FOR OFFICIAL USE ONLY Report No: PAD00052 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT PROJECT APPRAISAL DOCUMENT ON A FRAMEWORK APPROACH PROJECT OF US$800 MILLION OF WHICH A PROPOSED LOAN IN THE AMOUNT OF US$70 MILLION AND PROPOSED UKRAINE RELIEF, RECOVERY, RECONSTRUCTION, AND REFORM TRUST FUND GRANT IN THE AMOUNT OF US$162.5 MILLION TO UKRAINE FOR A HOUSING REPAIR FOR PEOPLE'S EMPOWERMENT PROJECT (HOPE) (P181200) AUGUST 16, 2023 Urban, Resilience and Land Europe And Central Asia This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. The World Bank Housing repair for People's Empowerment Project (HOPE) (P181200) CURRENCY EQUIVALENTS (Exchange Rate Effective {June 30, 2023}) Currency Unit = Ukrainian Hryvnia UAH 36.93 = US$1 FISCAL YEAR January 1 - December 31 Regional Vice President: Antonella Bassani Regional Director: Sameh Naguib Wahba Tadros Country Director: Arup Banerji Practice Manager: Christoph Pusch Task Team Leader(s): Karima Ben Bih, Ellen Hamilton Page 2 of 61 The World Bank Housing repair for People's Empowerment Project (HOPE) (P181200) ABBREVIATIONS AND ACRONYMS AF Additional financing ACG Anti-Corruption Guidelines AM Accountability Mechanism BoQ Bill of Quantities CE Citizen Engagement CHS Community Health and Safety CPSD Comprehensive Plans of Spatial Development CRP Comprehensive Recovery Programs DIIA Unified State Web Portal of Electronic Services DPD Design and Project Documentation EE Energy Efficiency ERW Explosive Remnants of War ESCP Environmental and Social Commitment Plan ESIRT Environmental and Social Incident Response Toolkit ESF Environmental and Social Framework ESMF Environmental and Social Management Framework ESMP Environmental and Social Management Plan ESRS Environmental and Social Review Summary ESS Environment and Social Standard EU European Union FCV Fragile Conflict and Violent FM Financial management GDP Gross Domestic Product GFDRR Global Facility for Disaster Reduction and Recovery GHG Greenhouse Gas GM Grievance Mechanism GPS General Plan of the Settlement GoU Government of Ukraine GRID Green Resilient and Inclusive Development GRM Grievance Redressal Mechanism GRS Grievance Redress Service HOA Homeowner association HOPE Housing repair for People's Empowerment Project IBRD International Bank for Reconstruction and Development ICR Implementation Completion Report IDP Internally displaced people IPF Investment Project Financing IOM International Organization for Migration LPIU Local Project Implementation Unit LSG Local self-governments Page 3 of 61 The World Bank Housing repair for People's Empowerment Project (HOPE) (P181200) LSGA Local Self Government Agency M&E Monitoring and Evaluation MFB Multi-family buildings MCTID Ministry for Communities, Territories, and Infrastructure Development MoDT Ministry of Digital Transformation MoF Ministry of Finance MoJ Ministry of Justice MTR Mid-term Review NDC National Determined Contribution OHS Occupational Health and Safety OP Operational Procedure PDO Project Development Objective PEACE Public Expenditures for Administrative Capacity Endurance PIU Project Implementation Unit PMT Project Management Team PPE Personal Protective Equipment PPSD Project Procurement Strategy for Development POM Project Operations Manual RDNA Rapid Damage and Needs Assessment RELINC Repairing Essential Logistics Infrastructure and Network Connectivity Re-PoWER Restoration Project of Winterization and Energy Resources SE/SH Sexual Exploitation/Sexual Harassment SEP Stakeholder Engagement Plan SFH Single-family houses STEP Systematic Tracking of Exchanges in Procurement TA Technical Assistance ToR Terms of Reference TPMA Third-Party Monitoring Agency UAH Ukrainian Hryvnia UN United Nations UNDP United Nations Development Programme UNHCR United Nations High Commissioner for Refugees URTF Ukraine Relief, Recovery, Reconstruction, and Reform Trust Fund USAID United States Agency for International Development US$ United States Dollar WB World Bank Page 4 of 61 The World Bank Housing repair for People's Empowerment Project (HOPE) (P181200) TABLE OF CONTENTS DATASHEET ............................................................................................................. 6 I. STRATEGIC CONTEXT ............................................................................................ 12 A. Country Context .............................................................................................................................. 12 B. Sectoral and Institutional Context .................................................................................................. 13 C. Relevance to Higher Level Objectives ............................................................................................. 15 II. PROJECT DESCRIPTION ......................................................................................... 16 A. Project Development Objective ...................................................................................................... 17 B. Project Components ....................................................................................................................... 17 C. Project Beneficiaries ....................................................................................................................... 20 D. Results Chain................................................................................................................................... 21 E. Rationale for Bank Involvement and Role of Partners .................................................................... 21 F. Lessons Learned and Reflected in the Project Design ..................................................................... 21 III. IMPLEMENTATION ARRANGEMENTS .................................................................... 22 A. Institutional and Implementation Arrangements ........................................................................... 22 B. Results Monitoring and Evaluation Arrangements ......................................................................... 23 C. Sustainability ................................................................................................................................... 24 IV. PROJECT APPRAISAL SUMMARY ........................................................................... 25 A. Technical, Economic and Financial Analysis (if applicable)............................................................. 25 B. Fiduciary .......................................................................................................................................... 25 C. Legal Operational Policies ............................................................................................................... 30 D. Environmental and Social ............................................................................................................... 30 E. Gender, Citizen Engagement and Climate Change ......................................................................... 32 V. GRIEVANCE REDRESS SERVICES............................................................................. 33 VI. KEY RISKS ............................................................................................................. 34 VII. RESULTS FRAMEWORK AND MONITORING ........................................................... 37 ANNEX 1: Implementation Arrangements and Support Plan .......................................... 43 ANNEX 2: Technical Analysis ......................................................................................... 46 ANNEX 3: Demand and Disbursement Projections ......................................................... 53 ANNEX 4: Scenario analysis for estimation of ceiling costs in component 1 .................... 58 ANNEX 5: Tentative list of the PMT ............................................................................... 61 Page 5 of 61 The World Bank Housing repair for People's Empowerment Project (HOPE) (P181200) @#&OPS~Doctype~OPS^dynamics@padbasicinformation#doctemplate DATASHEET BASIC INFORMATION Project Operation Name Beneficiary(ies) Ukraine Housing Repair for People's Empowerment Project (HOPE) Environmental and Social Risk Operation ID Financing Instrument Process Classification Investment Project P181200 Substantial Financing (IPF) @#&OPS~Doctype~OPS^dynamics@padprocessing#doctemplate Financing & Implementation Modalities [ ] Multiphase Programmatic Approach (MPA) [ ] Contingent Emergency Response Component (CERC) [ ] Series of Projects (SOP) [✓] Fragile State(s) [ ] Performance-Based Conditions (PBCs) [ ] Small State(s) [ ] Financial Intermediaries (FI) [ ] Fragile within a non-fragile Country [ ] Project-Based Guarantee [✓] Conflict [ ] Deferred Drawdown [✓] Responding to Natural or Man-made Disaster [ ] Alternative Procurement Arrangements (APA) [✓] Hands-on Expanded Implementation Support (HEIS) Expected Approval Date Expected Closing Date 30-Aug-2023 31-Dec-2025 Bank/IFC Collaboration No Proposed Development Objective(s) The Project development objective is to increase households’ access to repaired housing units damaged by Russia's invasion of Ukraine Components Component Name Cost (US$) Repair of residential units with partial damage 220,000,000.00 Design and capital repair of partially damaged Multi-Family Buildings 10,000,000.00 Project management and capacity strengthening 2,500,000.00 Page 6 of 61 The World Bank Housing repair for People's Empowerment Project (HOPE) (P181200) @#&OPS~Doctype~OPS^dynamics@padborrower#doctemplate Organizations Borrower: Ministry of Finance of Ukriane Implementing Agency: Ministry of Communities Territories and Infrastructure Development @#&OPS~Doctype~OPS^dynamics@padfinancingsummary#doctemplate PROJECT FINANCING DATA (US$, Millions) Maximizing Finance for Development Is this an MFD-Enabling Project (MFD-EP)? Is this project Private Capital Enabling (PCE)? SUMMARY Total Operation Cost 800.00 Total Financing 232.50 of which IBRD/IDA 70.00 Financing Gap 567.50 DETAILS World Bank Group Financing International Bank for Reconstruction and Development (IBRD) 70.00 Non-World Bank Group Financing Trust Funds 162.50 Ukraine Relief, Recovery, Reconstruction, and Reform TF 162.50 @#&OPS~Doctype~OPS^dynamics@paddisbursementprojection#doctemplate Expected Disbursements (US$, Millions) WB Fiscal Year 2024 2025 2026 Annual 220.00 12.50 0.00 Cumulative 220.00 232.50 232.50 @#&OPS~Doctype~OPS^dynamics@padclimatechange#doctemplate PRACTICE AREA(S) Page 7 of 61 The World Bank Housing repair for People's Empowerment Project (HOPE) (P181200) Practice Area (Lead) Contributing Practice Areas Urban, Resilience and Land CLIMATE Climate Change and Disaster Screening Yes, it has been screened and the results are discussed in the Operation Document @#&OPS~Doctype~OPS^dynamics@padrisk#doctemplate SYSTEMATIC OPERATIONS RISK- RATING TOOL (SORT) Risk Category Rating 1. Political and Governance ⚫ High 2. Macroeconomic ⚫ High 3. Sector Strategies and Policies ⚫ Moderate 4. Technical Design of Project or Program ⚫ Substantial 5. Institutional Capacity for Implementation and Sustainability ⚫ Substantial 6. Fiduciary ⚫ High 7. Environment and Social ⚫ Substantial 8. Stakeholders ⚫ Substantial 9. Other ⚫ 10. Overall ⚫ High @#&OPS~Doctype~OPS^dynamics@padcompliance#doctemplate POLICY COMPLIANCE Policy Does the project depart from the CPF in content or in other significant respects? [ ] Yes [✓] No Does the project require any waivers of Bank policies? [ ] Yes [✓] No ENVIRONMENTAL AND SOCIAL Environmental and Social Standards Relevance Given its Context at the Time of Appraisal Page 8 of 61 The World Bank Housing repair for People's Empowerment Project (HOPE) (P181200) E & S Standards Relevance ESS 1: Assessment and Management of Environmental and Social Risks and Relevant Impacts ESS 10: Stakeholder Engagement and Information Disclosure Relevant ESS 2: Labor and Working Conditions Relevant ESS 3: Resource Efficiency and Pollution Prevention and Management Relevant ESS 4: Community Health and Safety Relevant ESS 5: Land Acquisition, Restrictions on Land Use and Involuntary Resettlement Not Currently Relevant ESS 6: Biodiversity Conservation and Sustainable Management of Living Natural Relevant Resources ESS 7: Indigenous Peoples/Sub-Saharan African Historically Underserved Not Currently Relevant Traditional Local Communities ESS 8: Cultural Heritage Relevant ESS 9: Financial Intermediaries Not Currently Relevant NOTE: For further information regarding the World Bank’s due diligence assessment of the Project’s potential environmental and social risks and impacts, please refer to the Project’s Appraisal Environmental and Social Review Summary (ESRS). @#&OPS~Doctype~OPS^dynamics@padlegalcovenants#doctemplate LEGAL Legal Covenants Sections and Description The Borrower/Recipient, through the MCTID, shall, not later than forty-five (45) days after the Effective Date, hire a procurement specialist, environmental specialist, social specialist, and technical supervision specialist, all under terms of reference acceptable to the Bank and as further detailed in the POM. Not later than sixty (60) days after the Effective Date, the Borrower/Recipient, through the MCTID shall cause each Project Implementing Entity to establish and maintain, throughout the implementation of the Project, a  Local PIU, with adequate resources and staff in numbers and with qualifications acceptable to the Bank and as further set forth in the POM, to be responsible for: (i) the implementation of Part 2 of the Project; (ii) ensuring compliance of activities under Part 2 of the Project with the provisions of this Agreement, including the ESCP; (iii) procurement, financial management, disbursement, monitoring and evaluation related to the implementation of the said Part of the Project; and (iv) ensuring the coordination, communications and liaison of the relations among the MCTID, each Project Implementing Entity, and the Bank. The Borrower/Recipient, through MCTID shall no later than three (3) months after Effective Date, hire a Third-Party Monitoring Agency (“TPMA”), under terms of reference acceptable to the Bank. No later than thirty (30) days after the Effective Date, the Borrower/Recipient, through MCTID, shall prepare, adopt and thereafter carry out the Project in accordance with the Project Operations Manual, which shall be satisfactory to the Bank and shall contain, inter alia: (a) specific provisions on detailed arrangements for the carrying out of the Project; (b) composition and responsibilities of the PMT and Local PIUs, coordination mechanisms between MCTID and Project Implementing Entities; (c) procurement, financial management and disbursement requirements; (d) Project performance indicators; (e) verification and reporting protocols and arrangements to be used by the TPMA; (f) selection criteria for the Selected Local Self-Governments to carry out Part 2 of the Project; (g) selection criteria for Selected Page 9 of 61 The World Bank Housing repair for People's Empowerment Project (HOPE) (P181200) MFBs to be identified as a site for Project interventions under Part 2.1 and 2.2 of the Project; (h) Personal Data collection and processing in accordance with applicable national law and good international practice, and (i) procedures to ensure compliance with the Anti-Corruption Guidelines. @#&OPS~Doctype~OPS^dynamics@padconditions#doctemplate Conditions Type Citation Description Financing Source The Borrower/Recipient, through the MCTID, has established a Project Management Team Section 5.01 of the Grant Effectiveness (“PMT”) with adequate IBRD/IDA, Trust Funds and Loan Agreements resources and with staff in numbers, qualifications and with responsibilities acceptable to the Bank. B. Withdrawal Conditions; Withdrawal Period. 1. Notwithstanding the provisions of Part A above, no withdrawal shall be made: (a) for payments made prior to the Signature Date, except that withdrawals up to an aggregate amount not to exceed $69,825,000 may be made for payments Section III.B.1 of Schedule 2 Disbursement made prior to this date but IBRD/IDA to the Loan Agreement on or after May 30, 2023, for Eligible Expenditures under Category (1); or (b) under Category 2 until and unless the Bank has received adequate evidence that the Borrower has adopted the Regulation on Compensation for Medium Repairs in form and substance satisfactory to the Bank. B. Withdrawal Conditions; Withdrawal Period 1. Section III.B.1 of Schedule 2 Disbursement Notwithstanding the Trust Funds to the Grant Agreement provisions of Part A of this Section no withdrawal shall Page 10 of 61 The World Bank Housing repair for People's Empowerment Project (HOPE) (P181200) be made: (a) for payments made prior to the Signature Date, except that withdrawals up to an aggregate amount not to exceed $92,925,000 may be made for payments made prior to this date but on or after May 30, 2023, for Eligible Expenditures under Category (1); or (b) under Category 2 until and unless the Bank has received adequate evidence that the Recipient has adopted the Regulation on Compensation for Medium Repairs in form and substance satisfactory to the Bank; or (c) under Category 4 until and unless the Recipient has signed at least one Subsidiary Agreement, on terms and conditions satisfactory to the Bank, and said Subsidiary Agreement has been duly authorized or ratified by all necessary governmental action. Page 11 of 61 The World Bank Housing repair for People's Empowerment Project (HOPE) (P181200) I. STRATEGIC CONTEXT A. Country Context 1. Russia’s invasion of Ukraine continues to impose a severe humanitarian and economic toll . Between February 24, 2022 and April 9, 2023, 22,734 civilians were killed and injured.1 Russia’s invasion of Ukraine also triggered one of the largest human displacement crisis in the world where approximately 5.4 million people (or one-eighth of the population) were displaced within Ukraine, and over 8.1 million people fled to neighboring countries.2 Of those that were internally displaced, 60 percent were women and nearly half of the internally displaced people (IDPs) between ages 18 and 64 reported no income.3 Ukraine’s Gross Domestic Product (GDP) declined by 29.1 percent in 2022, with economic activity impacted by the destruction of productive capacity, damage to arable land, and reduced labor supply.4 Moreover, poverty5 is estimated to have increased from 5.5 percent in 2021 to 24.1 percent in 2022, pushing additional 7.1 million people into poverty and setting back 15 years of progress.6 Regions with active hostilities and those most affected by Russia’s invasion of Ukraine are expected to have experienced even higher poverty rates.7 2. Rising fiscal expenditure for defense and social protection increased the deficit, but higher tax collection, assistance from international partners, domestic borrowing, and monetization of the residual needs, partially relieved the stress on public revenues. Due to the high spending on wages, goods, and services to meet security needs, and on social benefits to provide relief, general government expenditure in 2022 stood at 66 percent of GDP —26 percentage points more than in 2021.8 Fiscal financing needs in 2022 reached 33.2 percent of GDP and included both needs for the deficit and for the repayment of debt principal. Having lost access to commercial external financing, Ukraine relied on official bilateral and multilateral assistance which provided a total of 21.1 percent of GDP in financing while the rest has been met by financing from domestic banks and National Bank of Ukraine monetization. Growth is expected to pick up only gradually. Under baseline projections, GDP is expected to expand by 2 percent in 2023 and starting from late 2024, the economy is expected to recover. This recovery would be driven by public investment as reconstruction activity picks up. 3. Recovery and reconstruction investments need to lay the groundwork for Ukraine to consolidate its development path towards a European Union (EU) aligned, low-carbon and climate resilient country. After being granted candidate status in June 2022, Ukraine’s future is expected to include eventual EU membership. As such, the process of recovery and reconstruction will need to be closely aligned with the EU accession process requirements. Ukraine ratified the Paris Agreement in 2016 and submitted an ambitious updated National Determined Contribution (NDC2) in July 2021 with the target of an economy wide net greenhouse gas (GHG) emission reduction of 65 percent by 2030 compared to the 1990 level. The country also recently reiterated its commitment to reaching carbon neutrality by 2060. Recovery investments will also need to consider Ukraine’s vulnerability to the impact of climate change.9 Ukraine is expected to have higher temperatures and prolonged heat waves during summer.10 The country’s high number and vast networks of rivers, catchments, and aquifers together with changes in precipitation can result in high-risk flooding scenarios. Droughts may become more frequent in north and west areas.11 Russia’s invasion of Ukraine exacerbates the climate risks further and weakens the country’s capacity to manage climate-related vulnerabilities. The climate risks can be mitigated, specifically in the urban housing areas, by introducing both mitigation and adaptation measures including energy efficient (EE) 1 https://www.ohchr.org/en/news/2023/04/ukraine-civilian-casualty-update-10-april-2023 2 https://dtm.iom.int/reports/ukraine-internal-displacement-report-general-population-survey-round-12-16-23-january-2023 3 International Organization for Migration (IOM). 2022. Ukraine Internal Displacement Report, Round 8. August 23, 2022. Available at: https://dtm.iom.int/sites/g/files/tmzbdl1461/files/reports/IOM_Gen%20Pop%20Report_R8_ENG_updated%20logo%20%281%29.pdf. It should be noted that Ukraine has seen an increasing number of returnees (as defined by the IOM) in recent months along with a decline in internally displaced people. 4 Still, the contraction was less than initially expected, on the back of the return of nearly 4 million refugees and the resurgence of agricultural exports. 5 Measured as consumption below the global US$6.85 per person per day line in 2017 PPP. 6 Simulations by the World Bank that reflect the impacts of economic contraction, differentiated impacts on public and private sector income, and inflation impacts on poverty. 7 The United Nations Development Programme (UNDP) estimates the highest monetary poverty rates in Odeska, Luhanska, Khersonska, Kharkivska, and Rivnenska, which were among the poorest oblasts before Russia’s invasion of Ukraine. 