwellings from 30% to 50%.

After a long elaboration and innumerable debates18the Urban Reform Law was enacted on October 14, 1969 and it was declared as part of the Fundamental Law, thus having a constitutional level19 because of its relevance and international importance. In enacting this law, the last reform promise announced in the pre-revolutionary program was fulfilled20. In this way, significant decisions were made regarding property law and housing policies.

Ownership of all rented houses was transferred to tenants; former landlords received compensatory payment based on the year of construction and the rental cost of the expropriated dwellings; elimination and prohibition of all mortgage taxes on urban dwellings was declared; legal institution of house leasing was eliminated and any form of private renting was prohibited.

In 1984 and 1988, two consecutive Housing General Laws were enacted (GLH, Law Nº 48/12.31.1984 and Law Nº 65/ 12.23.1988).

This paper analyzes the post-revolution policy based on three interrelated elements:

1. Property and other forms of housing tenure: It includes the characteristics of the different forms of tenure, such as rights, duties and responsibilities for the conservation, repair and functioning of single-unit and multiple unit buildings, as well as the security of tenure.

2. Construction and distribution of dwellings.

3. Funding of housing.

 

Property and Other forms of Housing Tenure

The revolutionary government always thought of ownership as the predominant form of housing tenure. This was reconfirmed by two consecutive Housing General Laws (GLH) enacted in 1984 and 1988. The ownership rate is above 83% and the rest of dwellings are inadequate spaces that do not meet the minimum requirements to be considered as property (e.g. 25m2 of useful floor space and its own bathroom, among other requirements) or belong to entities or companies (the so-called “housing rental assets” or “basic means.”) There is now a tendency to deliver State-built housing; however, such dwellings are not handed over to people, they are leased.

Private renting contracts represent a special case. The legal validity of private contracts was abolished after the enactment of the URL. Later on, the first GLH of 1984 carefully authorized these contracts, however, no special conditions regarding legal protection against eviction are specified and the number of legally registered contracts is insignificant21.

The revolution changed property ownership, in this way, buying and selling of housing was prohibited in order to avoid real estate speculation; only housing exchange of equal value was allowed22.

The application of this law generates, on the one hand, inflexibility as a result of the change in housing demand; and on the other hand, it involves legal actions 23 taken to achieve the desired result (such as housing buying and selling).

Apart from rights and responsibilities issues, the competence for the operation, repair and conservation of multiple unit buildings is also included24. The GLH contains legal provisions regarding this subject, the National Institute of Housing (NIH) Resolution 4/93 and the

INV, Physical Planning Institute (PPI), and State Committee of Price Joint Resolution of 9.25.1989 complement this enactment.

Unlike other countries, where tenure determines the responsibility of the inhabitant in relation to the functioning, conservation and repair of the dwelling, tenure situation in Cuba depends on the type of building. The law makes a distinction between private and municipal-administered buildings25. For buildings having more than four residential units it is a requirement that dwellers have to form a committee and pay a monthly fee ranging between 3.24USD and 21.60USD, which barely covers electricity expenses26. According to legal provisions, the General Directorate of Housing (GDH) bears the functioning costs of large municipal-administered buildings. This complex distribution of operational and repair responsibilities is the main weakness of Cuban housing management.

The analysis of the legal basis, comments on laws, and scientific studies show contradictions27. The first one is related to the role of the GDH in the functioning, conservation and repair of elevators, water pumps and other technical amenities of municipal-administered buildings. However, it does not seem correct that the owner of a higher quality dwelling is exempted from such payments.

Secondly, as stated by Dávalos in his comment on the GLH, all property owners of a building have the same co-ownership shares. That is to say, a small property owner and a large property owner living in the same building have to contribute the same amount of money. There is no regulation on cohabitation in buildings and the scope of horizontal property law is not clear. Dávalos proposes the abolition of such a law; however, this disposition is applied in the real estate activity28 and the Ministry of Justice republished it in 2000. Lastly, it is worth mentioning that security of tenure not only refers to eviction or any legal or sovereignty act, but also to technical and structural security.

