Like the governments of every urbanizing city and town in the Philippines, Naga's city government was faced with the vexing problem of how to deal with squatter communities in a way that is fair to them and to the landowners without encouraging more squatting. ln response to this problem, the city launched the Naga Kaantabay sa Kauswagan or Partners in Development Program in 1989. The program is driven by two overriding principles. First, the government will not help the urban poor unless they actively participate in solving their own problems. Squatters must organize themselves into urban poor federations, settle their own boundary disputes among neighbors, negotiate with landowners, and make down payments for their home lots with the city playing the role of supporting agent, as do three key NGOs. Second, is a tripartite effort among urban poor federations, national and local government agencies, and landowners in which the interests and abilities of each party are taken into account.

After taking a complete inventory of squatters (25 percent of the city’s population) and deciding only to help those who are on the inventory list, the city developed a program to address the sector's two main problems: the absence of security of land tenure, and the lack of basic infrastructure in the communities. The city encouraged the community organizing and capability building of urban poor communities by three NGOs. It provided free legal services and pre-relocation surveys, helped with subdivision plans, and improved services in relocation sites. The former squatters are now repaying loans for their housing, with a current repayment rate of 82%. These payments are held by the city's new urban poor trust fund, which is used for loans to other squatters.

In four years, the program has resettled 925 families on 22 hectares of city-owned land and in 789 home lots in downtown Naga. These beneficiaries represent one-fourth of the city's inventoried squatters, By institutionalizing a functional mechanism for permanently settling land disputes between landowners and land occupants; elevating living conditions of the urban poor through on-site area upgrading projects for blighted urban poor communities; establishing intra-city relocation sites for victims in extreme cases involving eviction and demolition, and providing livelihood opportunities, the Naga Kaantabay sa Kauswagan was able to empower the urban poor and cushion the negative impacts of urbanization.

This program is recognized as a Trailblazing Program, a finalist for the 1994 Galing Pook Awards.