8 At the end of 2022 Ukraine’s general govern ment deficit (excluding grants) stood at 25 percent of GDP. Ukraine was able to collect 41 percent of GDP in revenues, 4.7 percentage points more than one year earlier. Underlying this was a strong collection of social security contribution and personal income tax, despite the increased eligibility for concessional tax regimes imposed immediately after Russia’s invasion of Ukraine that temporarily reduced the tax base. 9This includes vulnerability to wildfire, droughts, extreme temperatures (both high and low), heatwaves, heavy precipitation, mudslides, and floods. 10 Cities are projected to experience intense temperature increases through the end of the century (over +5.0°C in summer in Luhansk and in winter in Kyiv), aggravated by the urban heat island effect. World Bank (2021) Ukraine. Building Climate Resilience in Agriculture and Forestry. Available at: http://documents.worldbank.org/curated/en/893671643276478711/Ukraine- Building-Climate-Resilience-in-Agriculture-and-Forestry 11 https://climateknowledgeportal.worldbank.org/country/ukraine/vulnerability Page 12 of 61 The World Bank Housing repair for People's Empowerment Project (HOPE) (P181200) standards and building codes, nature-based solutions like the use of green roofs and natural ventilation as well as disaster risk management practices such as early warning systems and flood-emergency response measures. Situation of Urgent Need 4. Damage to infrastructure, housing, and public services continues to grow, with funding needs for recovery and reconstruction estimated at US$411 billion as of February 24, 202312, with US$135 billion sustained in direct damage to buildings and infrastructure. According to estimates in the Rapid Damage and Needs Assessment (RDNA) update13 for the period of February 24, 2022, to February 24, 2023, the most affected sectors were housing (38 percent), transport (26 percent), energy (8 percent), commerce and industry (8 percent), and agriculture (6 percent). Donetska, Kharkivska, Luhanska, Zaporizka, Kyivska, and Khersonska oblasts were those sustained the greatest direct damage. For 2023 alone, it is estimated that the Government of Ukraine (GoU) would need upwards of US$14 billion to support fast and emergency recovery of its critical sectors. Out of this amount US$1.9 billion is needed for housing alone. There will be a tremendous social and economic cost, borne especially by the poorest and most vulnerable, if these most urgent needs are not met in the short term. 5. The Housing repair for People's Empowerment (HOPE) Project is a part of the World Bank (WB)’s package of emergency financing mobilized to help the GoU sustain essential government services delivery to the Ukrainian people and repair critical infrastructure. This package includes the IDA-IBRD blended financing for the Public Expenditures for Administrative Capacity Endurance (PEACE) Project (P178946), allowing the GoU to optimize its fiscal space and maintain health, education, and social protection services during Russia’s invasion of Ukraine, and the Ukraine Relief, Recovery, Reconstruction and Reform Trust Fund (URTF)14 launched by the World Bank Group (WBG) to activate rapid transfer mechanisms to channel international donor contributions. The first three framework projects have been approved over the last six months for emergency repairs and support in the health, transport, and energy sectors with financing through the URTF. The HOPE Project will be the fourth framework operation and will help affected households to urgently regain adequate housing through emergency repair of damaged housing stock. 6. Given the current country context, the level of damaged housing sector and the urgent repair needs in anticipation of the next winter season, the Project is being processed under Condensed Procedures as per the WB Procedure on Preparation of Investment Project Financing (IPF) for Projects in Situations of Urgent Need of Assistance or Capacity Constraints. The Project is being prepared and implemented according to Paragraph 12, IPF Policy, which allows for certain exceptions to the IPF policy requirements if the Bank deems the Borrower to be in urgent need of assistance because of a disaster or experiences capacity constraints because of fragility or specific vulnerabilities as is the case in Ukraine. B. Sectoral and Institutional Context Housing sector damage and needs 7. According to RDNA2 estimates, the housing sector was the most affected in terms of cost of damage, with two- thirds of residential buildings impacted by Russia’s invasion of Ukraine, considered partially damaged and repairable. As of February 2023, the total damage cost to the housing sector is estimated to be over US$50 billion, increasing by around 70 percent from June 2022. Russia’s invasion of Ukraine is estimated to have impacted about 1.4 million residential units (7 percent of total residential unit’s stock), directly affecting approximately 3.5 million residents of the country. Nearly 87 percent of housing units damaged were in multi-family buildings (MFB) and four out of five damaged units were in urban areas.15 Two-thirds of the total damaged residential stock consisted of partially damaged units16 with an estimated cost of 12 The needs – estimated for the next decade – consider inflation, market conditions, surge pricing in areas of mass construction, higher insurance premiums, and a shift in the future towards lower energy intensity and more resilient, inclusive, and modern design. 13 The first Ukraine Rapid Damage and Needs assessment (RDNA1) was published in September 2022 and covered the period between February 24, 2022, to June 1, 2022. RDNA1 was led by the GoU, the World Bank Group (WBG), and the European Commission (EC). Subsequent RDNA update (henceforth referred to as RDNA2) w as commissioned and published in March 2023, covering the period between February 24, 2022, to February 24, 2023. RDNA2 was led by the joint effort of the GoU, the WBG, the EC and the UN, in cooperation with other partners. Unless otherwise mentioned, all statistics in this strategic context section and subsequent sections are estimates by World Bank Staff based on official statistics of Ukraine’s public author ities that are highlighted in RDNA1 and RDNA2. 14 The URTF was established is a multi-donor trust fund which supports Ukraine to: (i) sustain its administrative and service delivery capacity and conduct relief efforts; and (ii) plan and implement Ukraine’s recovery, resilient reconstruction, and reform agenda. Further information can be found here: https://www.worldbank.org/en/programs/urtf 15 An estimated 135,000 single-family houses (SFH) have been damaged as well and account for around 9 percent of the total affected housing sector assets. Over 64 percent of housing damage is concentrated in one of three oblasts (Kharkivska, Donetska and Luhanska) with an additional 28 percent in Kyivska, Mykolaivska, Chernihivska, Dnipropetrovska and Kyiv city 16 The housing stock damage estimates in the RDNA were categorized into three damage levels in agreement with the MCTID: damage below 10 percent (considered as “minor damage”), damage between 10 and 40 percent (considered as “medium damage”) , and damage above 40 percent (considered as “destroyed”). All units that were damaged below 40 percent are considered partially damaged and repairable in the short to medium term. Page 13 of 61 The World Bank Housing repair for People's Empowerment Project (HOPE) (P181200) damage of US$13 billion. Among them, almost 290,000 units sustained minor damage amounting to US$1.4 billion, and around 620,000 units with medium damage with an estimated cost of US$11.7 billion. The scale of damage in the housing sector is exacerbating the already existing shortage of adequate, affordable, and safe housing in Ukraine — a severe challenge in oblasts where large number of IDPs and returnees reside. As of March 31, 2023, close to 45 percent of registered IDPs were residing in oblasts that had among the highest partial damage to the housing sector. 8. A systematic program focused on the rapid repairs of partially damaged housing units can provide safe and sustainable housing solutions for residents as winter approaches. According to the International Organization for Migration report published in February 2023, 45 percent of IDPs, 18 percent of returnees, and 16 percent of non-IDPs reported the need for emergency repairs of their housing units to allow safe return to their areas of origin.17 According to the same report, the most pressing challenge among both IDPs and returnees was the shortage of cash with a third of returnee households reported to not have sufficient rent to cover the winter months. Therefore, sustainable solutions for rehousing, especially in hosting communities, are urgently needed especially before the start of the 2023-2024 winter months. Additionally, housing recovery in Ukraine will positively influence the social and economic development of the country and has the potential to become an engine of the country’s economic recovery by stimulating the return of citizens, increasing employment, creating demand for construction products and equipment, and supplying tax revenues to the state budget. Development of the housing construction market also positively influences the GDP considering that the real estate sector in Ukraine, including housing, accounted for 5.8 percent of GDP in 2021. Table 1: Estimated damage to housing units based on the Rapid Damage and Needs Assessment, 2023, World Bank Level of damage Minor damage Medium damage Destroyed Total (<10 percent damaged) (10 < 40 percent) (>40 percent damaged) housing Asset Type Percent of Percent of Percent of units Number of total Number of total Number of total damaged Units damaged Units damaged Units damaged (> (<10 %) (10-40%) 40%) MFB, pre - 1991 Apt 7,488,345 220,448 76% 459,000 74% 355,568 71.5% MFB, post - 1991 Apt 1,686,724 45,639 16% 89,368 14% 66,314 13.5% SFH (urban and rural) 8,977,862 11,628 4% 57,426 9% 65,911 13% Dormitories 910,592 11,008 4% 16,768 3% 11,264 2% Total 19,063,523 288,723 100% 622,562 100% 499,057 100% Source: Estimates by the WB team in collaboration with the MCTID, based on damage data provided by the MCTID; RDNA2, WB, 2023 Key characteristics of the housing sector in Ukraine 13. The national housing policy framework requires updates and refinement to face the demands of housing reconstruction and recovery. Current housing regulations are scattered among various laws and resolutions and require revising and consolidating in an overarching housing policy oriented toward EU regulations. Building regulations in Ukraine have been transitioning since the Soviet era, with methods of proscriptive construction and institutional centralization evolving, although gradually, to becoming more liberal, flexible, and decentralized.18 However, further modernization of the housing policy, property rights, building regulatory framework, and urban development is needed. 14. Private ownership is the dominant tenure form in Ukraine. Ukraine had a total of around 18 million housing units prior to Russia’s invasion of Ukraine. MFBs are predominant in urban areas and cater to almost 67 percent of the urban population. In larger cities, this share increases to 79 percent. MFBs, primarily built during the Soviet period, have often exceeded their design lifespan, are energy inefficient and suffer from deferred maintenance and repairs. Almost 94 percent of the housing is privately owned, although ownership rights are not systematically included in the State Registry of Rights for Real Estate (eRegistry), which was established in 2015 and only after privatization had been largely completed. As of 2013, only 3.4 percent of households were officially considered renters, although an additional 10-15 percent likely 17 International Organization for Migration (IOM), February 16, 2023. DTM Ukraine Returns Report - (16 - 23 January 2023). IOM, Ukraine. Available at https://dtm.iom.int/reports/ukraine- returns-report-16-23-january-2023 18 The Law of Ukraine "On Construction Regulations" No. 1704-VI was adopted in 2009 to regulate construction and determine the legal framework for designing and approval of construction. Page 14 of 61 The World Bank Housing repair for People's Empowerment Project (HOPE) (P181200) rent informally. Since the beginning of Russia’s invasion of Ukraine, rental rates reportedly have increased, particularly in the western parts of the country. 15. The majority of MFBs are managed and maintained by the local self-governments (LSGs). While MFBs may be managed by houseowner associations (HOAs) or in other ways such as by private agencies chosen by co-owners, and though apartment owners were encouraged to form HOAs to manage the building common spaces (roofs, elevators, stairs, internal heating, water networks, etc.), only about one in five MFBs has established a HOA. Consequently, most MFBs do not have a well-defined management structure, and, by default, the building and apartment block management responsibility is shouldered by local entities of the LSGs.19 Decades of insufficient revenues for maintenance and repairs have left the ageing stock in a deteriorated condition with limited finance for capital repairs and investments, including in Energy Efficiency (EE) measures that would reduce MFB energy consumption and, thus, decrease energy-related costs for residents. GoU support for housing recovery 16. To address the damages and support affected populations, the GoU has made significant efforts to identify, monitor, and prioritize the most urgent infrastructure repairs. For housing, the GoU requires that all damaged assets be verified and registered by LSGs or hromadas20 in the Register of Damaged and Destroyed Property, which is managed by the Ministry for Communities, Territories and Infrastructure Development (MCTID) and is currently being linked with the eRegistry managed by the Ministry of Justice (MoJ). The damage inventory system aims to mitigate the risk that support will be provided to repair the same asset more than once, and to monitor the extent, nature, and location of damaged assets and progress on their repair and reconstruction. The damage inventory was established shortly after Russia’s invasion of Ukraine and is estimated to have 40 percent of damaged assets registered as of April 2023. In terms of addressing housing damages, MCTID is developing different compensation procedures and repair programs for residential property owners with damaged or destroyed units. The immediate priority group targets owners who applied for support to fix urgent non-structural light repairs (such as broken windows or a damaged roof).21 A second priority group is moderately damaged MFBs, while a third priority group (not included in this Project) will receive housing vouchers for their destroyed homes. C. Relevance to Higher Level Objectives 17. The Ukraine National Recovery Plan articulates the GoU’s blueprint for necessar y actions for recovery in short, medium, and long-term. It has the overarching goals to support economic, social, and environmental resilience, find efficient solutions for recovery of crucial economic and social processes and natural ecosystems, and develop a modernization plan to ensure expedited sustainable economic growth and the well-being of the Ukrainian people. One of the key tasks is to restore and create quality new housing and living infrastructure with protective, sustainable, and inclusive solutions. The plan outlines the need to rebuild a clean and safe environment and ensure sustainable development in line with the EU Green Deal,22 recover and upgrade housing and regions infrastructure, launch housing upgrade program and new urban planning pilots (e.g., Bucha, Chernihiv), and scale up the public-private partnerships (PPP) in infrastructure to allow for diversified reconstruction financing investments. 18. The Project is aligned with the WB’s approach paper “Relief, Recovery and Resilient Reconstruction: Supporting Ukraine’s Immediate and Medium-Term Economic Needs”.23 The Project will support MCTID to have a more granular assessment of the housing sector’s recovery needs, and aid the GoU in establishing housing recovery governance, financing, and implementation modalities. It will also help to develop linkages with broader urban service restoration and economic recovery and ensure the safety of the population through acceleration of explosive hazard management in urban areas. 19 Only one in four apartment buildings are managed by HOAs. Anisimov, O. Fedoriv, P. and Tkachenko, O., Lawson, J. and Buitelaar, E. (2023), Rebuilding a place to call home. Sharing knowledge for the recovery of Ukraine, The Hague: PBL. Netherlands Environmental Assessment Agency. 20 Ukraine has three levels of constitutionally guaranteed subnational government (i) oblast (regions) (ii) rayon (districts) and (iii) hromada (local self-government units that range from cities to villages and rural hamlets). Hromada can be cities, towns, villages, and settlements with local councils and were formed as a result of a series of municipal amalgamations (OECD,2022) 21 Although this is not the predominant type of damage, there are many possible scenarios, where individual units in MFBs may sustain damages without common areas being damaged. One of the more common forms of this maybe broken windows due to shocks caused by explosions or artillery firing (that affected only some units in the apartment 22 https://commission.europa.eu/strategy-and-policy/priorities-2019-2024/european-green-deal_en 23 https://documents1.worldbank.org/curated/en/099608405122216371/pdf/IDU08c704e400de7a048930b8330494a329ab3ca.pdf Page 15 of 61 The World Bank Housing repair for People's Empowerment Project (HOPE) (P181200) 19. The Project supports the objectives of the Ukraine Relief, Recovery, Reconstruction and Reform Trust Fund (URTF). By providing funds to affected households for the repair of partially damaged residential units under Component 1, the Project contributes to Outcome 1.2 of the URTF results framework, which seeks to ensure that Ukraine “has financial and implementation support to execute critical recovery and reconstruction operations”. Component 2 contributes to Outcome 2.1 of the URTF results framework, which seeks to ensure that Ukraine “has (i) relevant data and analytics; and (ii) needed sectoral planning and project preparation capacity for recovery, reconstruction, and reform”, by supporting formulation and updates of underlying planning documents to address the multi-sectoral needs for housing recovery. 20. The Project will also contribute to the WB goals of ending poverty and boosting prosperity and the WB Climate Change Action Plan (CCAP) 2021-2025 on “Supporting Green, Resilient, and Inclusive Development (GRID)”. In pursuing these goals, the WB has three priorities, which include: helping create sustainable economic growth, investing in people, and buildings resilience to shocks and threats that can roll back decades of progress. By supporting the affected households to regain adequate housing through repair of damaged housing stock, the Project will contribute to improving the short-and long-term living conditions and well-being of the population. Activities that quickly restore access to housing and consequently, basic services for all people, will contribute to building resilience in the long term and help reduce the number of vulnerable people from falling into or becoming trapped in cycles of poverty. Under Component 2, the Project will support climate adaptation through investments in resilient infrastructure and mainstreaming disaster and climate risk considerations into housing repair investments and will promote introduction of climate change mitigation measures, such as integration of both EE standards and resilience to multi-hazard risks in building design and construction. 21. The Project is aligned with the WB Strategy for Fragility, Conflict, and Violence (2020-2025)24 particularly Pillar II which emphasizes “remaining engaged during conflicts and crisis situations” to build resilience, deliver basic services, and support national and local institutions. With Russia’s invasion of Ukraine still continuing, the Project takes a phased approach where it aims to first create conditions for actions by supporting realistic measures through the targeting of repairable housing units, while also supporting the national and local institutions in continuing to engage directly with citizens on the housing sector. II. PROJECT DESCRIPTION 22. The US$800 million HOPE Project is designed using a “framework” approach. The Project design will support activities that Ukraine will need to partially address the damages inflicted on the housing stock, with a scope of support that is informed by both available and future financing over the immediate-and short-term. The Project has been designed and appraised for the full US$800 million, including envisaged results indicator targets that match this envelope. The design outlines Project activities that will be implemented with an initial funding of US$162.5 million grant from the URTF and US$70 million IBRD loan (supported by the Credit Enhancement Trust Fund with contribution of the Government of Japan) with the expectation of additional contributions from other donors,25 and resource mobilization of US$567.5 million, which is expected to be filled as subsequent Bank and donor funding (through trust funds, or co-financing) materializes. 26 23. This “framework” approach provides a clear line of sight on the urgent needs in the sector, as well as a simplified process to move from the available financing of US$232.5 million to the US$800 million target. It also reflects the importance of acting with the agility and speed of delivery in an emergency. Consistent with this approach, the Project components are designed as sustainable within the available financing, while also being flexible enough to easily absorb additional financing as resources become available. With the full US$800 million designed and appraised, the process of incorporating additional funds as more financing becomes available will be significantly simplified, as no changes to the original design are required. Any further increase of financing beyond US$800 million will entail Additional Financing and restructuring to scale-up the Project. Furthermore, should mobilization of anticipated resources prove more difficult than 24 World Bank. 2020. World Bank Group Strategy for Fragility, Conflict, and Violence 2020 –2025. http://documents.worldbank.org/curated/en/844591582815510521/World-Bank-Group- Strategy-for-Fragility-Conflict-and-Violence-2020-2025. Washington, DC: World Bank 25 Additional financing of up to US$380 million may be made available immediately after the disbursement of the initial financing by the end of December 2023. 