 

Construction and distribution of dwellings

The legal basis for housing construction is contained in the GLH. The following concepts are relevant in relation to construction and distribution:

a) The type of land

b) The type of tools

c) The builder, the investor and the end user

A) housing management is greatly influenced not only by housing policies, but also by urban planning and land policies. In market economy countries, where private property over land applies, land value can reach about 30% of the total value of a construction located in the downtown. After the triumph of the revolution, consecutive laws were enacted so as to stopping speculation on urban construction land29

The 1976 Constitution turned the property regime (and thus the land regime) into a system in line with socialist principles; however, ownership over vacant plots within existent housing estate and ownership of small farmers over (intra) urban dwellings have never been modified.

In order to analyze the current scenario, it is important to make a distinction between the construction of single-unit dwellings built by self-builders and the State construction of multi-unit dwellings. In the case of the construction of buildings, the main cost factor was eliminated by fixing a low floor price for land for development, thus eliminating an important source of income for municipalities. These earnings are generated by land planning, such as in market socialist economies. The Municipal Directorate of Physical Planning is in charge of physical planning and classification of urban land.

As the basis to understand the ownership link of an urban plot, prerevolutionary registration of property is still being used; it is worth noting that such registration is not fully updated30.

The selection of self-builders31 is governed by Articles 17-23 of the GLH.

There are three different ways to get an urban plot or a vacant plot32

- Sale and purchase or donation of a private vacant plot. Generally, these are unused plots transferred by inheritance

- Transfer of perpetual right over State land; in order to avoid speculation, such land is not given as property

- Sale and purchase or donation of a terrace roof for building purposes

The revolutionary government has carried out more than 800 divisions of land with different urbanization levels33; however, no new division of land for the construction of single-unit dwellings has taken place in Havana.

B) those selected to build or repair a house on a self-help basis have the right to get the materials they need on authorized entities34 at subsidized prices35. Nevertheless, it is difficult to obtain these elements because of the reduced supply; as a consequence, such materials are obtained in black markets, grey markets36 or hard-currency stores, where tax on items rises 10 to 50 times.

Black and grey markets operate based on the price structure of hard-currency stores and are influenced by the relation between supply and demand, regional special features and traditions.

There are grey markets specialized in plumbing articles, in these markets, scarce items are purchased for resale at speculative prices. There are also grey markets specialized in recycled materials, such as steel and a substitute for sand obtained from the debris left by urban demolitions. In addition, there are authorized local producers of pebble, bricks and mosaic; most of these producers are member of a cooperative. In the case of State construction of multi-unit buildings, investors and companies depend on building materials assigned according to State economic plans. This group buys directly from local producers and, according to the legal position of the investor, imports or purchases from foreign representatives provided that there are availability of currency.

The cost is fixed by a central inventory of construction prices (Precons), which is sporadically updated and contains manpower and equipment costs. The price of manpower is fixed on the basis of State wages, which are insufficient37 and do not reflect real costs. Those who do not have the ability to build their own dwelling depend on the recruitment of artisans who work on their own and charge 100-300CUC (108-324 USD) per day of work; some of these artisans do not have permits. Authorized artisans have to pay taxes and duties on a monthly basis; so far, no new permits have been granted38. These contractors, apart from hard-currency stores, do not have access to investment goods or building materials, therefore they resort to black or grey markets. In addition, there is no cooperative entity aimed at defending the interests of artisans and ensuring minimum quality standards at the same time.

C) Here, another distinction between self-builders and State builders/investors is needed. The procedure to obtain a construction permit is complicated and cumbersome39. Those selected, according to social and employment behavior, to build their own dwelling are authorized to do so for family use only.

It is possible to identify ten different builders/investors within the State-housing construction sector, such as the Ministry of the Interior and the Ministry of the Revolutionary Armed Forces, these entities build housing for their own employees; the Ministry for Sugar Industry, the Ministry of Agriculture and the microbrigades40. In the last years, special housing programs have been developed for a specific section of the population, such as the staff of the Ministry of the Interior and the Armed Forces, as well as internationalist doctors who are back home. The development of these programs creates sectoral residential estates and segregation.

 

Funding

Funding for construction is based on the principles of the housing policy, endorsed after the triumph of the revolution. The new URL eliminated all existent mortgage taxes over urban property. While the Mortgage Law was republished by the Ministry of Justice in 1999, there are no credit lines, either as mortgage-backed securities or consumer credit, for self-builders. In the case of State built/given properties, mortgage loans with a term of 10-20 years are granted, these include an annual interest of 2% (if the end user took part in the construction of the dwelling) or 3%. Looking at the US sub-prime crisis41, which included European countries, it is questionable if the current mortgage system generates capital42; however, it is clear that the lack of credit lines affect the construction and conservation of housing.