26 Should the full US$800 million in Project financing not become available, the Project will be restructured to scale-back total financing, the scope of activities, and the results framework, among other things and as needed. Page 16 of 61 The World Bank Housing repair for People's Empowerment Project (HOPE) (P181200) anticipated, efforts to identify additional resources will be intensified or, alternatively, the Project will be restructured to adjust results indicator targets. 24. The HOPE Project follows an analogous framework approach to the Health Enhancement and Lifesaving (HEAL) Project (P180245), Repairing Essential Logistics Infrastructure and Network Connectivity (RELINC, P180318), and Restoration Project of Winterization and Energy Resources (Re-PoWER, P180332). The Board’s approval of the HEAL Project on December 20, 2022, authorized the Regional Vice President to approve incremental financial commitments up to the Board-authorized envelope (with notification to the Board and after coordinating with relevant internal stakeholders, including the Operations Policy and Country Services and Credit Risk departments). This authorization is valid for the duration of the Project as approved by the Board. The HOPE Project has been designed similarly. The WB management will update the Board as appropriate, as approved framework projects secure additional funds and achieve critical development objectives. For example, an update of currently approved framework projects was distributed to the Board with a World Bank Group Ukraine Country Program Update on June 05, 2023. 25. The Project aims to respond to urgent needs in the housing sector and build institutional capacity at the national and local levels to undertake and scale up housing and urban repair works that are consistent with climate smart and resilient development. The Project will also target the critical repair needs of partially damaged27 Single Family Homes (SFHs) and MFBs in affected territorial communities under the GoU control. Without urgent support on repairing the damaged housing units, the housing stock in Ukraine in 2023 and 2024 is likely to decline dramatically, particularly in terms of the number of available MFB units, which would reduce households’ welfare and would have a significant impact on the capacity of IDPs, returnees, and those households who found themselves in poor living conditions unable to access safe and decent housing before winter.28 The framework approach of the Project is envisaged to help establish a platform for housing sector recovery. Using the Project and its immediate financing, interventions will start from minor to medium repairs through direct payment to beneficiaries. A. Project Development Objective PDO Statement 26. The Project development objective is to increase households’ access to repaired housing units damaged by Russia’s invasion of Ukraine. PDO Level Indicator 27. Number of people benefitting from repaired residential units (Number, gender disaggregated) B. Project Components Table 2: Project components with total available and estimated financing Estimated Total Financing Financing available Short Component Description Financing Needed (US$ - Millions) Needed (US$ - Millions) Component 1: Repair of residential units with partial damage 220.0 370.0 590.0 Subcomponent 1.1: Repair of residential units with minor damage ~160.0 Subcomponent 1.2: Repair of residential units with medium damage ~60.0 Component 2. Design and capital repair of partially damaged MFBs 10.0 190.0 200.0 Subcomponent 2.1: Preparation of design and project documentation for 2.0 10.0 12.0 partially damaged MFBs Subcomponent 2.2: Capital repair of partially damaged MFBs 0.0 185.0 185.0 Sub-component 2.3. Support integrated housing and urban recovery in selected 3.0 0.0 3.0 LSGs Component 3. Project management and capacity strengthening 2.5 7.5 10.0 27 The recently passed law on compensation clarifies on two categories of housing units eligible for government support: damaged and destroyed. The “damaged” category is the focus of this project. The ‘destroyed’ category is eligible for US$40,000 housing vouchers, according to the law on compensation, for the p urchase of a new house (this support is not available for the partial damage category). The decision to remain focused the damaged category was made as there may be risks and liabilities in supporting a spatially blind housing voucher system given the uncertain state of the capital stock, the likely need for complementary developer and/or mortgage finance on the supply and demand side, and the prior need for city/municipal planning for reconstruction and recovery to ensure infrastructure availability and habitability of neighborhoods. 28 Mean winter (December to March) temperatures in Ukraine range from -4.8°С to 2°C (https://climateknowledgeportal.worldbank.org/country/ukraine/climate-data-historical Page 17 of 61 The World Bank Housing repair for People's Empowerment Project (HOPE) (P181200) Estimated Total Financing Financing available Short Component Description Financing Needed (US$ - Millions) Needed (US$ - Millions) Total Funding for Project 232.5 567.5 800.0 Component 1. Repair of residential units with partial damage (US$70 million IBRD + US$150 million grant funded; estimated total financing need is US$590 million) 28. Component 1 will provide funding to affected households for the emergency repair of their partially damaged residential units or SFHs.29 Eligible households are owners or co-owners of SFHs and apartment units in MFBs with partial damage. Buildings with damage in common areas and/or with structural damage are excluded. Following the prioritization outlined by the GoU's Law on Compensation, applications will be processed in the order received. Eligible affected households can make the request for compensation for repair of their partially damaged residential units or SFH by applying through the Unified State Web Portal of Electronic Services (Portal DIIA)30 or in-person at their local administrative service centers. Compensation is commensurate with the level of damage which is confirmed by local commissions which are being established to review applications and verify the levels of damage.31 Once approved, compensation is then automatically deposited in the applicant’s bank account for use for goods and services related to repairs.32 29. Component 1 will follow a phased approach, in which the first subcomponent has lower payment thresholds associated with the lower levels of damage and will be piloted first. This will allow for testing the established system, while identifying and addressing any unforeseen issues that may arise. This adaptive learning will facilitate the implementation and rapid disbursement of both subcomponent 1.1 and the follow-on subcomponent 1.2. Disbursements of this component will be made against incurred expenditures, i.e., reimbursements against compensations paid to applicants through the DIIA platform. In this context a one-time retroactive financing33 is available up to 70 percent of the component with a start date of the adoption of the WB approved amendment to Resolution 381 and signing. To verify the accuracy of supporting data and ensure compliance with compensation procedures which will be detailed in the Project Operations Manual (POM), an independent Third-Party Monitoring Agency (TPMA) will be contracted by the Project Management Team (PMT) at MCTID under the Project. The responsibilities of TPMA are to confirm, through periodic verification reports, transparency, and eligibility of expenditures through each stage of the procedure. Subcomponent 1.1: Repair of residential units with minor damage 30. This subcomponent will finance repairs for residential units with minor damages in the amount of up to UAH 200,000 equivalent. Funds will be disbursed against reports of incurred expenditures in the form of one-time retroactive financing, and through reimbursement of compensations made to applicants. Funds will be made available to provide compensations up to UAH 200,000 for minor damages per application to eligible and prioritized households, as determined by the Compensation Law and the compensation procedure outlined in the GoU’s Resolution 381 (see Annex 3 for detailed process of Resolution 381). The procedure also requires that 5 percent of the households reporting completion of repairs are verified for the use of funds. As mentioned in the above paragraph, in addition to the GoU’s verification of the use of funds, TPMA hired by PMT at MCTID will conduct sample verifications, as determined in the POM. Subcomponent 1.2: Repair of residential units with medium damage 29 Partial damage in this Project refers to damage up to 40% of the total asset, per RDNA guidance. This may require minor repairs (such as window/door replacements, minor bullet holes repairs, etc.) not exceeding UAH 200,000 or medium repairs (roof repair, windows/doors replacement, wall repairs, etc.). See Annex 4 – Technical Analysis for the compensation scenarios. 30 DIIA is a mobile application and online portal that opened up digital access to 120 government services and enables Ukrainians to engage with their government online in a one-stop-shop – from applying for benefits and government programs to paying taxes, accessing important documents, registering and running bu sinesses, and providing identification and digital signatures. Following Russia’s invasion of Ukraine in February 2022, DIIA has also allowed Ukrainians to receive social support with government services closed in affected areas and has been used by displaced Ukrainians to access aid and other critical services. The app is the gold standard in e-government, and Ukraine is now sharing this technology with other countries. 31 The local commission is a consultative and advisory body, accountable and under control of the executive committee of the local council ( or the “authorized body”) . The commission includes representatives from the authorized body and representatives from the public. The number of representatives from the public cannot be less than one third of the total composition of the commission. Each commission, as per the resolution, should include a specialist who has obtained a higher education in the field of knowledge "Construction and architect ure", in addition a member specialized in land management and construction. Additionally, persons with experience in anti-corruption, internal audit or procurement monitoring have preferential right to be included in the composition of the commission. 32 The resolution 381 checklist of the types of repairs covered by this component can be found in the Annex 4 33 Retroactive financing ends at the signing of the loan/credit. Exceptions to go beyond the 40% limit can be requested on a case-by-case basis following the process outlined on page 33 of the World Bank Procedure: Preparation of Investment Project Financing. Page 18 of 61 The World Bank Housing repair for People's Empowerment Project (HOPE) (P181200) 31. This subcomponent will finance medium repairs exceeding UAH 200,000. A key disbursement condition will be that the compensation resolution for this category, currently under drafting by MCTID, is found to be satisfactory to the WB from a technical, environment and social, integrity, procurement, and financial management (FM) perspective. Funds will be disbursed against reports of incurred expenditures in the form of a one-time retroactive financing, and through reimbursement of compensations made to applicants. The draft Resolution is similar to Resolution 381, with key differences as follows: i) maximum compensation for apartment units at MFBs is UAH 350,000 and for SFHs is UAH 500,000; ii) requirement for engineering and building safety assessment (in addition to the commission’s damage verification) to ensure no structural damage to the residential building; iii) compensation to be provided through two tranche disbursements, with the second tranche contingent on uploading of evidence of progress of works, and; iv) sample of units and houses subject to commissions’ monitoring and verification at the end of the process of repair, larger than or equal to 10 percent. In addition to the GoU’s verification of use of funds, TPMA hired by PMT will conduct a sample verification, as determined in the POM. Component 2. Design and capital repair of partially damaged34 MFBs (US$10 million grant funded; estimated financing need is US$200 million) 32. This component is designed to support green and resilient capital repairs of partially damaged MFBs. The component will follow a phased approach where the repair of MFBs is contingent on the completion of the engineering assessments and the project design documentation. Subcomponent 2.1: Preparation of design and project documentation for partially damaged MFBs 33. This subcomponent will finance the technical preparation of the repair works for partially damaged MFBs in up to five LSGs. Consequently, it includes consulting services for: (i) detailed structural engineering assessments, (ii) technical studies to define structural and non-structural performance standard35 to be followed in design, (iii) feasibility studies to determine design options; and (iv) design and project documentation (DPD) with costs estimates, Bill of Quantities (BoQ) and tender documents for rehabilitation of each selected MFB. These assessments are a prerequisite to ensure that all repair works are appropriately designed and delivered, aligned with EE standards, incorporate resilience to climate and disaster risks, and follow anticipated updates to the building codes.36 The selected LSGs will contract and supervise design firms in delivering these studies with support from the local Project Implementation Units (LPIUs). 34. The prioritization framework will use a spatial cluster approach that is recognized to maximize the impact for recovery in crisis-affected populations.37 LSG selection will be carried out in consideration of several factors including procurement and implementation capacity as acknowledged by the WB, level of damage, access to service delivery networks, capacity for continued service delivery, completion of non-technical and technical surveys for explosive hazard management (and demining if needed), etc. Second, the aim is to consider creation of cluster buildings within the selected LSGs, when feasible, to ensure economies of scale. Based on global best practices, the following variables would be considered during the development of the prioritization framework: availability and functionality of service delivery infrastructure, present occupancy rates, average cost of repair per unit in the building (to prioritize MFBs with more beneficiary households at a lower cost), completion of non-technical and technical surveys for explosive hazard management in the area etc. Additional selection criteria could include clusters exposed to climate risks, such as those in flood prone areas, to advance the GoU’s goals of resilient recovery.38 The selection of MFBs would also be subject to necessary environmental and social safeguards as well as a legal review that establishes property ownership for all units in the selected MFBs along with all required documents and information paired with a “no-objection” document certifying permission to carry out the works in the MFBs as defined in the DPDs. The selection approach and criteria will be detailed in the POM. 34 Partially damaged buildings include both minor and medium damaged assets. This includes assets with nonstructural damage as well as assets with estimated structural damage level lower than 40 percent. See Annex 2 and table A.2.1 for further details. 35 Per EU buildings and Energy Efficiency standards - Housing repair and reconstruction activities should integrate a climate change mitigation approach, to the extent possible, to include improvements in energy efficiency, including reduced energy demand (e.g. insulation, windows, heating/cooling systems, lighting), renewable energy (e.g. rooftop solar photovoltaic) and water efficiency (e.g. low flush toilets, low water shower heads, rainwater capture and reuse), and minimization of embodied carbon in construction materials. 36 Given the uncertainties that may arise at the building level, these studies are critical to ascertain the final BoQs needed, and funding for the contracting. 37 https://reliefweb.int/report/world/area-based-approaches-urban-settings-compendium-case-studies-may-2019-edition 38 Enhanced low-carbon, energy efficient building standards and codes will be applied based on the interim guidance prepared through component 3.2 of this Project Page 19 of 61 The World Bank Housing repair for People's Empowerment Project (HOPE) (P181200) Subcomponent 2.2: Capital Repair of partially damaged MFBs 35. This subcomponent will finance the repair of the identified MFBs for which the DPDs have been completed as part of the subcomponent 2.1 support. Based on the engineering assessments and design documentation developed under subcomponent 2.1, this subcomponent will finance contracts (goods and labor) for the repair works of a subset of partially damaged MFBs using a place-based approach and as per financing available under the Project. The selected LSGs will receive funds through fiscal transfers from MCTID and will contract and supervise contractor firms in delivering the civil works, through LPIUs. PMT at MCTID will oversee the overall project implementation, supervise LPIUs and play a quality assurance role (see Implementation arrangements for details). Sub-component 2.3. Support for integrated housing and urban recovery support in selected LSGs 36. This subcomponent will provide assistance to the selected LSGs for the formulation and updates of underlying planning documents and data. The subcomponent will finance consulting services and capacity building to the LSGs selected for subcomponent 2.1 and 2.2, to prepare, among others, necessary plans to kickstart their recovery programming. These include, among others, Comprehensive Recovery Programs (CRP) and associated Comprehensive Plans of Spatial Development (CPSD)39 or General Plan of the Settlement (GPS),40 as applicable and needed. These plans are fundamental for undertaking phased, spatially coordinated repair works necessary to address the multi-sectoral needs for housing recovery through a place-based approach. Component 3. Project management and capacity strengthening (US$2.5 million grant funded; estimated financing need is US$10 million) 37. This component will finance project management and strengthening project implementation capacity. It will include financing of (i) TPMA procured by PMT; (ii) operating costs of PMT; (iii) goods and equipment required to implement the Project activities; (iv) training costs including necessary training to strengthen the capacity of the PMT staff to mainstream climate mitigation and adaptation as part of the Project implementation; and (v) expenditures linked to the Project audit. 38. This component will also finance necessary technical assistance (TA) and local capacity building activities carried out by PMT to advance project implementation. This includes MCTID consultant fees and operating costs to (i) support capacity within the ministry to enable the recovery support group to fulfill its duties; (ii) procure necessary TA to formulate and disseminate interim repair, reconstruction, and recovery guidance documents for LSGs, and (iii) formulate necessary processes for housing recovery, to complete the housing recovery program. This support will ensure that all repair and recovery works, investment priorities and plans are aligned with the policy and legal documents critical for the EU-aligned, climate-smart, recovery and reconstruction that are being drafted at the central level. One example is the new building code to guide all construction and building repair works towards EU’s EE and construction and resilience standards. C. Project Beneficiaries 39. The primary beneficiaries of the Project will be people whose housing units have suffered partial damage. Through component 1 the Project will channel compensation directly to households for the purposes of repairing partial damage and is estimated to around 98,000 households. Component 2 will repair around 160 MFBs across 3-5 LSGs, with expected direct beneficiaries of an additional 8,000 households.41 As of February 23rd, 2023, the estimated number of partially damaged residential units was over 900,000, including SFHs, units in MFBs and in dormitories.42 As such, this Project will have the capacity for scaling up, should funding become available, further increasing the number of beneficiaries. Other beneficiaries will include (i) staff of MCTID and LSGs that would benefit from TA and capacity building under Component 2 and 3; (ii) residents in the selected LSGs who would benefit from increase in planning capacity at the local level; (iii) households seeking temporary accommodation would benefit from an increase in the stock of repaired residential units that are safe and resilient, and (iv) contractors, laborers, construction material manufacturers benefitting from demand 39 These spatial and development plans are an important basis for responding to the conditions of territorial communities affect ed by Russia’s invasion of Ukraine, and for the prioritization and sequencing of recovery works and need to consider both short term and long-term perspective and for example, long term demographic changes, needs for demining etc. 40 For Hromadas comprised of a single city, General Plan of the Settlement (GPS) is to be created (that is equivalent of a Comprehensive Plan for Spatial Development or CPSDs). 41 This assumes a conservative estimation of the average unit number per MFB being 50. 