By studying the housing management and the housing policies as a whole, it can be said that it is not a coherent system.

 

CHART 1. SOCIOECONOMIC FRAMEWORK

Havana is the capital city of Cuba, a country defi ned by its constitution as a socialist State of workers. Cuba is administratively divided into 14 provinces plus a special municipality. Havana is one of these provinces (Havana City Province), which is identical to Havana's metropolitan area; according to the 2002 census, this city has a population of 2.2 million. Havana City is divided into 15 municipalities; each of them has its own administrative structure, including an assembly and a municipal council. From a financial perspective, neither provinces nor municipalities generate income on their own; they completely depend on transferences made according to the central plan and in accordance with top down orders.

In order to understand economic relations, it is worth mentioning that there are two currencies circulating at the same time. On the one hand, there is the Cuban peso (CUP), also known as national currency (nc). The CUP is used to pay wages and to buy local goods and food. On the other hand, there is the Cuban convertible peso (CUC), which is an artifi cial currency that is at a fi xed one-to-one parity with the American dollar (1 CUC = 1.08 USD). The official exchange rate is 25 CUP= 1 CUC. The CUC is used to purchase import goods, products containing imported parts and goods manufactured by joint-ventures.

In 2009, the average wage was 427 CUP (426 USD) (Pérez, 2010:78) and the wage of a university professor ranged between 600 and 900 CUP (599 and 899 USD). Figures indicate that almost a million of the 3.4 million of Cuban families received remittances from abroad, averaging 1.200 USD per year (Orosco, 2009).

In the first three months of 2009, imports almost quadrupled exports and the foreign trade defi cit of 2008 grew 68% compared to 2007 (Espinosa Chepe; 2009).

After Indonesia, Cuba is the most indebted country (Paris Club, 2008) and fi nancially survives thanks to the daily provision of 100,000 oil barrels sold at strategic prices by Venezuela, Cuba's strategic partner. In recent times, signs of a severe fi nancial crisis have increased (Pavel, 2010).

 

Although the decision that promotes ownership as a predominant form of tenure looks promising, owners cannot legally retain their dwellings, or in other cases, they have to resort to black or grey markets. Then, housing conservation is affected by:

1. There are no markets where materials for rehabilitation and construction are sold. The option is to resort to black and grey markets, where only available items without warranty are purchased.

2. There are neither freely-hired rehabilitation or legally constituted construction brigades, nor a cooperative entity or chamber of handicrafts in charge of supervising self-builders. As a result, people resort to black and grey markets and its negative consequences.

3. There are neither credit lines for rehabilitation and construction, nor subsidies as part of an urban rehabilitation program; the exception is the historic center, which is managed by the Office of the Historian of the City (OHC)43.

4. As regards the complexity of multi-unit buildings, there is no “horizontal property law” adapted to Cuba's particular circumstances. The management committees of each of these buildings do not have legal personality so as to keep and account and ask for loans.

5. Ban on the sale and purchase of housing makes legally impossible the adaptation to new circumstances, such as the reduction of housing consumption as a consequence of financial problems or changes within the family.

These housing shortcomings, along with the socioeconomic crisis that affects the people and the government alike, have worsened the technical and conservation state of constructions. See Chart 1. In this context, the deterioration level of housing in the downtown areas of Havana is even worse due to the characteristics of dwellings (old buildings and tenement houses), making it difficult for the private sector to rehabilitate such constructions. Official information regarding the structural and technical state of housing is contradictory. Figures provided during the V International Meeting on Historic Centers44 indicate that 50% of dwellings located in the Historic District of Havana are in poor or very poor condition; it is worth mentioning that this area concentrates 59% of the population. This scenario also occurs in the rest of central districts.

The other questionable aspect of the Cuban housing policy is the excessive subsidy on the reduced building activity. Finished State-built dwellings are handed over to the future owners at a legal price, which is not related to reality45. For this reason, the acquirer of State-built housing is receiving a highly subsidized asset. Such a property is given regardless of the real needs of the beneficiary, which are unknown or difficult to interpret.

Self-builders holding construction permits are granted subsidy to cover material costs. All beneficiaries are equally subsidized, regardless of their real needs. In this way, the prohibition of the construction of unsubsidized housing is a very costly solution for any State. The different modes of subsidization until 2010 are explained in the following graphic (see graphic 1). It is worth noting that there are only two main modalities for the construction of dwellings; on the one hand, there is the State construction of multi-unit buildings, in which subsidies are granted not only for building construction (promotion of the object), but also for the end user (owner), who is subsidized through the legal price of his dwelling (promotion of people); on the other hand, self-builders are subsidized through the price of materials (promotion of people).

 

The Survey and Its Findings

Almost a hundred experts were surveyed between March and June 2010 about “the deterioration of existing dwellings, the accumulated quantitative and qualitative deficit and the stagnation of rehabilitation and construction. Which measures may invigorate and revitalize construction and rehabilitation?” Those polled were asked to rate the influence each of the 27 measures aimed at improving habitat may have; to this end, a scale from 1 to 5 was proposed, being 5- decisive; 4- highly influential; 3- influential; 2- slightly influential; and 1- non-influential.

 

Graphic 1. System of Instruments of the Cuban Housing Policy

Source: Author

 

These measures were distributed into four groups, namely, tenure; urban land; promotion, production and distribution of housing; and funding, payment and subsidies. Most surveys were complemented with interviews in which experts were asked to provide opinions and guidelines.

Table 1 represents six measures related to tenure and legal aspects of housing. The most remarkable output of this section is not the elimination of legal constraints in the free disposal of housing, or the enactment of laws aimed at regulating coexistence and responsibilities in multi-unit buildings, but the rejection to housing speculation and the rise of the missing landlord.

Table 2 contains measures related to urban land. The slight influence of the linkage between housing ownership and land ownership is striking. This is due to a limited presence of public interests; the same occurs in some Latin American countries, where almost all urban land is privately owned.

Table 3 shows how all experts had the same opinion regarding the proposal measures. These initiatives were classified as of highly-influential and decisive for the improvement of habitat. There is no concern for the resurgence of the Small and Medium-size Enterprises (SME) for the manufacture of materials. In addition, there are structural socioeconomic changes ahead for the SMEs; these modifications are discussed at the end of this paper.

Table 4, which is related to funding, payment and subsidies, also shows interesting results. Given certain specific factors such as long durability, high investment expenses and slow capital turnover, the building sector needs a stable and long-term oriented financial system. Lack of housing credit makes the construction and rehabilitation of dwellings difficult. It is no wonder that the creation of credit lines has been chosen as one of the top two measures; however, what was surprising is the high level of rejection to mortgages.

Mention should also be made to both the failed recovery of credit granted to buy electrical appliances and to the influence of negative propaganda about evictions in capitalist countries after the 2008 sub-prime crisis; the latter is another episode of the legislative history against evictions.

 

Table 1: Measures Related to Housing Tenure

Average Value

Lift the ban on the sale and purchase of housing between private persons

3.8

Permit the exchange of property, even if there are substantial differences in the price of dwellings and permit compensation payment

4.0

Promote other forms of housing tenure, such as leasing and cooperative housing

3.93

Enact a law aimed at regulating the obligations and responsibilities of coexistence, administration and conservation within multi-unit buildings, tenements and estates

4.08

Lift the ban on the possibility of having more than one property

2.15

Enact a law of cooperative housing

4.09

 

Table 2: Measures Related to Urban Land

Average Value

Authorize the sale of urban land and terrace roofs between private persons

Permit the exchange

4.13

Link the ownership of housing in apartment buildings with the property of land

3.2

Acknowledge the differences in land value in relation to physical location

4.0

 

Table 3: Measures Related to the Promotion, Production, Distribution and Consummation of Housing

Average Value

Grant self-employment permits for the building sector

4.44

Create open markets and ensure the availability of materials and elements for construction and completion of housing

4.8

Create a cooperative entity or chamber of handicrafts aimed at supervising self-builders and the quality of their work

4.22

Create an organization for the defense of the rights of customers

3.94

Authorize the freedom to hire brigades/companies for the construction, rehabilitation and conservation of housing

4.47

Promote construction cooperatives and sell work facilities

4.48

Grant permits for self-help construction to anyone asking for them

4.33

Expand the housing supply through new actors/promoters, such as cooperatives and non-profit organizations