42 The most significant numbers of damage are in in Donetska, Kharkivska, Luhanska, Kyivska, and Mykolaivska oblasts Page 20 of 61 The World Bank Housing repair for People's Empowerment Project (HOPE) (P181200) for minor and medium repairs. In addition, there is an indirect benefit to the total population of the country from the increased capacity of the authorities to build back better and efficiently. D. Results Chain PDO: The Project development objective is to increase households’ access to repaired housing units damaged by Russia’s invasion of Ukraine Output Intermediate Outcome PDO Outcome Long term Activity Outcome • Compensation for resilient repairs Increase in availability Provide compensation received by eligible households of repaired residential for resilient repairs of • Monitoring, verification, and reporting partially damaged units with minor and Ukraine has processes established housing units (minor and medium damage expanded and • Communication and grievance redress medium damage) demonstrated mechanisms established • Structural engineering assessments and Increase in number of capacity to build feasibility studies completed energy efficient and and manage Prepare design • Climate resilient design documentation resilient repaired Increased housing and documents for the repair prepared apartment buildings households’ communal of partially damaged • Contracts for climate resilient repair of based on prioritization access to services recovery apartment buildings apartment buildings signed framework established repaired and • Climate-resilient pilot capital repairs in and technical studies housing units reconstruction selected buildings completed conducted projects in a Number of climate resilient • Interim Guidance documents for LSGAs municipalities that have and EU-Aligned Strengthen institutional formulated and communicated housing and territorial manner, capacity at the national • Trainings provided by the PMT to LSGs and /urban reconstruction accelerating its and local level for other Ministerial departments and plans based on a pathway to housing repair works agencies systematic climate recovery consistent with climate • Selected hromadas have resilient, and EU aligned smart and resilience formulated/updated and adopted climate approaches approach resilient investment and spatial plans Critical Assumptions: • The situation in affected territories remains constant or improves, with subsequently stabilized material and construction market • Commissions at the local levels are finalized and functional • Adequate implementation capacity, data, and expertise available throughout project implementation at both national and local levels • Strong political commitment is maintained, and adequate coordination mechanisms established and functional at both national and local levels E. Rationale for Bank Involvement and Role of Partners 40. There are three main value drivers behind the Bank’s support for the proposed Project. These include: ▪ Providing a technical and fiduciary framework for meeting immediate, urgent needs in the housing sector. The proposed Project provides a framework that enables additional development partners to channel financial resources towards immediate needs in Ukraine’s housing sector. The procurement activities and fiduciary procedures that apply under the proposed Project can provide a basis for partners to channel their funding through joint or parallel financing structures as funding becomes available. In addition, the WB can rely on its own technical expertise, expansive global experience and convening power for efficient and transparent emergency procurement and identification of potential donors. ▪ Complementarity with the Bank’s analytical activities and ongoing TA. The proposed Project draws upon outputs from the Ukraine RDNA, the latest of which was jointly released in March 2023. Results from this analytical work provided the basis for the Project design and support areas across the first three components of the project. Similarly, ongoing WB- supported TA to MCTID and LSGs at the subnational level will inform key procedures and can directly identify a pipeline of investments financed by the Project with a view to increase readiness for future recovery and reconstruction initiatives; ▪ Providing scalability under the Bank’s Environmental and Social Framework. The Project’s activities will be implemented in compliance with the Bank’s Environmental and Social Framework (ESF) which will also serve as the basis for scaling up Project interventions as and when additional funds may become available. F. Lessons Learned and Reflected in the Project Design Page 21 of 61 The World Bank Housing repair for People's Empowerment Project (HOPE) (P181200) 41. The Project incorporates lessons learned from the WB’s previous engagement in war and conflict‐affected situations, as well as global disaster risk management and emergency recovery and reconstruction experience. The proposed Project design draws on findings of Independent Evaluation Group reports as well as the lessons drawn from various engagements in Fragile Conflict and Violent (FCV) countries such as Sri Lanka, Lebanon, Yemen, and Iraq and specifically from emergency and recovery projects.43 The following best practices are highlighted: a. Emergency projects require both flexibility and a phased approach. Well-structured emergency project designs that are simple, guided by a framework, and with clear investment eligibility, sequencing, and selection criteria, provide room for the necessary flexibility for emergency projects. b. The recovery process affords the opportunity to “build back better” and to offset distributional impacts of disasters.44 The Bank’s strategy of building government capacity through TA and by improving the technical standards for infrastructure and housing reconstruction will help improve the preparedness and reduce the vulnerability of communities to future natural disasters and strengthen the country’s resilience to hazards and climate change. Care will also be taken to avoid unsustainable lock-ins such as rehabilitation or reconstruction of damaged infrastructure in locations that are susceptible to other hazards or reinforce unstainable land uses or carbon-intensive buildings. c. Using existing agencies and mechanisms with a proven track record is an effective approach for implementing recovery programs. Given the urgency for expedient and effective implementation, to the extent possible, emergency recovery projects can capitalize on existing institutions and platforms that are both trusted and have the capacity to facilitate the implementation of project activities. d. Leadership from a centralized agency is necessary for facilitating effective and efficient reconstruction planning and works. Global experience suggests the success of large-scale recovery and reconstruction efforts, like those needed in Ukraine, relies on leadership from a legally empowered agency, set up under a central authority to coordinate all stakeholders, mobilize resources and set up monitoring systems. In Ukraine, MCTID has been tasked with driving recovery and reconstruction. To meet its mandate, MCTID would need to optimize processes including coordination and planning, absorption of funds and facilitation of streamlined and agile implementation — all of which are key factors underpinning effective recovery. e. Emphasizing owner-driven repair and reconstruction can improve scalability and efficiency. Successful recovery efforts such as those after earthquakes in Pakistan and in India highlighted the importance of community and owner driven works, alongside contractor driven works. Such an approach was complemented by (i) the participation of grassroots organizations that were responsible for providing guidance and training to affected communities and individuals on ESF compliance; (ii) communicating key procedures and guidelines, and (iii) strong Grievance Redress Service (GRS). III. IMPLEMENTATION ARRANGEMENTS A. Institutional and Implementation Arrangements 42. The Project will be implemented by MCTID, through a PMT, at the central level to oversee execution of all Project activities. The PMT will be primarily staffed with MCTID existing civil servants and supported with consultants hired by the Project with WB projects implementation experience. The composition of the PMT shall be acceptable to the WB. The Project Coordinator will act as a focal point for communication with the WB team on the Project-related issues. The PMT will be strengthened with consultants and technical experts/specialists in supervision, procurement, FM, monitoring and evaluation (M&E), environmental and social specialists, housing and urban development, capacity-building, and architecture and engineering, hired as deemed needed and in consultation with the WB. An indicative composition of the PMT staffing with roles and responsibilities is provided in Annex 5. MCTID will form PMT before the Project effectiveness and engage any additional staff/consultants to PMT no later than forty five days after the Project effectiveness. Civil servants’ salaries are not eligible expenditures for financing under this Project. 43.Projects include, among others, the Sri Lanka Tsunami Emergency Project (P094205), Sri Lanka North-East Housing Reconstruction Project (P083932; P110317), the China Wenchuan Emergency Project (P114107), the Sindh Flood Emergency Rehabilitation Project (P179981), The Pakistan Earthquake Emergency Project (P099110), the Yemen Integrated Urban Services Emergency Project (P164190), the Beirut Housing Rehabilitation and Cultural and Creative Industries Recovery (P176577), the Bosnia and Herzegovina Emergency Housing repair project (P044459) and the Istanbul Seismic Risk Mitigation and Emergency Preparedness Project (P078359). 44 Hallegatte, Stephane, Adrien Vogt-Schilb, Mook Bangalore, and Julie Rozenberg. 2017. Unbreakable: Building the Resilience of the Poor in the Face of Natural Disasters. Climate Change and Development Series. Washington, DC: World Bank. Page 22 of 61 The World Bank Housing repair for People's Empowerment Project (HOPE) (P181200) 43. PMT will be responsible for the overall Project coordination and reporting, including monitoring compliance with ES standards, fiduciary, legal and other covenant, as well as for hiring and managing the TPMA. Responsibilities of PMT would include (i) undertaking procurement for activities intended at the national level; (ii) establishing coordination mechanisms and regularly coordinating with national level Ministries including Ministry of Finance (MoF), MoJ, and state entities such as OschadBank; (iii) ensuring the establishment of environment and social risk management, FM systems and policies to ensure safety of investments; (iv) setting up processes to incorporate flexibilities in ESF and Project FM procedures during emergency situations; (v) ensuring timely flow of funds to the beneficiaries (vi) carrying out projection of disbursements and preparation of financial reporting; (vii) coordinating closely with local entities and LSGs participating in the Project; (viii) supervision, quality control, monitoring, reporting and verification at the national and local levels; (ix) mitigating risks; (x) formulating and updating the POM, as well as other standard operating procedures across Project components; and (xi) managing the TPMA contract and aligning and adjusting aforementioned responsibilities and tasks based on the TPMA findings and results. The structure and processes of monitoring, verification and reporting under the Project would be further elaborated in the POM. 44. Component 1: Eligible expenditures under this component will be compensations that will be paid to beneficiaries’ bank accounts through the DIIA platform and will be verified by MCTID. MCTID (through the PMT) will collect and analyze monthly reports from OschadBank on the number of payments made through eRestore DIIA Platform (see chart 1 below). The reports of verifications will be sent to the WB and will be the basis for the Bank disbursements. The TPMA verification will be conducted at the end of the repairs and will be the basis for verifying appropriate use of funds by the end beneficiaries. 45. Component 2 will follow the WB procurement rules. Existing LPIUs, previously established under WB financed Projects, will, under supervision from PMT, be responsible for procurement, contract management, FM, disbursement, ES risk management, and monitoring and evaluation. Consultants may be engaged to provide technical support as needed to LPIUs. 46. Component 3 will follow WB procurement rules with PMT under MCTID acting as the lead implementing agency. 47. The Project will be implemented based on the POM which will describe all processes related to procurement, FM, disbursement, monitoring and implementation arrangements, and arrangements for the TPMA for component 1. The POM will be finalized and adopted no later than 30 days after the Project effectiveness. Chart 1. DIIA Process Flow of the eRestore Procedure for subcomponent 1.1 B. Results Monitoring and Evaluation Arrangements Page 23 of 61 The World Bank Housing repair for People's Empowerment Project (HOPE) (P181200) 48. The Project’s Monitoring and Evaluation will be carried out by MCTID PMT. The PMT will be responsible for preparing and submitting all monitoring and evaluation reports to the Bank related to the all the subcomponents. The PMT will include dedicated M&E officers who will be responsible for preparing monthly implementation progress reports on all ongoing project-funded activities (monthly reporting is envisaged to showcase the compensations amounts disbursed, given the short timeline of the Project implementation to ensure the close follow up to achieve PDO). The implementation progress reports will provide progress updates on ongoing procurement, activities under implementation, anticipated timelines, disbursement projections for the following month, and any challenges affecting implementation progress. Progress reports will also provide updates on progress towards the achievement of targeted outcomes on a quarterly basis, as captured under the Results Framework of the Project. Further details on M&E arrangements will be detailed in the POM. 49. Component 1 will require additional monitoring. Given that the procedure for implementation of Component 1 was recently designed and adopted, monitoring and facilitation of adaptive learning would be necessary. This will entail regular data collection, monitoring and reporting necessary under this component for all stages of the compensation process, including both applicant and beneficiary profiles, to help document lessons learnt, identify key bottlenecks and associated mitigation measures and to better nuance targeting with respect to beneficiaries in subsequent phases of the project. This monitoring arrangement in addition to the M and E plan, will be outlined in the POM and will be carried out by the PMT. In addition, the WB will also monitor the effectiveness and functioning of established implementation mechanisms, based on results of TPMA reports, and update them as necessary, in consideration of better targeting, efficiency of systems, and the evolving circumstances of Russia’s invasion of Ukraine. 50. The TPMA will independently monitor, verify, and report on the Project’s activities. For component 1 the TPMA, hired by the PMT under MCTID, will conduct the verification of completed repair works and commissions’ processes, including (i) the approval of applications, and (ii) inspection of damage and allocation of compensation. The TPMA, will, as necessary, conduct site visits and sample surveys. Verification reviews will be organized by municipality, and increased verification review will be done for municipalities with over 5 percent of ineligible expenditures. TPMA arrangements, including the threshold trigger for increased verification of 5 percent and clear guidance on categorization of “ineligible expenses”, will be agreed on and explicitly detailed in the POM. The ToRs detailing the TPMA arrangements will be finalized in coordination with the World Bank Task Team and will require a final approval by the WB. For component 1, the TPMA monitoring, verification, and reporting supplement the PMT supervision, the commissions’ verifications, and the WB enhanced supervision support. The TPMA should be hired no later than 3 months after effectiveness. For component 2, a subsequent technical audit or an additional TPMA would be added at the beginning of the implementation of subcomponent 2.2. C. Sustainability 51. Providing a basis for a housing reconstruction and recovery program. The recovery process for the housing sector requires a phased approach. This project will address the first phase, laying the foundation for a comprehensive recovery planning for the sector. The Project will first tackle light repairs, and, in parallel, strengthen damaged assets registration, property tenure registry, and support LSGs to develop recovery and development plans and strategies, and capacitate them to procure capital repairs works. It will also define the policy and institutional framework and mechanisms for housing and urban recovery that is aligned with the EU requirements and sustainability principles. The Project will help define spatial, infrastructural, environmental, and socio-economic priorities at the national level and local level and will support the dissemination of the guiding principles of the new Building code. This is critical for the definition of the framework that will guide the recovery investment priorities. 52. Institutional sustainability. Through the Project, the PMT will be trained in environmental and social safeguards, procurement, and FM best practices as well as the WB’s Anti-corruption guidelines. It is expected that the capacity built at the central PMT level will spillover to other participating agencies, ministries, and LSGs, as PMT undertakes its responsibilities. In addition, implementation arrangements as part of Component 1 will contribute to the digitalization of the database and information systems related to damaged housing, property registration, and payments both at national and local level. Component 2 will support the strengthening of the national and LSGs’ capacity to procure contracts for the technical assessments and repair and construction works that are inclusive, green, and resilient for the damaged MFBs. Page 24 of 61 The World Bank Housing repair for People's Empowerment Project (HOPE) (P181200) This capacity building is critical, given the large number of damaged MFBs in need for restoration that can be carried out as the financing for civil works under Component 2 becomes available. 53. The proposed Project will adopt a “build back better” approach to the rehabilitation and reconstruction of damaged housing. The Project, in addition to ensuring the structural and seismic integrity of the construction, will generate significant energy saving gains through higher EE standards. Increased EE will also support resilience of the occupants during extreme heat and cold events. The Project-financed rehabilitation of housing units will use global good practice and experiences for seismic and climate change resilience, particularly to extreme heat and floods. This will include improved engineering standards, designs, siting, and orientation, with due recognition of affordability and technical viability constraints. IV. PROJECT APPRAISAL SUMMARY A. Technical, Economic and Financial Analysis (if applicable) Full Technical Analysis is available in Annex 2, 3, and 4 54. Categorization of damage: The categorization employed in the Project, although based on the categories used in the RDNA2, also seeks to align with the categories as defined by the GoU in its legal framework (particularly resolutions 144 and 473). Component 1 includes within its remit all partially damaged units that are up to a 40 percent of damage.45 Subcomponent 1.1 considers only housing units which require minor repairs, or units in need of repairs up to UAH 200,000. Subcomponent 1.2 considers units that may require both routine and capital repairs, have had little to no structural damage. For the purposes of this proposed project, Subcomponent 1.1 would therefore cater to “Minor damage” an d subcomponent 1.2 to “Medium damage” (See annex 2, section A for further details). 55. Estimation of threshold values: Within Component 1, eligibility for compensation is determined based on the estimated costs for construction material and repair works prepared by MCTID. The threshold cost amounts have been estimated based on: (i) a scenario analysis that incorporates cost estimates for an array of goods and works detailed in the resolution 381; (ii) estimations based on the RDNA2, as well as; (iii) thresholds used by different humanitarian organizations. Based on the guidance and different cost estimates provided by the World Bank technical team, MCTID in agreement with the WB, determined the eligibility of compensation for Resolution 381, catering to subcomponent 1.1, at UAH 200,000 (approximates US$ 5,400). The threshold value for subcomponent 1.2 is set at UAH 350,000 for units in MFBs, and UAH 500,000 for SHFs, with acknowledgement that the subcomponent may not be able to meet the full set of medium repairs required in SFH that are of above average size and in consideration of maximizing the number of households receiving compensation. (See Annex 2, section B and Annex 4 for further details). 