4.21

Enable the creation of SMEs in the building and rehabilitation sector

4.22

Promote the small local craft industry

4.49

Authorize the SMEs entry into the materials market

4.31

 

Table 4: Measures Related to Funding, Payment and Subsidies

Average Value

Create credit lines for the rehabilitation and construction of housing

4.72

Grant mortgages on urban properties as a source of funding

3.0

Grant legal personality for the purposes of administering and rehabilitating multi-unit buildings, managing bank accounts and asking for loans

4.0

Concentrate subsidies on the less favored groups

4.29

Abolish the legal price concept due to its non-relation to real price

3.75

Promote the formation of mutual or cooperative savings banks

4.02

Declare selected central areas as emergency zones and subsidize its rehabilitation

4.35

 

Only four experts insisted on the importance of mortgages as a way to unfreeze the sole asset of Cuban people. There were 20 experts who rejected this idea by using the argument of the final responsibility of the government for people accommodation. How to reconcile these two opposing extremes? This question is going to be one of the main challenges of future housing policy. In general terms, mortgage was the most controversial measure of the survey and 30% of those polled either did not know the subject or declined to answer the questions.

The lack of housing markets (land, materials, manpower, capitals and dwellings), excessive subsidies and the incapacity of the government to manage a large-scale funding of housing are major issues.

This paper does not provide additional insight into dichotomies such as exchange value and use value, or the right of housing and housing as a commodity. The requirement proposed by Jenkis to separate the housing asset and its use may be a proper approach to the problem. As for construction, there is the need for infrastructure and capital inputs, land and building materials markets, as well as manpower and expenditures related to consumption and conservation. In addition, there is housing use, which, depending on political resolutions, may be regarded as a social commodity. Once this decision is made, it should be decided which groups of the population are eligible for subsidization and the State should be capable of funding these subsidies46.

Cuban authorities acknowledge that the government is facing financial difficulties. On October 8, 2010, a series of resolutions announcing the unemployment of State supernumerary employees47, the extension of self-employment48, the possibility for particular individuals to hire people49, the introduction of a unified system for the payment of taxes on personal income50 and flexibility for private individuals to rent housing and rooms51 were edited in the Official Gazette.

A few weeks later, the “Social and Economic Policy Guidelines”52 were made available to the public. This framework, designed as a preparation for the VI Congress of the Communist Party, brings flexibility to the purchase, sale and exchange of property and promotes new non-State modalities for the construction of dwellings and the sale of unsubsidized building materials. In addition, special attention is given to the “short-term study of building costs so as to modify and implement them with the objective of measuring the real price of dwellings…”53; the adoption of new organizational entities, such as housing cooperatives and self-builders; and the standardization of unsubsidized jobs in multi-unit buildings.

 

Picture 1. Self-help housing in Cerro's downtown

 

Picture 2. Heavily deteriorated building near the Capitolio building

 

Picture 3. Store turned into a shelter

 

Picture 4. Store turned into a shelter in Havana's downtown

 

The application of these measures is the next step; however, the absence of a housing policy in the list of social policies is concerning. Additionally, given the devaluation of salaries, the method through which people received subsidies for the conservation and improvement of dwellings is not clear.

Five decades without large investments and conservation of housing have resulted in serious deterioration. There are no reliable statistics54 available; however, the total amount of dwellings in poor or very poor condition in Havana exceeds 200,000 units55. Of this figure, there are more than 20,000 dwellings located in districts unfit for habitation, more than 60,000 units located in citadels and about 30,000 families living in dwellings in state of collapse56.

If the fact that “the revolution has preventing Cuba from suffering the irreversible human degradation observed in the rest of Latin American cities, has allowed the preservation of cultural identity and has avoided hierarchy-based spatial distribution and social segregation57” is officially acknowledged, then the costs of these achievements should be analyzed. It is common to see the collapse of buildings in Havana's downtown districts, and, in the search for solutions, shopping centers dating from the 50s are turned into uninhabitable spaces lacking lightning and ventilation. See Pictures 1 and 2.

Within a context where all stores were turned into dwellings and shelters, the feasibility of the financial injection proposed by the new guidelines and the intervention of popular productive forces remains to be seen.