56. MCTID, along with the Project team, have led a projection exercise to assess the disbursements over the first six months of the Project Implementation. The projections consider the demand based on the RDNA housing sector analysis and consider important variables including (i) Households willingness and ability to apply (ii) Eligibility conditions under Resolution 381 and its amendments (iii) Likelihood of applications to be successfully submitted (iv) Application submission trajectory and (v) Capacity of the local commissions and agencies to determine and approve the compensations. Four scenarios have been determined for estimating the demand for component 1 over the life of the Project and the “Conservative” scenario was the basis for determining the overall allocation for component 1. The projections for disbursement by the end of the calendar year consider four cases and are based on the “Conservative” demand projection scenario. It is estimated that by the end of December 2023, led by a gradual increase in the efficiency of the local commissions, US$210 million would be absorbed under component 1. Further details of the projections exercise can be found in Annex 3. B. Fiduciary (i) Financial Management 45Damage defined as minor damages by resolution 144 and as category I by resolution 473. . The resolution 473 is available at https://zakon.rada.gov.ua/laws/show/473-2022-%D0%BF#n9 and resolution 144 is available at https://zakon.rada.gov.ua/laws/show/z0898-22#Text Page 25 of 61 The World Bank Housing repair for People's Empowerment Project (HOPE) (P181200) 57. The assessment of the Project’s FM arrangements was carried out based on the currently agreed implementation arrangements and FM risk was assessed as High. In case of subsequent changes due to the framework nature of the Project or other factors, the FM assessment will be adjusted to cover any such changes. The FM assessment is focused on the assessment of the MCTID capacity as the main project implementing agency as well as FM disbursement arrangements in place for all components of the Project. MCTID was created in 2023 by merging Ministry of Communities and Territories (MinRegion) Development with Ministry of Infrastructure, both of which had prior experience in implementation of WB financed projects, and therefore some of the relevant capacity was retained. The assessment was conducted taking into consideration: (i) WB’s Operational Policy 8.00 on Rapid Response to Crises and Emergencies; and (ii) Guidance Note on FM in Rapid Response to Crises and Emergencies. The Project is appraised for the full US$800 million scope, although the currently available financing in the amount of US$232.5 million. Given that this Project follows a “framework” approach and the large size of the operation, the capacity of the implementing agency will be monitored on an ongoing basis, and existing capacity matched to the changing scope of the operation (if any changes). FM performance and risk ratings will then be updated accordingly. While implementation support will be provided throughout Project implementation, it is anticipated that more intense support will be needed in the first 12 months after Project approval, with monitoring taking place every month. It is envisioned that intensive support (including missions) will be provided remotely initially. The Project, through PMT, will also hire a third-party monitoring agency for supervision and verification of the project activities, and its scope will cover FM and disbursement performance of the Project. 58. FM arrangements were confirmed to be adequate and will be further strengthened. MCTID has retained some capacity from implementation of several ongoing infrastructure projects, where FM performance was recently assessed as “Moderately Satisfactory”. MCTID’s predecessors MinRegion and MinInfra had proven capacity to implement large scale IBRD-financed operations (Urban Infrastructure Project, P132386, District Heating Energy Efficiency Project, P132741, and Road Sector Development Project, P149322). MCTID will establish a new PMT that would be responsible exclusively for implementation of HOPE project, consist of MCTID staff, and be strengthened by external consultants, including at least one specialist on FM/disbursement. Establishment of PMT will be required within 30 days from effectiveness. All details as to the specific internal controls and segregation of tasks between MCTID as other parties involved will be detailed in the POM. Despite some MCTID experience with the earlier projects and its institutional capacity, this project will involve a higher volume of transactions and a larger number of stakeholders. In addition, having central and local level implementation agencies poses some complexities in terms of interinstitutional coordination. These risks will be mitigated by strengthening MCTID capacity for technical and fiduciary oversight. Also, given the Project’s framework structure, the emergency nature of the operation, and the need to work closely with MCTID, additional WB implementation support will be provided through an increased frequency of implementation support and supervision missions (every 2 months virtually). The Bank will also engage services of an independent supervision consultancy firm that will contribute to the Bank’s supervision of the project’s Financial Management and disbursement functions. Such support to MCTID will include guidance to preparation of POM, review, and clearance of the TPMA TORs, assistance in delivery of training to LPIUs, to expedite implementation upon effectiveness. TPMA TORs will be designed to cover review and testing of the processes and procedures related to implementation of both Components 1 and 2. 59. MCTID and its PMT will be responsible for reporting and auditing of the Project, including all its components. The Project will be required to submit quarterly Interim Financial Reports (IFRs) to the WB within 45 days from each calendar quarter, format which will be agreed with the Bank and incorporated in the POMs. Auditing of the Project financial statements will be carried out on an annual basis by an independent private auditor acceptable to the WB and will cover all components and activities of the Project. Component 3 of the Project provides funding for this audit. Project scope will be expanded to increase transaction sampling and indicate specific controls that will need to be tested during the audit. 60. Disbursements: MCTID will oversee Project disbursements for all components, including submission of withdrawal applications and reporting to the WB. MCTID open and maintain Designated Account, denominated in United States Dollars. This Designated Account would be used to process payments under Components 2 and 3 of the Project. In Page 26 of 61 The World Bank Housing repair for People's Empowerment Project (HOPE) (P181200) addition, sub-accounts will be opened for each of the hromadas selected to be financed under Component 2. The minimum application size for direct payment, reimbursement, and special commitment will be specified in the Project’s Disbursement and Financial Information Letter (DFIL). Regular disbursement mechanisms will be available during project implementation, including (i) direct payments; (ii) reimbursement; (iii) advance; and (iv) special commitments. Given the emergency nature of this Project, preference will be given to direct payments to contractors, to both save on the processing time and minimize fiduciary risks, as well as reimbursement of expenditures already incurred. In case of both grant and loan financing, those would be disbursed and accounted for in parallel, using different Designated Accounts, and separate set of accounting records. 61. For Component 1 of the Project on Repair of damaged residential units, disbursements will be processed after Project effectiveness as a reimbursement of relevant eligible expenditures already incurred and recorded by the Government. Such funds will be credited to an account in the State Treasury of Ukraine indicated by the Government. Funds will be credited to the General Fund of the budget and project Designated Account will not be used. 62. For Component 2, Project related payments will be made by MCTID PMT to contractors and consultant firms, either through designated account or as direct payments. Respective contracts with the contractors will be concluded by selected regional authorities (hromadas) and their LPIUs, but payment documents once prepared by LPIUs will be also verified by MCTID prior to their processing. MCTID PMT as well and LPIUs will be strengthened by additional staff to be able to manage this additional workload. In parallel, subventions to the regional authorities will be created and processed in the government system, to reflect in the budget the funds that were spent by MCTID in favor or each participating regional authority. This modality was used by MCTID when working with European Investment Bank (EIB) and can continue to be used for this project. 63. For Component 3, MCTID PMT will be fully in charge of component implementation and processing payments. (ii) Procurement 64. Procurement will be carried out in accordance with the World Bank’s Procurement Regulations for IPF Borrowers for Goods, Works, Non-Consulting and Consulting Services, dated November 2020 (Procurement Regulations).46The Project will be subject to the World Bank’s Anti-Corruption Guidelines (ACG), dated October 15, 2006, revised in January 2011, and as of July 01, 2016 (Guidelines on Preventing and Combatting Fraud and Corruption in Projects financed by IBRD Loans and IDA Credits and Grants). 65. Use of Systematic Tracking of Exchanges in Procurement (STEP): The Project will use STEP to plan, record, and track procurement transactions and monitor milestones for contract implementation. It is mandatory for all procurement transactions for post and prior review packages under the Project to be respectively recorded in or processed through STEP. This tool will be used to manage exchanges such as procurement documents, bid evaluation reports, and no objections between the implementing agencies and the WB. However, in view of the recent countrywide lack of power supply and unstable internet connection, the WB team may agree with PMT on using available secure communication channels; contact persons for such communications; safe custody of documents for audit/review and procurement plan as a control document for procurement activities. These communication protocols will be defined in the POM, but the use of STEP will still be needed to regularize all procurement-related actions once power supply and internet connection is considered adequate. While MCTID has staff that are experienced in using STEP, the WB team will provide additional trainings to MCTID on how to establish its account and use the system. 66. The major planned procurements under this Project will include: (a) civil works for repair of residential units that have been damaged because of Russia’s invasion of Ukraine; (b) consultancy services for preparation of the design 46 Due to Russia’s invasion of Ukraine and emergency nature of operation, procurement simplifications and flexibilities as defined in the Guidance Note on Procurement in Situations of Urgent Need of Assistance or Capacity Constraints dated March 2019 will apply. The specific flexibilities for Ukraine were approved by the Chief Procurement Officer in July 2022. Page 27 of 61 The World Bank Housing repair for People's Empowerment Project (HOPE) (P181200) documents for repair of up to moderately damaged multi-family apartment buildings; (c) expenses related to project management like consultancy services, project audit, office equipment, etc. MCTID will rely on the capacity of existing central PMTs and LPIUs under its coordination and responsibility, that are implementing other WB-financed projects at the central and local levels and will engage these units for the proposed project wherever feasible. Additional consultants for procurement, technical, FM, M&E, ESF, etc. will be selected to strengthen the PMT as needed. 67. A simplified Project Procurement Strategy for Development (PPSD) and initial Procurement Plan sufficient for negotiations is currently being developed by MCTID with support from the WB. Preparation of a detailed PPSD is deferred to the implementation stage. All selection methods and approaches defined in the Procurement Regulations can be used, but priority will be given to streamlined and simple procedures and to those which ensure expedited delivery, such as: Direct Selection, Request for Quotations with increased threshold limit for this method as appropriate, and Framework Agreements—including tapping into existing ones, provided the call-offs under the Project incorporate the requirement for compliance with the WB’s Anti-Corruption Guidelines (ACG) and its prevailing sanctions policies and procedures as set forth in the WBG’s Sanctions Framework. In addition, the WB has approved several flexibilities in procurement to expedite support to the people of Ukraine. Application of chosen flexibilities will be described in the detailed PPSD as acceptable to the WB team. Procurement will follow either an international or national approach with increased thresholds for all market approaches for all types of procurement and with minimal prior reviews whenever possible to be reflected in the PPSD. Tender commissions of the implementing agency shall be limited to five essential people or, alternatively, an Authorized-in-Procurement person may be appointed instead to speed up project procurement-related decisions. 68. The proposed procurement approach prioritizes fast-track emergency procurement for the required goods, works and services. The use of such emergency measures will be carefully monitored and applied as and when needed. Key measures to fast-track procurement including Bid Securing Declaration may be required in lieu of a guarantee; Performance Security may not be required for small contracts; Advance payment may be increased to 40 percent while secured with the advance payment guarantee. The time for submission of bids/proposals can be shortened depending on the value and complexity of the requested scope of bid and capacity of local and international firms to prepare responsive bids in the proposed periods. Standstill period will not apply in any procurement under the Project. Overall, since the situation is very fragile and dynamic, the Bank will be flexible in advice and approval of MCTID requests which may be provided on a case-by-case basis depending on the circumstances and risks and will be described in the detailed PPSD. 69. The use of Ukraine’s national e-procurement system Prozorro or e-catalogues system are approved by the World Bank. Prozorro may be used for procurement of goods and works using Request for Quotation, National Request for Proposal methods. The WB-financed international tender procedures will be piloted in Prozorro after respective changes agreed between the WB and the GoU are made to the system. Irrespective of the use of Prozorro as a tool for procurement or WB standard procedures, it is recommended that all procurement-related notices be published in Prozorro to enhance competition and transparency. The national procurement law in force meets the requirements of the Procurement Regulations for national open competitive procurement, except the necessity to include the WB’s ACG, including the WB’s right to sanction and inspection and audit rights in the sample procurement documents. The WB will not finance any contracts which do not include the World Bank’s fraud and corruption related clauses. 70. Procurement will be carried out both centrally by MCTID with the support of a PMT to be established and adequately staffed and functional before project effectiveness. The capacity assessment of MCTID is being carried out and will complement the procurement arrangements decision. Since this is a framework project, and more financing is expected in the future, the procurement capacity assessment, risks, and implementation arrangements may need updating. Procurement during Russia’s invasion of Ukraine poses new challenges for the implementing agency as the situation remains dynamic. Streamlined procedures for approval of emergency procurement to expedite decision making and approvals by the Borrower shall be agreed and communicated. Procurement of works and goods for the repairs will be agreed with the Bank and may be organized using acceptable national platforms. Page 28 of 61 The World Bank Housing repair for People's Empowerment Project (HOPE) (P181200) 71. The residual risk associated with the Project’s Procurement structure is assessed as “High”. The major risks to procurement are: (i) slow procurement processing and decision-making with potential implementation delays; (ii) poor contract management under ongoing WB-financed projects in MCTID; (iii) increased security risks; (iv) no defined participants (LSGs) under Component 2 at the moment of project preparation; and (v) disruptions in production and supply chains, and (vi) increased risk of fraud and corruption—potential abuse of simplified procurement procedures, false delivery certification, inflated invoices, theft of goods, commodities, and materials procured or delivered for the Project. These risks are elevated by the global nature of the economic crisis, which creates shortages of supplies and necessary services. Risk is exacerbated by the fact that WB supervision in the short and medium-term may need to remain virtual. To deal with potential procurement delays, the WB will support MCTID in applying procedural flexibilities such as extension of bid submission deadlines and advising on the applicability of force majeure. Considering available market response and needs, the WB team will work with MCTID to review and agree the need for feasibility assessment of the procurement approaches and outcomes. To mitigate the identified risks, the following actions are recommended in addition to those mentioned above: (i) maintain accountability for following the expedited approval processes for emergency; (ii) assign staff with responsibility to manage each contract; (iii) involve international engineering and consulting companies to assist the implementing agency with best international practices and provide technical supervision services according to legal requirements of Ukraine; (iv) ensure oversight by the WB teams in close coordination with the Borrower’s oversight agencies; (v) hold regular ACGs awareness raising workshops for all stakeholders; (vi) intensify TPMA; and (vii) use the WB’s system of making direct payment to the contractors or suppliers or consultants on behalf of the client from the proceeds of the financing, in accordance with the terms of the legal agreement, can be adopted. The Project task team will continuously support the Borrower and will monitor the Project to flexibly adjust the mitigation actions to reduce additional or unforeseen risks. Despite the proposed mitigation measures, the overall procurement risk remains High. 72. Disclosure of procurement information. The following information shall be disclosed on the project websites: (a) a Procurement Plan and updates; (b) an invitation for bids for Goods, NCS; (c) request for expression of interest for selection/hiring of consulting services; (d) contract awards of Goods, NCS procured following RFB international and national procedures; (e) a list of contracts/ purchase orders placed following RFQ procedures on a quarterly basis; (f) a list of contracts following direct contracting (DC) on a quarterly basis; (g) a quarterly financial and physical progress report of all contracts; and (h) an action taken report on the complaints received on a quarterly basis. 73. Complaint handling mechanism. To address procurement complaints received by the proposed Project, the implementing agency will implement a complaint handling mechanism. The implementing agency is required to ensure the recording of procurement-related complaints in the STEP system. Both the WB and implementing agency will use STEP to track complaints. The implementation agencies will be responsible for performing the following actions in STEP: (a) promptly record all complaints relating to the procurement process in IPF operations; (b) for procurement process complaints received on contracts subject to the WB’s prior review, submit the implementing agency’s proposed response to each complaint before issuing it to the complainant(s); (c) record the implementing agency’s response to the procurement process complaints upon issuance to the complainant(s); and (d) promptly register requests for debriefings and update STEP with the record of the debriefings to interested parties. The implementing agency will publish on their Prozorro website and in bidding documents emails and telephone hotlines for reporting fraud and corrupt practices. 74. The WB’s oversight of procurement will be done through implementation support. The fraud and corruption risks that are common to the construction sector and emergency procurements in general will be further discussed and elaborated between the WB and MCTID and will result in a specific Action Plan of mitigation measures that will be incorporated in detailed PPSD. The WB’s Integrity Vice Presidency may be consulted in the preparation of the Action Plan. The WB will intensify third-party/technology-based implementation support and post-reviews, including, whenever possible, intensified implementation support missions. The WB’s prior review will be minimized. The details of the implementation support and post-review arrangements will be elaborated in the detailed PPSD when it is finalized. MCTID will also regularly report on the use of approved procurement flexibilities for Ukraine irrespective of value or review type of the package (ex-post and ex-ante). Page 29 of 61 The World Bank Housing repair for People's Empowerment Project (HOPE) (P181200) C. Legal Operational Policies @#&OPS~Doctype~OPS^dynamics@padlegalpolicy#doctemplate Legal Operational Policies Triggered? Projects on International Waterways OP 7.50 No Projects in Disputed Area OP 7.60 No D. Environmental and Social 75. The Project is mainly associated with overall positive social impacts as it involves (i) the repair of damaged buildings affected by Russia’s invasion of Ukraine which will be selected following prioritization procedures; (ii) necessary recovery and reconstruction planning documents to allow for inclusive, climate-resilient, and more sustainable urban environment. The grants for repairs under the proposed Project will greatly reduce the economic burden of the affected population. 76. Environmental risks are “Substantial”. The project is envisaged to have positive environmental and social impacts by restoring climate-resilient and safe-for-living houses, as well as paving the way for build-back-better approach during future restoration and planning of new urban spaces. However, the project activities are expected to have various environmental impacts and risks, especially from Component 1 (mostly small-scale civil works) and Component 2 (medium to large-scale civil works) activities. They include: (i) consumptions of energy, water, and building materials (paints, cement, steel, sand, electrical supplies, etc.) for residential units and buildings rehabilitation; (ii) the generation of solid waste domestic, demolition, and hazardous waste (such as asbestos-containing materials, lead pipes, and various types of heavy metals); (iii) nuisance, related to dust generation, air quality, water quality, vibration, and noise; and (iv) occupational health and safety (OHS) as workforce hazards, including the increased risk of accident from inadequate working conditions at construction sites (risk of falling from height settings, etc.) and from COVID-19 infection, (vi) community health and safety (CHS) hazards resulting from work activities, particularly for residents leaving in or neighboring the proposed rehabilitation housing buildings, (vii) increased traffic. Further, these risks may be exacerbated by potential aerial bombardments and other military actions which add an element of extreme uncertainty and risk of fatality or serious injury that cannot be entirely mitigated by environmental and social management measures. Also, there is a risk that project sites may become a target for aerial bombardment which will endanger nearby communities. Other related risks include possible site contaminations with hazardous compounds (including asbestos contained in demolition waste) and explosive remnants of war (ERW). The project is being prepared rapidly and involves implementing agency (MCTID) with limited experience engaging with or implementing the requirements of WB ESF. At the same time, some LSGs have experience with WB-financed projects, both under safeguard policies and ESF. Furthermore, safety issues undermine the Borrower’s and Bank’s ability to supervise the project activities, thus, the project will have to rely on ES instruments and ES capacity of implementing parties. It will be important that a trained environmental specialist is engaged for the PIU to screen, assess and manage environmental impacts associated with the project activities, as well as provide ESF-related guidance to local implementing parties. Considering all these potential risks and the limited capacity of the implementing agencies, the project's environmental risk rating is rated Substantial. 