The transition from the decisions made 50 years ago, where political ideals prevailed over economic interests, to a housing management based on economic principles is an important step; however, this fact does not involve the design of a housing policy aimed at ensuring decent habitat to those deprived of resources.

The selection of instruments for housing policies, as well as its funding, depend on whether the economic reforms58 represent a sustainable economic growth; in this way, those in need would receive benefits from tax collection59.

 

Notes

1Doctoral thesis "Strategies for Housing Management in the Urban Rehabilitation of Havana's Downtown Districts", supervised by Mario Coyula, Ph.D., to apply for the Ph.D in Technical Sciences, Faculty of Architecture, Polytechnic José Antonio Echeverría.
3 In 1919, Havana had a population of 432,721; in 1953, this figure grew to 1,210,929, the city had 653,823 inhabitants in 1931 and 935,670 inhabitants in 1943. Acosta, Hardoy (1973), p. 78.
4 Vega Vega (1986), p. 38.
5 Information regarding the 1953 census was retrieved from Fernández Núñez (1976) p. 40 and Acosta Hardoy (1973) p. 86.
6 The horizontal property law (Decree Law 09.16.52) was enacted to create clear ownership conditions. This law bears a resemblance with the German home ownership law. For information about the history and legal nature of this act, see Gómez Gil (1954.)
7 According to the Filtering Theory, the construction of dwellings for well-off groups involves a string of removals. Poor classes are at the end of this chain, they also improve their habitat.
8 Hamberg (1994), p.19; Vega Vega (1976), p.38.
9 Vega Vega (1984), p.39.
10 In this way, housing was one of the six issues that had to be addressed after the triumph of the Revolution. The six remaining points were education, health, employment, industrialization and land reform. Castro (1953), p. 36.
11 Castro (1953), p.37.
12 Castro (1953), p. 42
13 Castro (1955), p. 218
14 José Martí quoted in INAV (1960), p. 14
15 Fidel Castro quoted by Fernández Núñez (1976), p.86 when asked on the historical importance of his defense statement.
16 Hamberg, (1994), p. 27.
17 Corneado estimates 70.000 forced evictions prior to the Revolution, Cf. Corneado (1962), p. 14. It should also be taken into account that there were strikes and production stoppages during the revolutionary transformation.
18 Vega Vega (2000), Chapter 4.
19 Final Provision in "Six Laws of the Revolution", p. 99 and s.; Canton Blanco (1982), p. 446.
20 "… additionally, it was the only item remaining from Moncada's program. Therefore, it has its roots in that period…" Castro (1960), p. 23
21 There are about 3,200 permits for rooms and dwellings rentals in Havana, most of them are used for tourism purposes. Only 0.2% of total dwellings are transferred for long-term rent. See DPV (2006), p. 24.
22 Theoretically, cash payment to cover the value of a property is prohibited. Legal standards question whether the installation or transfer of fitted kitchens, air conditioning systems, or fitted wardrobes is an illegal act.
23 Fake marriages, transfers free of charge within the legal framework and other ideas.
24 In the case of single or multi-unit dwellings, such responsibility generally lies with the owner.
25 Municipal-administered buildings are constructions containing a large number of dwellings, floors and complex amenities, such as elevators, garbage chutes, intercom systems, etc. (See Art.93b. GLH). There are 526 buildings of this type in Havana City Province. See DPV (2006), p 5.
26 This symbolic contribution is not enough to maintain basic amenities. A dwelling might lose its value. For tax purposes, this loss of value is known as amortization and it should be compensated by a reserve.
27 See Hamberg (1994), p. 486, Dávalos (1991), p. 227, Vega Vega (1986), p. 146.
28 In Cuba, real estate activity involves the construction of dwellings and offices carried out by joint-ventures with foreign capital. These spaces are available for sale (housing) or lease (offices) to non-permanent residents or foreign firms. This modality was suspended in 2000; today there are 200 special cases (foreigners owning property in Havana) and half a dozen incomplete constructions.
29 The historical analysis and the consequences of these laws are available at Hamberg (1994), p. 54.
30 If an old firm is registered as the owner of the urban plot, the State is the legal successor; however, if a natural person is registered as owner, the issue becomes complex, as an investigation has to be carried out in order to find whether the owner or his heirs are still living in Cuba. If a building is put up in the plot of an owner with permanent residence, the owner receives another plot as compensation.