77. The social risk rating for the project is Substantial. The social risks can be summarized as follows: (i) under Page 30 of 61 The World Bank Housing repair for People's Empowerment Project (HOPE) (P181200) Component 1, there is the risk of perception of exclusion of certain vulnerable groups like refugees, displaced people, poor households, female-headed households, persons with disabilities, and the elderly - this may result in social tensions due to perceptions of elite capture, discrimination or other potential conflict arising from the project benefits; (ii) issues on the assessment of damages, (iii) ownership issues where damages have occurred as not all eligible recipients of the project will have proper digitalized proof ownership of the assets documented in Diya application and will have to obtain in Property Rights Registry and upload those into eRecovery ; (iv) weak communication/outreach and transparency on the eligibility criteria under Components 1 and 2; and (v) an inadequately functioning grievance mechanism to handle complaints and concerns. Social risks and impacts associated with project-related civil works include community health and safety risks and lack of workers’ awareness of OHS requirements, such as the use of Personal Protective Equipment (PPE) and safe workplace practices. These risks are site-specific and temporary, but they may be exacerbated by potential targeted or indiscriminate aerial bombardments and other military actions. Additional threats to workers are posed by ERW. This adds an element of extreme uncertainty and risk of fatality or serious injury to project workers and nearby communities that cannot be entirely mitigated by environmental and social management measures. Preventative measures required to be in place for the project activities under emergency conditions will be described in the project’s Environmental and Social Commitment Plan (ESCP) and Project Operations Manual (POM). These include principles for information disclosure and consultation, grievance redress, monitoring, ESIRT reporting by the designated social focal point, as well as Emergency Preparedness and Response Plans (EPRPs) for dealing with risks and impacts on project beneficiaries due to Russia’s invasion of Ukraine . A draft Stakeholder Engagement Plan (SEP) will be adopted and implemented by MCTID outlining a comprehensive outreach program that will need to be set up to ensure access to the program information among different stakeholders’ groups. PIU shall hire a social specialist providing overall coordination and support on assessment and management of social risks. A Grievance Mechanism (GRM) will be readily accessible to all project-affected parties, at no cost and without retribution, including concerns and grievances filed anonymously, in a manner consistent with ESS10. The grievance mechanism will also be able to receive, register and address concerns and grievances related to SE/SH in a safe and confidential manner, including through the referral of survivors to gender-based violence service providers. 78. To address the potential ES risks associated with project activities, the project will prepare an Environmental and Social Management Framework (ESMF) in compliance with the Bank, and GoU requirements. The ESMF will be prepared no later than 90 days after project Effectiveness and before the start of any civil works. During the preparation of the ESMF, the Borrower will meaningfully consult with relevant stakeholders, including local populations, government agencies, CSOs, NGOs, and vulnerable groups and disclose the cleared instruments in local language. The ESMF will also serve as a guide to prepare subsequent, appropriate instruments for sub-projects to adequately mitigate all site-specific E&S risks and impacts once their location and scope are known - at this stage, it is envisaged that Component 1 will require ESMP Checklist, subcomponent 2.1-2.2 will require standardized ESMP (to be finalized as site- specific Contractor’s ESMP) and subcomponent 2.3. will require a set of ES requirements and build-back-better guidelines defining the environmentally and socially sustainable mode of undertaking civil works and urban planning. 79. The ESMF will include instructions and template for preparation of Emergency Preparedness and Response Plans (EPRPs). EPRPs will include measures to protect the safety and security of project workers and nearby communities from hazards related to Russia’s invasion of Ukraine, as well as information on warning system and designated shelters, and will be prepared as part of subproject ESMPs, as applicable. The ESMF will include Labor Management Procedures which will, inter alia, address the risk of SE/SH incidents and a grievance process for workers with contact details for service providers. 80. The PMT will develop an adequately functioning Project-level grievance mechanism which will need to be included and inclusive to a meaningful stakeholder engagement procedure that will need to be implemented throughout the project life cycle. This GM will also include referral pathways in the event of SE/SH related complaints Page 31 of 61 The World Bank Housing repair for People's Empowerment Project (HOPE) (P181200) and the relevant staff handling the GM will receive the relevant training for handling of SE/SH complaints. 81. In addition to the monitoring, evaluation and verification procedures established by the PIU and MCTID, the Third- Party Monitoring Agency responsible for establishing checks at each stage of the eRestore procedure, including verification of repair works completed will also monitor ES compliance for works performed and beneficiary feedback. E. Gender, Citizen Engagement and Climate Change Gender Considerations 82. Gender gap is identified in areas that are severely impacted by Russia’s invasion of Ukraine. From heightened trafficking and gender-based violence to the loss of crucial livelihoods and rising poverty levels, women and girls of Ukraine are facing severe impacts. Prior to Russia’s invasion of Ukraine, female ratio of the total population is 53.7 percent and women are increasingly becoming heads of households and leaders in their communities’ considering men are being conscripted. This situation on the other hand is also likely adding to the economic burden on female household heads. The large-scale destruction of infrastructure has left houses, buildings, survivor services, healthcare, and other critical forms of support out of reach for many. Research shows that the impacts of Russia’s invasion of Ukraine are particularly disproportionate for internally displaced people and marginalized groups, such as female-headed households. However, the Law on Compensation No 2329-IX dated February 23, 2023, and eRestore Resolution No 381, dated April 21, 2023, do not explicitly include women as a part of the marginalized group requiring building repairs. It is essential to recognize that the right to adequate housing is a fundamental aspect of women's right to equality as enshrined in international human rights law. 83. Under Component 1, the project incorporates various measures to promote access to repaired buildings specifically for female-headed households, aiming to address the gender gap in asset ownership and control. To ensure inclusivity, the project will closely monitor and consult with the GoU to ensure that applications made by female-headed households are not overlooked once verified eligible. Furthermore, the project will ensure that verified female-headed households receive compensation in a fair and non-discriminatory manner, alongside the prioritized group. Climate change mitigation and adaptation 84. Ukraine's population and economy are exposed to earthquakes, wildfires, droughts, extreme heat and cold events, and riverine and urban floods, with floods posing the greatest risk. The most common natural disasters are associated with heavy rainstorms that may cause mudslides and flooding of large areas of houses and industrial buildings. Climate change is expected to increase risks and severity of natural disasters in Ukraine, through more intense temperatures as well as rainfall patterns, prolonged heat waves, and water scarcity.47 The annual average population affected by flooding in Ukraine is about 600,000 and the annual average GDP about US$1 billion. The most devastating flood in Ukraine since it gained its in dependence occurred in 2008, causing nearly 40 fatalities and about US$1 billion in damage.48 85. This Project has been screened by the WB for short- and long-term climate and disaster risks and has been assessed for its contribution to climate change adaptation and mitigation. The proposed Project will contribute to the GoU’s climate change objectives and WB climate targets by financing investments that maximize climate Co-Benefits. All residential buildings repaired will be designed to be resilient to climate-induced hazards (such as flood, wind, extreme heat, cold) by using best practice climate-resilient design and building standards. In addition, the Project will apply the updated building codes for climate-resilient infrastructure and energy/water-efficient buildings. 86. The operation is aligned with the goals of the Paris Agreement on both mitigation and adaptation. Ukraine’s NDC2 commits the target of an economy wide net greenhouse gas (GHG) emission reduction of 65 47 World Bank. Climate Change Knowledge Portal For Development Practitioners and Policy Makers. https://climateknowledgeportal.worldbank.org/country/ukraine/vulnerability 48 GFDRR. 2017. Disaster Risk Profile: Ukraine. https://www.gfdrr.org/en/publication/disaster-risk-profile-ukraine Page 32 of 61 The World Bank Housing repair for People's Empowerment Project (HOPE) (P181200) percent by 2030 compared to the 1990 level. This includes ‘Introducing energy efficiency measures in more sectors of the economy’ and ‘Promoting thermal modernization of buildings’. a. Assessment and reduction of adaptation risks: The main climate and disaster risks likely to affect the project investments are extreme heat, flooding and drought. The project design takes into consideration the extreme heat, precipitation and flooding risks that threaten the outcomes of the project. Specifically, climate change risks and vulnerability to floods and extreme heat will be managed and mitigated through targeted adaptation measures into building design for repair and reconstruction where possible. b. Assessment and reduction of mitigation risks: The project design will follow the level of the national regulations adopting EU Standards for cost-effective improvements in integrating energy-efficiency standards for the building of roofs/doors/windows where possible. The component and activities in the operation, which include enabling activities, facilities and investments to ensure a ‘building-back better’ approach ensure a low-emission pathway in the long-term, as aligned with its NDC. Citizen Engagement 87. Effective and demonstrable Citizen Engagement (CE) will be central to Project implementation. Given the communication and engagement limitations posed by Russia’s invasion of Ukraine, careful planning is needed to reduce any risk of exclusion of vulnerable groups. The Project considers CE as a cross-cutting issue for all components. The SEPs prepared by the PMT will ensure the participation of all stakeholders, to understand the needs of the affected populations, ensure transparency and coordination between government entities, the PMT, and communities, and receive feedback and grievances. The SEP sets out the nature and periodicity of stakeholder consultations, which will be used to measure and improve CE. Informing and receiving feedback from citizens in real time can provide insight into how project beneficiaries, especially women, persons with disabilities, the elderly, and other vulnerable populations, are receiving and perceiving the repair works of residential units and buildings and can enable real-time course correction to ensure works are responding to beneficiaries´ needs. A robust feedback mechanism will promote equal access and feedback from diverse population groups as well as improve data collection and awareness of gender-specific needs. A communications strategy will be embedded as part of the consultative and accountability processes, including the GRMs of the PMT and LPIUs. One beneficiary feedback indicator is included in the Results Framework measuring the percentage of registered grievances related to the delivery of project benefits that are addressed. 88. Additionally, the Project will include mechanisms to promote equal access and feedback from diverse population groups as well as improve data collection and awareness of gender-specific needs. The selected consultative and feedback mechanisms will be detailed in the POMs and E&S documentation. The Project will collect and use gender- disaggregated data to design and enhance social benefits and, where required, mitigate negative gender impacts. Throughout the consultation phase and implementation, the Project will ensure that the needs of women in terms of safety, hygiene, and employment opportunities are addressed. V. GRIEVANCE REDRESS SERVICES 89. Grievance Redress. Communities and individuals who believe that they are adversely affected by a project supported by the World Bank may submit complaints to existing project-level grievance mechanisms or the Bank’s Grievance Redress Service (GRS). The GRS ensures that complaints received are promptly reviewed in order to address project-related concerns. Project affected communities and individuals may submit their complaint to the Bank’s independent Accountability Mechanism (AM). The AM houses the Inspection Panel, which determines whether harm occurred, or could occur, as a result of Bank non-compliance with its policies and procedures, and the Dispute Resolution Service, which provides communities and borrowers with the opportunity to address complaints through Page 33 of 61 The World Bank Housing repair for People's Empowerment Project (HOPE) (P181200) dispute resolution. Complaints may be submitted to the AM at any time after concerns have been brought directly to the attention of Bank Management and after Management has been given an opportunity to respond. For information on how to submit complaints to the Bank’s Grievance Redress Service (GRS), visit http://www.worldbank.org/GRS. For information on how to submit complaints to the Bank’s Accountability Mechanism, visit https://accountability.worldbank.org. VI. KEY RISKS 90. The overall risk to achieving the PDO is “High”. This rating reflects risks due to Russia’s invasion of Ukraine, which is ongoing, and the resulting widespread uncertainty in terms of security, capacity and changing needs that cannot be fully mitigated. Key risks include the impacts on the macro-fiscal environment, ongoing risk of damage to Project assets, and ongoing “high” political and governance risk. The ratings for all risk categories mentioned below are based on the assessments of residual risks after considering proposed mitigation measures in a rapidly evolving context. 91. Political and Governance risk is “High”. At the time of the Project preparation, Russia’s invasion of Ukraine primarily affected areas in and around the eastern and southern parts of Ukraine. However, the continuing unpredictability and the potential impacts on the ability of the GoU to perform core functions create large uncertainties. This could result in delays in the Project implementation. To the extent possible, these risks are being mitigated by (i) aligning the Project objectives with the recovery priorities outlined by the GoU (ii) ensuring component design and activities are reflected in the legal and institutional updates currently underway and by (iii) ensuring effective coordination and engagement with various stakeholders. Nevertheless, residual Political and Governance risks remains High. 92. Macroeconomic risk is “High”. The Project outcomes will depend on sufficient allocation of GoU’s budget to the Project activities. However, revenues remain under stress, while the need for public expenditure (including military) continues to grow. Efforts to contain the high fiscal financing requirements—consisting of the deficit (excluding grants) and debt repayments—are ongoing. Donor support has somewhat alleviated the severe fiscal strain with an estimated US$3 billion to US$4 billion per month required in 2023 to maintain essential services, including government operations, health, education, and social protection. Additionally, Ukraine’s capital absorption capacity, at around US$8 billion in 2023 remains low in comparison to the high and mounting needs —estimated at US$411 billion by February 24, 2023. The GoU’s proposed 2023 budget is austere, with substantial compression of social and other non-military expenditures and there will be difficult tradeoffs in deciding which sectors to prioritize for recovery and reconstruction. As such, the residual macroeconomic risk is assessed as High. 93. Sector strategies and policies risk are “Moderate”. Key sectoral strategies and policies remain outdated. For example, the housing and building codes date back to the Soviet era. Given the current context of the country and the requirement of aligning with the EU standards and building back better, urgent updates to sectoral laws and policies are needed. While the formulation and adoption of new laws and policies would take time, to ensure that Project activities are indeed following climate smart, resilient, and inclusive principles, the Project requires that interim guidance on key policies – especially the building code – be developed, communicated, and disseminated to local governments and implementing agencies. Further WB technical support will be mobilized to ensure the GoU has needed capacity to undertake these reforms in a timely manner. Consequently, residual sector strategies and policies risk is Moderate. 94. Risk associated with the technical design of the Project is “Substantial”. The complexity of design in the proposed project, especially of the first component is likely to hamper speed of disbursement and increase the likelihood of corruption risks. The significant dependance on local commissions and the executive committee of the local councils in each stage of the compensation procedure can result in large bottlenecks, especially in areas that have suffered high damages and where local entities do not have the capacity to address the volume of applications in the stipulated amount of time. The PDO also relies on the efficiency of the transfer of funds as well as the adequate availability and stabilized Page 34 of 61 The World Bank Housing repair for People's Empowerment Project (HOPE) (P181200) pricing of goods and labor in the market. These risks have been addressed through the monitoring, verification, and reporting procedures for Component 1 including the recovery support group that would help ensure smooth implementation and address bottlenecks. Moreover, the PMT plans on operationalizing both selective (sample based) as well as comprehensive monitoring procedures over the entire implementation period with associated regular reporting. A strong grievance redressal mechanism has also been designed particularly for component 1. An additional layer of oversight would be performed by the TPMA across all steps and stages of the compensation procedure. The reimbursement of ineligible expenditures as reported by the TPMA would offer an added incentive for the PMT and lead counterpart to ensure that the implementation of Component 1 progresses as planned. The overall residual risks associated with the technical design are therefore considered Substantial. 95. Institutional Capacity for Implementation and Sustainability risks are “Substantial”. The considerable increase in MCTID’ s workload due to this proposed emergency Project, in addition to the management of their ongoing Bank- financed operations and the potential scaling up with further financing, may result in delays. Given the emergency nature of the Project and the requirements to disburse within a short time frame, the newly established PMT is likely to face capacity challenges. Staff within PMT would need to quickly acquaint themselves with WB requirements on ESF, FM and procurement while completing key tasks such as the elaboration of the POM. To mitigate these risks, the Project will support capacity strengthening of PMT by financing the mobilization of additional technical, procurement, environmental, and social, and financial management consultants. In addition, the Bank will provide hands-on extended implementation support to PMT at their request, continuous technical assistance through the existing Bank-executed Trust Funds from GFDRR, as well as regular training of PMT staff on fiduciary and ESF management during project implementation, especially in its start-up phase. However, the residual institutional capacity risks are still rated as Substantial. 