31 Until February 2010, social and work merit, as well as housing needs, were required to be granted a building permit (NIH Resolutions 320/2001 and 11/06, Regulations for the New Construction and Rehabilitation of Self-help Housing; Official Gazette (OG), special edition 1, v. 01.24.2006.) This selection method was abolished (Resolution 40/120, special OG, 17.02.2010.)
32 Any transfer of land or roof is authorized as long as a valid building permit is presented.
33 Hamberg (1994), p. 67.
34 See NIH Resolution 10/06, Regulations for the New Construction and Rehabilitation of Self-help Housing; i. special OG, 1, v. 24.01.2006.
35 A 42.5kg of a subsidized sack of cement costs 0.20 CUC (0.22 USD); in hard-currency stores, this same product costs 6.60 CUC (7.13 USD).
36 Stolen, embezzled or illegally introduced products are sold in black markets; speculative resale of seemingly legal products, or the acquisition and circulation of unlicensed products are activities related to grey markets.
37 In the insufficient Marxist sense for the reproduction of manpower.
38 The situation has changed since October 2010. Today, permits are granted to self-builders in order to absorb available workers. See last chapter.
39 See note 30. As Schaeffer (2004) describes, if the fact that those who want to build with ease have to invest 1,000 CUC (1,080 USD) to get a building permit it is not proved, it cannot be regarded as improbable given the large quantity of documents involved.
40 See DPV (2006), S.9f.
41 The sub-prime crisis was the beginning of the worst financial and economic crisis. The excessive granting of credit mortgages to people without resources created an unprecedented housing bubble.
42 "The importance of the capital generated by titles of property on land and real estate cannot be highly estimated." Lichtenberger, E, (2002), S.62.
43 The sporadic delivery of cement and paint to the representative of the poplar council (administrative unit that is one level down the municipality) is not regarded as rehabilitation. The Office of the Historian of the City (OHC) and the efforts to rescue the Historical Center through a comprehensive rehabilitation is excluded from this critic.
44 Veitia Reyes, Z. (2006) Information and Collaboration Group of the Municipal Administration Council of Old Havana: Municipal Management for Risk Reduction, lecture given in the V International Meeting on Management of Historical Centers.
45 Legal price is a system used to calculate the value of a dwelling by squared meters. The price of a new construction ranges between 65 and 180 CUC (65 and 194 USD) by squared meter. In addition, it has to be added a surcharge depending on the location the new dwelling is going to be built. (Dávalos (1990), p. 92ss.) It is clear that a legal price below 10USD by squared meter has no relation with real prices
46 Jenkis (2001), p. 249.
47 Ministry of Work and Social Security Resolution 35/2010, OG, special edition 12, 10.08.10
48 Ministry of Work and Social Security Resolution 32/2010, OG, special edition 12, 10.08.10
49 Ministry of Work and Social Security Resolution 32/2010, Article 5, OG, special edition 12, 10.08.10; Ministry of Work and Social Security Resolution 33/2010, OG, special edition 12, 10.08.10
50Ministry of Finance and Prices Resolution 281/2010, OG, special edition 12, 10.08.10
51 National Institute of Housing Resolution 305/2010, OG, special edition 12, 10.08.10
52 See PCC (2010).
53PCC, (2010) Guideline 271
54 "The lack of reliable statistics on Cuban housing; the biased approach to it; the continuous absence of financial indicators; and the variables introduced by those who address housing from an ideological perspective, rather from a technical-economic perspective, restrict the well-founded debate." Vásquez (2009), p. 50
55 Author's estimate based on the extrapolation of government figures in respect of exact figures obtained in reduced zones.
56 DPV (2006), p. 21.
57 Ruiz, Hernández (1998), p. 12
58 Pérez Villanueva, (2010); González Mederos (2010); Vidal, Alejandro, (2010).
59 The Resolution 286/2010, Norms Concerning Tax Payment on Personal Income, Sales… (OG, 12, 10.08.10) introduced a unified tax system for the first time. However, high taxes (wages of 100 CUC [108 USD] are taxed at 25% and wages of 300 CUC (324 USD] are taxed at 40%) leave uncertainty about the promotion of fiscal honesty.


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Received: 07.03.11
Accepted: 10.06.11