96. Fiduciary risk associated with the Project is “High”. Russia’s invasion of Ukraine presents risks that the MCTID and other agencies involved may not be able to carry out FM and disbursement functions. In addition, the emergency nature of the Project and time pressures to process payments for delivery of urgent interventions also contribute incremental risk. Other factors contributing to the Project’s high fiduciary risk rating are (i) the inability of the WB staff to carry out on- site supervision under Ukraine’s present security situation (ii) complex project design (iii) limited capacity of MCTID and particularly local authorities and (iv) presence of several implementing agencies requiring consolidation of financial information. These risks will be partially mitigated through more enhanced supervision, including more frequent missions as well as by using the services of both the TPMA and the independent supervision consultancy firm hired by the Bank to complement the Bank team’s supervision, including over the Project’s FM and disbursement functions. Other risk mitigation measures would include (i) qualified fiduciary staff at MCTID and LPIUs, (ii) periodic training in FM, procurement, and disbursement for fiduciary staff, (iii) use of the approved POM, and (iv) Expanded scope of the audit. 97. Environmental risks are rated as “Substantial”. The main environmental risks associated with the project may include: (i) consumptions of energy, water, and building materials (paints, cement, steel, sand, electrical supplies, etc.) for residential units and buildings rehabilitation; (ii) the generation of solid waste domestic, demolition, and hazardous waste; (iii) nuisance, related to dust generation, air quality, water quality, vibration, and noise; and (iv) occupational health and safety (OHS) as workforce hazards, including the increased risk of accident from inadequate working conditions at construction sites (risk of falling from height settings, etc.) and from COVID-19 infection, (vi) community health and safety (CHS) hazards resulting from work activities particularly for residents leaving in or neighboring the proposed rehabilitation housing buildings, and (vii) increased traffic. 98. The social risks are rated as “Substantial” and can be summarized as follows: (i) there is the risk of perception of exclusion of certain vulnerable groups like refugees, displaced people, poor households, female-headed households, persons with disabilities, and the elderly - this may result in social tensions due to perceptions of elite capture, discrimination or other potential conflict arising from the Project benefits; (ii) issues on assessment of damages, (iii) ownership issues where damages have occurred; (iv) weak communication and outreach and transparency on the Page 35 of 61 The World Bank Housing repair for People's Empowerment Project (HOPE) (P181200) eligibility criteria under Components 1 and 2; and (v) inadequately functioning grievance mechanism to handle complaints and concerns. Social risks and impacts associated with project-related civil works include community health and safety risks and lack of workers’ awareness on OHS requirements, such as the use of Personal Protective Equipment (PPE) and safe workplace practices. These risks are site-specific and temporary; however, these risks may be exacerbated by potential targeted or indiscriminate aerial bombardments and other military actions. Additional threats to workers are posed by ERW. This adds an element of extreme uncertainty and risk of fatality or serious injury to project workers and nearby communities that cannot be entirely mitigated by environmental and social management measures. 99. Stakeholder risk is “Substantial”. The proposed Project involves multiple stakeholders and effective interinstitutional coordination, and cooperation of several players will be necessary for achieving the PDO. In Component 1 this includes at least three Ministries at the national level, the PMT, local commissions, local councils and state and commercial banks. Components 2 and 3 similarly require the participation of entities at both the local and national levels and across Ministerial agencies. A key reason for the vast array of stakeholders in the project design is because housing recovery is a multi-sectoral effort. To mitigate these risks, PMT established in MCTID will retain the role of the lead implementing agency across all components of the Project to ensure supervision and monitoring across all Project activities and the addressal of grievances and bottlenecks in a timely manner. The Project will also put in place the necessary mechanisms to ensure adequate implementation of the SEPs, including measures such as diversifying means of communication, employing traditional channels of communication and online communications tools. Overall, the residual risk on technical design therefore remains Substantial. Page 36 of 61 The World Bank Ukraine Housing repair for People's Empowerment Project (HOPE) (P181200) VII. RESULTS FRAMEWORK AND MONITORING @#&OPS~Doctype~OPS^dynamics@padannexresultframework#doctemplate PDO Indicators by PDO Outcomes Baseline Period 1 Closing Period Increase households' access to repaired housing units damaged by Russia's invasion of Ukraine Number of people benefitting from repaired residential units (Number) Jul/2023 May/2024 Dec/2025 0 140,000 250,000 ➢of which are female (Percentage) 0 50 Intermediate Indicators by Components Baseline Period 1 Closing Period Repair of residential units with partial damage Number of compensations disbursed to households for emergency repairs (Number) Jul/2023 Mar/2024 Dec/2025 0 50,000 98,000 ➢Share of compensations recieved by female headed households (Percentage) 0 40 40 Share of verified residential units repaired within 12 months of receipt of compensation (Percentage) Jul/2023 Dec/2025 0 90 Design and capital repair of partially damaged Multi-Family Buildings Number of moderately damaged MFBs with completed project design and construction documents, taking into account cliate resilience and energy efficiency (Number) Jul/2023 Dec/2025 0 160 Number of signed construction contracts for repair of MFBs in compliance with climate/disaster resilient and energy efficient design standards (Number) Jul/2023 Dec/2024 Dec/2025 0 80 160 Page 37 of 61 The World Bank Ukraine Housing repair for People's Empowerment Project (HOPE) (P181200) Share of participating LSGswith updated/formulated and adopted climate resilient planning and strategic recovery documents (Percentage) Jul/2023 Dec/2025 0 100 Project management and capacity strengthening Interim guidance on housing recovery programming, HLP, and building codes formulated and communicated to all hromadas (Yes/No) Jul/2023 Dec/2025 No Yes Share of LSGAs approving the damage checklist within the amount of time stipulated in the POM (Percentage) (Percentage) Jul/2023 May/2024 Dec/2025 0 80 90 Percentage of registered grievances related to the delivery of project benefits that are addressed (Percentage) Jul/2023 Dec/2025 0 70 Page 38 of 61 The World Bank Ukraine Housing repair for People's Empowerment Project (HOPE) (P181200) Monitoring & Evaluation Plan: PDO Indicators by PDO Outcomes Number of individuals benefiting from repaired housing units with the Project support (Number) Individuals benefiting from repaired housing units in a climate resilient manner with the Project support (Number) This indicator measures the total number of people who would benefit from residential units that have been repaired Description through financial support received through the project, including support received both under Components 1 and 2 Frequency Quarterly Data source DIIA portal and progress reports managed by the MCTID (PMT) For component 1: Conclusion of repairs of residential units will be recorded in eRestore subservice by the beneficiary. The app also would include information on number of persons in the beneficiary household. Data from the app will be aggregated per quarter in the progress reports with the incorporation of results of the verification of the completion of works carried out by the Commission and thereafter by the recovery support group. Methodology for Data The total number of individuals benefitting from component 1 repair = total number of persons residing in households Collection where repairs have been concluded – ( ( total householeholds where repairs have been recorded as completed X the percentage of verification sample deemed ineligible ) x average household size) For component 2: Progress and conclusion of repairs of each MFB will be reported by the LPIU to the PMT. The MCTID PMT will provide quarterly progress reports that should also include the total housing units in each building along with the household profile and the calculated total number of people benefitting from the repair of MFBs in component 2. Responsibility for Data  MCTID (PMT) Collection of which are female (Percentage) This indicator measures the number of women that would benefit from the repaired units that through financial support Description received through the project, including support received both under Components 1 and 2 Frequency Quarterly Data source DIIA portal and technical and progress reports managed by the MCTID (PMT) Methodology for Data For both component 1 and for component 2 the total beneficiaries would be disaggregated by gender Collection Responsibility for Data MCTID (PMT) Collection Monitoring & Evaluation Plan: Intermediate Results Indicators by Components Repair of residential units with partial damage Number of compensations disbursed to households for emergency repairs (Number) Description This indicator measures the total number of households that received financial support under Components 1 Page 39 of 61 The World Bank Ukraine Housing repair for People's Empowerment Project (HOPE) (P181200) Frequency Monthly Data source DIIA portal and reports on disbursement to beneficiary accounts by the Oschadbank The disbursement to beneficiary accounts would be recorded by Oschaadbak in addition to the final approval of the Methodology for Data compensation that is recorded in the eRestore subservice of the DIIA app. Data from both sources will be aggregated per Collection month in the monthly disbursement progress reports which would state the total number of unique accounts the disbursement was made to as well as the total number of final compensation approvals granted. Responsibility for Data  MCTID (PMT) Collection of which female headed households (Percentage) This indicator measures the percentage of female headed households that received compensation provided under Description Component 1 Frequency Quarterly Data source  DIIA portal and technical and progress reports managed by the MCTID (PMT) The disbursement to beneficiary accounts would be recorded by Oschaadbak in addition to the final approval of the compensation that is recorded in the eRestore subservice of the DIIA app. The DIIA app would also have data on the Methodology for Data household profile including if the household is female headed or not. Data from both sources will be aggregated in the Collection progress reports which would state the total number of final compensation approvals granted and the proportion of which were granted to female headed households Responsibility for Data MCTID (PMT) Collection Share of verified residential units repaired within 12 months of receipt of compensation (Percentage) This indicator measures the verified proportion of households that completed the repairs of the households that Description received compensation Frequency Quarterly Data source Progress reports managed by the MCTID (PMT) and supplemented with progress reports of the TPMA The resolution requires that of those households that have submitted a repair conclusion notice on the eRestore app, 5 percent are subject to verification of the local commission per month. In addition the TPMA would conduct a verification Methodology for Data on a 10 percent for households which received compensation 12 months ago every quarter. The share of verified Collection residential units repaired would be aggregated at the national level and would reflect the average proportion of the sample which was considered as eligible by the commission and by the TPMA. Responsibility for Data MCTID (PMT) Collection Design and capital repair of multi-family apartment buildings Number of signed construction contracts for repair of MFBs in compliance with climate/disaster resilient and energy efficient design standards (Number) Description This indicator measures the number of MFBs for which construction contracts for climate resilient and energy efficient Page 40 of 61 The World Bank Ukraine Housing repair for People's Empowerment Project (HOPE) (P181200) repairs have been procured and signed Frequency Biannual Signed procurement contracts between the participating municipality and contractors that are approved and revied by Data source the LPIUs Methodology for Data LPIUs to provide the PMT with regular progress updated which are to be recorded in the technical and progress reports Collection from the MCTID (PMT) Responsibility for Data MCTID (PMT) Collection Number of moderately damaged MFBs for which project design and documentation has been completed (Number) This indicator measures the number of MFBs for which the package of project design and documentation has been Description completed. Frequency Biannual Documentation of the completion of DPDs provided by participating municipalities that are approved and revied by the Data source LPIUs Methodology for Data LPIUs to provide the PMT with regular progress updated which are to be recorded in the technical and progress reports Collection from the MCTID (PMT) Responsibility for Data MCTID (PMT) Collection Share of participating LSGs with updated/formulated and adopted climate resilient planning and strategic recovery documents (Percentage) This indicator measures the percentage of participating LSGs with updated/formulated and adopted climate resilient planning and strategic recovery documents under component 2 of the project, including but not limited to (i) Description Comprehensive Recovery Programs (CRP), (ii) Comprehensive Plans of Spatial Development (CPSD) and (iii) General Plan of the Settlement (GPS) Frequency Annual Data source Technical and progress reports from the MCTID (PMT) This indicator would calculate share of total participating LSGs where atleast one of the above mentioned documents Methodology for Data was updated/ formulated and adopted aligned with climate resilient and energy efficient principles and reviewed by the Collection World Bank team Responsibility for Data MCTID (PMT) Collection Project management and capacity building Interim guidance on housing recovery programming, HLP, and building codes formulated and communicated to all LSGs (Yes/No) Description This indicator measures if interim guidance documents have been formulated and communicated to all LSGs Frequency Quarterly Data source Progress reports by the MCTID (PMT) Methodology for Data The indicator would consider if interim guidance of atleast 2 of the national level policies currently under draft status ( Page 41 of 61 The World Bank Ukraine Housing repair for People's Empowerment Project (HOPE) (P181200) Collection one of which is necessarily the building code) has been formulated and is subsequently communicated to all LSGs. The communication with a LSGs would be considered as completed following the participation of atleast 2 officials from the LSG in relevant training event organized. Responsibility for Data MCTID (PMT) Collection Share of LSGAs approving the damage checklist within the amount of time stipulated in the POM (Percentage) (Percentage) This indicator measures the share of LSGS that are able to approve the damage checklist (which triggers the payment of Description the compensation) from the time of application approval within the number of days as stipulated in the POM Frequency Quarterly Data source DIIA portal and technical and progress reports managed by the MCTID (PMT) The maximum number of days within which a checklist should be approved from the application approval would be Methodology for Data agreed and stated in the POM ( and would likely be higher than that stated in the resolution to account for bottlenecks Collection and additional procedures). Data would be sourced from the eRestore subservice of the DIIA app and aggregated at the LSG level for all LSGs Responsibility for Data MCTID (PMT) Collection Percentage of registered grievances related to the delivery of project benefits that are addressed (Percentage) Description This indicator measures the share of grievances addressed Frequency Quarterly Data source Technical and progress reports managed by the MCTID (PMT) and the Recovery support group Methodology for Data This indicator would measure the proportion of registered greivances considered closed Collection Responsibility for Data MCTID (PMT) Collection Page 42 of 61 The World Bank Ukraine Housing repair for People's Empowerment Project (HOPE) (P181200) ANNEX 1: Implementation Arrangements and Support Plan COUNTRY: Ukraine Ukraine Housing repair for People's Empowerment Project (HOPE) 1. While implementation support will be provided by the World Bank project team throughout project implementation, it is anticipated that more intense support will be needed in the first 12 months after project approval. The Project will have hands-on implementation support and enhanced supervision. Intensive support from approval through effectiveness and the first stages of implementation will be provided both remotely and in person, with full missions anticipated security situation allowing. The World Bank team will closely monitor implementation progress and achievement of results and review technical, procurement, FM, and ESF aspects of the Project through monthly remote and quarterly in-person missions (security situation permitting). To complement the Bank team’s supervision, an independent supervision consultancy firm will be engaged directly by the Bank (under the Bank’s own budget) to support with on the ground monitoring, oversight and reporting on implementation progress. The findings and recommendations of these missions will be shared and recorded in Aide Memoires. In between the missions, the Bank team will maintain close contact with the PMT at MCTID and will have periodic discussions as needed to provide timely advice on any technical, FM, procurement, and ESF issues. The implementation support provided by the Bank will cover the following areas: (a) Strategic and Just-in-time support. The World Bank project team will facilitate continuous policy dialogue in partnership with MCTID, MoF, MOJ, MoDT and other relevant Project stakeholders, including participating LSGs and LSGs as well as other IFIs supporting housing recovery activities in Ukraine. This dialogue will allow to discuss global best practices, and strategic alignment of the different project activities, especially at the planning level, and will foster synergies between the different project components as well as with other World Bank projects currently supporting the GoU in recovery activities. Support will also be provided on an ongoing basis, as required, to resolve implementation constraints and bottlenecks (if any). (b) Technical Support. The Bank team will provide technical support, and ensure the technical quality of bidding documents, ToRs, evaluation reports, reports delivered by consultants, and other documentation produced under the Project. During construction works, regular site visits will be carried out jointly by consultants on behalf of the World Bank and the relevant implementing agency to ensure that technical contractual obligations are met. (c) Fiduciary Support. Procurement and FM support will be provided to (i) perform desk reviews of project IFRs and audit reports, following up on any issues raised by auditors, as appropriate; (ii) assess the performance of control systems and arrangements; (iii) provide training and guidance on carrying out procurement processes in compliance with the applicable Procurement Regulations and Anticorruption Guidelines and the POM; (iv) review procurement documents of prior review contracts and provide timely feedback to the implementing agencies; (vi) carry out the post review of procurement actions; and (vii) help monitor project progress against the Procurement Plan and identified performance indicators of the contracts. (d) Environmental and Social Framework Support. The World Bank will have dedicated staff to oversee implementation and monitoring of the ESMPs, the SEP, and other relevant plans. (e) Operational Support. The World Bank’s implementation support team will ensure compliance with the agreements in place. 2. Mid-Term Review (MTR). An MTR will be carried out about one year into project implementation to assess overall progress towards meeting the development objectives and to address any changes to project design or implementation required to meet the objectives. Page 43 of 61 The World Bank Ukraine Housing repair for People's Empowerment Project (HOPE) (P181200) 3. Implementation Completion and Results Report (ICR) will be drafted by the Bank and the borrower within six months of project completion to satisfy accountability needs and provide lessons from completed operations. ICRs are tailored to enhance development effectiveness through a continuous process of self-evaluation, lesson learning and application, sharing of knowledge, and being accountable for results. The lessons learned from the ICR are expected to improve the quality and effectiveness of similar WB-financed operations, while borrower/stakeholder participation in the ICR process is expected to inform design, preparation, and implementation of follow-up projects. 4. The following implementation support plan reflects the preliminary estimates of the skill requirements, timing, and resources requirements over the life of the project. Implementation support will be provided by the Bank team, consisting of staff with relevant competencies in operations, procurement, finance, ESF, and technical content on municipal infrastructure, housing, civil engineering, and disaster risk management. Keeping in mind the need to maintain flexibility over project activities, the skill requirements may change over time to ensure that they continue to meet the implementation support needs of the project. Implementation support will be provided in the form of direct support from the Bank team and additional consultants will be mobilized by the Bank to provide further technical assistance as needed. Table A.1.1 Implementation Support Plan Timeline Focus Skills Needed Resource Estimate Creating project implementation momentum through institutional capacity strengthening Support for the formulation of the POM and other operating guidelines and procedures. At minimum, 3 formal Project management, operational, Approval through first implementation support Continued implementation, monitoring, supervision, and technical (including M&E), 12 months missions; just-in-time reporting of component 1 fiduciary, environment, and social technical assistance Financial and data management Preparation of critical procurement packages for component 2 Project management, operational, Mid-term Mid-term review and identification of mid-course technical (including M&E), MTR mission Review adjustments fiduciary, environment, social Continued institutional capacity enhancement and implementation monitoring Project management, operational, Formal implementation 12-24 months technical (incl. M&E), fiduciary, support missions; just in Operational and technical assistance to support environment, and social time technical assistance implementation. Completion phase ICR and final payments Project management; Fiduciary ICR mission Page 44 of 61 The World Bank Ukraine Housing repair for People's Empowerment Project (HOPE) (P181200) Table A.1.2 Indicative Team skills and time allocation Skills Needed Weeks International Trips Project Management 24 4 Technical Specialists 12 4 FM Specialist 4 4 Procurement Specialist 4 0 (Local) Environmental Specialist 4 0 (Local) Social Specialist 4 0 (Local) Technical consultants 12 0 (Local) Administrative Support 6 0 (Local) Page 45 of 61 The World Bank Ukraine Housing repair for People's Empowerment Project (HOPE) (P181200) ANNEX 2: Technical Analysis A. Categorization of Damage 1. For the purposes of the Rapid damage and needs assessment (RDNA), in agreement with MCTID, damage to assets was categorized into three levels. During the first RDNA that covered the period between February 24, 2022, to June 1, 2022, the World Bank’s sectoral team together with MCTID (at the time, the Ministry of Regional Development) agreed to classify damaged housing assets into 3 categories: damage below 10 percent considered as “minor damage”, damage between 10 and 40 percent considered as “medium damage” and damage above 40 percent considered as “destroyed”. Minor and medium damaged assets were considered as repairable. Based on the assigned damage categories, the overall cost of damage and needs to the housing sector was calculated. The Subsequent RDNA update or the RDNA2, published in March 2023, covering the period between February 24, 2022, to February 24, 2023, or one year since Russia’s invasion of Ukraine, retained the same damage categories as in RDNA1 to ensure continuity and comparability across the two time periods. Estimates of damaged housing assets for both RDNAs were based on data provided by MCTID. 2. The categorization of the level of damage was first made official by the GoU in resolution 473 (April 2022) and aligned with the categorization used for the RDNA. The objective of the Resolution on “Procedure for urgent work to eliminate the consequences of the armed aggression of the Russian Federation related to damage to buildings and structures” is to define a mechanism that would allow LSGAs to promptly respond and carry out urgent repair works for damaged assets in a systematic manner. The resolution requires that (i) Local governments make a list of damaged assets based on appeals from homeowners, building managers and others, with details of the object including, address, ownership, object characteristics and other technical details sourced from the respective Bureau of Technical Inventory (ii) An inspection panel or commission formed at the local level examine the damaged object and determine next steps based on the level of damage.49 The resolution explicitly differentiates across 3 categories of damage—category I or minor damage, category II or medium damage and category III significant damage. In the case of category I and category III urgent repair and urgent demolition are respectively recommended. Assets falling under category II are recommended for further technical inspection. While the resolution does not provide detailed guidance to undertake the categorization such that uniformity and objectivity is maximized, it does direct objects which can be restored through current repairs to category I/ minor damage. 3. The categorization under Resolution 473 was subsequently detailed in Order 14450 (August 2022). Resolution 144 regulates the procedure of conducting the technical survey as deemed necessary in resolution 473. The resolution was elaborated with the objective of determining the actual condition of the damaged object, assessing the object's compliance with the basic requirements for buildings and structures defined by legislation, and recommending measures to ensure reliability and safety during its operation. The resolution provides a series of checklists to be filled during the inspection and a rubric to assign the object to a damage category based of the estimated degree of damage (Table A.2.1). The detailed inspection carried out thus allows for the diagnosis of the technical condition of the building structures, engineering systems etc., determination of the volume of damage and the extent of emergency repair works required, understanding the scope of both capital and current works necessary for restoration, and justifying the need for demolition. Recommendations made, outline the rationale for (i) further safe operation of the facility (ii) planning current, capital and emergency works (parts of the object) (iii) reconstruction of the object (separated parts of the object) and (iv) the demotion of the object. 49 Resolution 257 (April 2022) defined the mechanism and procedure for conducting the surveys and inspection of the objects damaged and mandates that a report be completed stating the inspection result and associated recommendations. 50 Order of Minregion that approved the Methodology for conducting the inspection and processing its results Page 46 of 61 The World Bank Ukraine Housing repair for People's Empowerment Project (HOPE) (P181200) Table A.2.1: Categorization of damaged assets and consideration within the proposed project Degree of damage Damage categories based on the GoU’s legal framework – order 144 Consideration within proposed project (Percent) and resolution 473 RDNA Category General characteristics of damage Recommendations for Component 1 Component 2 categorization further operation (Repair in individual (Repair of entire MFB residential units in considered partially SFH and MFB) damaged) Perform restoration works Partial damage: 0-10 Yes through routine repairs Minor Yes (repairs) of the object (parts (Minor damage – of the object) Subcomponent 1.1) Minor damages to bearing and 10-20 enclosing structures that do not I violate requirements for mechanical resistance and stability Perform restoration works Partial damage: through current and / or Yes Medium 21-40 capital repairs (repairs) of Yes (Medium damage – the object (parts of the Subcomponent 1.2) object) Damages to load-bearing and enclosing structures, the degree and Perform restoration works nature of which indicate the need to through capital repairs perform work on partial dismantling 41-80 II (repairs), object (parts of No Yes of parts of the object or its individual the object), reconstruction structures, strengthening the object or of the facility its individual load-bearing and enclosing structures Destroyed The object is unsuitable for use for its intended purpose and has completely lost its economic value. There is Carry out urgent work on 81-100 III damage to the load-bearing and the dismantling No No enclosing structures, the degree and (liquidation) of the facility nature of which indicate the danger of collapse of the object 4. At present, data on the number of units damaged across categories, as defined by the GoU’s legal framework is not available. While Order 144 provided detailed guidance on the categorization of damage, implementation of the resolution and consequently aggregation of the number of damaged objects across damage categories has proven challenging for numerous reasons, for example the lack of uniformity and objectivity in assessing the degree of damage and the complexity of specifications to be detailed within the resolution. Furthermore, it appears that the data gathered does not consistently differentiate between housing objects and housing units— a limitation particularly considering the large number of multi-family apartment buildings that have suffered various degrees of damage. MCTID plans to update this order as it considers it to be outdated and not aligned with the series of laws and resolutions for housing recovery that have come into force since (including the law of compensation). It should be noted that although the data collected based on the resolution’s directives may not be admissible, the categorization and related recommendation for further Page 47 of 61 The World Bank Ukraine Housing repair for People's Empowerment Project (HOPE) (P181200) operation, for both resolution 473 and order 144, are still valid and act as a guiding framework for the triaging of damaged objects. 5. The project relies on the estimation of damaged housing units carried out during the RDNA2 and on the categorization defined by the GoU’s legal framework which broadly align with those of the RDNA2. MCTID has been using the housing sector damage estimates from RDNA2 for its project preparation, projections, and communications. The categorization employed in the project, although based on the categories used in the RDNA2, also seeks to align with the categories as defined by the GoU in its various resolutions (particularly Resolution 144 and 473). Component 1 includes within its remit all partially damaged units (as defined in the RDNA2 and including both minor and medium damages housing units) that are up to a 40 percent damaged (defined as minor damages by Resolution 144 and as category I by resolution 473). 6. Within the category of damaged housing units considered in component 1, eligibility for compensation is determined based on the maximum estimated cost of repairs. Within component 1, subcomponent 1.1 considers only housing units which would require routine repairs, or units having suffered up to 20 percent damage (as defined by resolution 144) while subcomponent 1.2 considers units that although may require both current and capital are assigned to the minor damage category by resolution 144 (between 21-40 percent damaged) and to category 1 by resolution 473. For the purposes of this proposed project, Subcomponent 1.1 would therefore cater to “Minor damage” and subcomponent 1.2 to “Medium damage”. The threshold cost amount has been estimated based on a scenario analysis that incorporates cost estimates of goods and labor for the repair of different types of damaged structures within the unit as detailed in the draft resolution 381. As such, these cut-off costs also act as a proxy for determining the degree of damage to the asset. 7. Component 2 caters to the repair of MFBs that are up to moderately damaged. This would include, as detailed in table A.2.1, the consideration of MFBs that have damages up to an estimated 80 percent and including those with minor damage. Ultimately, the selection of MFBs to be repaired in component 2 would follow a cluster approach and the criteria and methodology as detailed in the POM. B. Estimation of ceiling prices for component 1 8. The ceiling prices in component 1 have been recommended keeping in mind several approaches. Compensation threshold values are largely dependent on country context and vary widely on the predominant type of housing asset and the extent of damage. For the proposed project, compensation for “minor repair” up to UAH 200,000 (approximately, US$ 5400) is under subcomponent 1.1, whereas compensation above UAH 200,000, and with variable ceilings based on the asset types for “medium repair” is provided through subcomponent 1.2; namely a ceiling UAH 350,000 for residential units in MFBs, and a ceiling of UAH 500,000 for SFHs. Given that there is no recognized methodology to determine compensation amounts, these threshold values have been recommended based on the following sources. a. International Humanitarian Organizations: Organizations such as the Shelter Cluster, the United Nation High Commissioner for Refugees (UNHCR), and the Red Cross have been providing compensation for emergency repairs across the globe. As such, the estimation and methodology used by these organizations are considered reliable given their vast presence on the ground and involvement in the procurement of goods and labor for emergency works. According to available information, the maximum compensation limits in the aforementioned institutions for Ukraine in 2022 were as follows: • Compensation for minor repairs ranges from US$ 500 to 2,500 with up to US$ 1,500 for multi-apartment buildings and up to US$ 2,500 for single-family houses. • Compensation for major renovations and repairs for an average or above-average degree of damage ranges from US$ 1,000 to 15,000. It should be noted that the maximum threshold compensation amount of up to Page 48 of 61 The World Bank Ukraine Housing repair for People's Empowerment Project (HOPE) (P181200) US$ 15,000 in this compensation category is only possible for single-family houses. The maximum compensation amount for multi-apartment buildings ranges from US$ 2,500 to 4,000, depending on the institution that provides compensation. b. Estimations from the RDNA2: A common global practice for proposing compensation threshold values is to leverage the damage and needs assessments and apply the replacement costs used to the corresponding degree of damage for different housing asset types. As part of the assessment of needs for the restoration of the housing sector during the RDNA2 exercise, the technical team of the World Bank together with the MCTID agreed on the application of the following compensation amounts for housing restoration • Partial damage (<10%): US$ 5,320 for apartments in MFBs and US$ 6732 for SFHs (including furniture and replaceable goods within the house); • Partial damage (10 – 40%): US$ 20,052 for apartments in MFBs and US$ 25,969 for SFHs (including furniture and replaceable goods) c. Scenario analysis conducted based on the indicative prices of goods and works detailed in the Resolution 381. The technical team conducted a tentative estimate of compensation, for four possible scenarios, based on the checklist provided in Appendix 2 to the order "Providing compensation for restoring individual categories of real estate damaged by hostilities, terrorist acts, sabotage, caused by armed aggression of the Russian Federation using the e-Restoration public service," approved by the Cabinet of Ministers of Ukraine No. 381 on April 21, 2023. The table below (A.2.2) provides the results of the calculations for the 4 scenarios whereas the Annex 4 provides the detailed estimation as well as the long list of goods and works eligible under the resolution 381. The 4 scenarios included capture an incremental level of damage and do not include structural repairs. Table A.2.2: Scenarios for estimating threshold amounts for maximum compensations under subcomponent 1.1 and 1.2 Consideration in Estimated cost Scenario Type of asset Unit characteristics Damage case Proposed Project of repair (US$) A three-room apt; 65 sqm; On the lower floors of a 16- stories panel building; An explosion occurred in the courtyard. Although there constructed in the 1980s; was no direct impact, fragments and a strong shock Four windows of which two wave shattered all the windows, interior doors were are near the balconies. All dislodged from their frames and were damaged. The windows are positioned on most damaged room requires the restoration of Approximately 1 Apt in MFB the two corner facades. windowsills and the window itself. Subcomponent 1.1 2796 US$ Three-room apartment; 63 An explosion occurred in the courtyard of the building. square meters; Lower floor Fragments and a strong shock wave shattered the of a nine-story panel windows of the apt. All three windows facing the building; Constructed in the courtyard of the apartment were shattered, and the 1970s; Located in a interior doors were dislodged from their frames and residential area damaged. There was damage to the parquet and ceiling Three windows face one in some areas. In the kitchen, the wall with ceramic tiles side, while another window was damaged by fragments, and the kitchen faucet was with a balcony faces the damaged. The plumbing in the bathroom was partially Approximately 2 Apt in MFB other affected Subcomponent 1.1 5448 US$ A series of explosions occurred not far from the building with combat operations taking place in the immediate Three-room apt; 75 sqm; vicinity. A direct hit on the apartment's window during On the second floor of a street fighting destroyed part of the brick wall, and recent four story brick there was heavy smoke damage to 30 percent of the building; Floors are made of apartment, but the floors (construction) were not Approximately 3 Apt in MFB wood. affected. Subcomponent 1.2 9581 US$ Page 49 of 61 The World Bank Ukraine Housing repair for People's Empowerment Project (HOPE) (P181200) An explosion damaged two facades. The windows of two facades featuring on the side of the explosion have been shattered, and most of the interior doors in the An individual two-story, rooms mentioned above are not suitable for four-bedroom residential restoration. Part of the roof and the attic floor were Single Family house with an attic totaling damaged by a fallen column/tree due to the explosion. Approximately 4 Home 127 square meters All possible movable engineering equipment looted Subcomponent 1.2 12493 US$ Note: The cases used in the above analysis are hypothetical and have been drawn to reflect typical damage scenarios. It is assumed that the larger the housing asset, the higher the cost of repair. 9. The threshold values determined for component 1 have been defined by the MCTID based on the World Bank team recommendation. Based on the guidance and different cost estimates provided by the technical team, MCTID in agreement with the WB, determined the eligibility of compensation for resolution 381, catering to subcomponent 1.1, at US$5400. The ceiling value for subcomponent 1.2 is UAH350,000for units in MFBs, and UAH 500,000 for SFHs, with acknowledgement that the subcomponent may not be able to meet the full set of medium repairs required in SFH that are of above average size and in consideration of maximizing the number of households receiving compensation. C. The Law on compensation 10. The legal framework for compensation: The Law of Ukraine “On Compensation for Damage and Destruction of Certain Categories of Immovable Property as a Result of Hostilities, Acts of Terrorism, Sabotage Caused by the Armed Aggression of the Russian Federation Against Ukraine” together with the “State Register of Property Damaged and Destroyed as a Result of Hostilities, acts of Terrorism, Sabotage Caused by Armed Aggression of the Russian Federation Against Ukraine" (No 2923-IX, dated February 23, 2023) is the legal framework for compensation aimed at (i) providing compensation to citizens of Ukraine for damage and destruction of certain categories of real estate objects and (ii) gathering information for future claims of the state of Ukraine. Under the umbrella of the compensation framework, the GoU is planning on adopting a series of resolutions that would advance the dual goals of this legal framework for compensation. 11. The law determines the legal and organizational basis for compensating damaged and destroyed housing objects. The law introduces two types of compensation i) financial compensation to perform repairs or purchase a new dwelling, and ii) financing the purchasing of a new housing unit through issuing housing certificates. Stakeholders identified in the law include (i) subjects of compensation, i.e., owners of damaged or destroyed units, HOAs, etc., ii) LSGs, iii) implementation agency(ices), and iv) electronic portal and services DIIA. The law also formally establishes the Register of Damaged Property and regulates its operation. 12. LSGs are envisaged to play a primary role in the implementation of the Law on compensation and its associated resolutions. Their responsibilities would range from damages detection, establishing commissions and organizing their performance to verifying documentation and recovery works completed. Given the capacity constraints at the local levels it is anticipated that strong support from the national level both financial and institutional would be needed to supplement local efforts. The good news is that most processes are expected to be automated and would rely on electronic and digital platforms— however access to electronic services and extent of automated decision making has room for improvement. 13. The Law explicitly prioritizes certain categories of households. The law prioritizes the following groups of individuals (i) Households of veterans (ii) Households of currently conscripted individuals (iii) Large families (iv) Citizens with disabilities and special needs. Further targeting could be included additional targeting measures after the current funds are fully allocated and the system has tested well in terms of efficiency and speed. Page 50 of 61 The World Bank Ukraine Housing repair for People's Empowerment Project (HOPE) (P181200) D. eRestore Process Flow (Resolution 381) for subcomponent 1.1 – DIIA process E. Construction Market in Ukraine: Status 14. The construction materials market in Ukraine has faced a crisis since the beginning of Russia’s invasion of Ukraine. The destruction of construction materials manufacturers, the disruption of supply chain logistics for raw materials and resources, and the loss of control over territories important for manufacturing of certain key products have severely impacted the market, especially considering that much of the critical infrastructure is located in eastern Ukraine. Two of the five largest metallurgical enterprises - Mariupol Metallurgical Combine and Azovstal - have been lost, and the remaining enterprises in Zaporizhzhia, Kamiansk, and Kryvyi Rih cannot work at full capacity. An analysis of the impact of Russia’s invasion of Ukraine, on the construction materials market in Ukraine suggests a significant increase in prices for metal structures and fittings, glass and windows, dry mixtures, and insulating materials. 15. Yet the construction sector shows a slight growth, which may indicate that the bottom of the market has been overcome. According to the information of the State Statistics Service of Ukraine (SSSU)51, the indicator “business confidence in construction” increased by 5.8% in the 1st quarter of 2023 and by 3.6 percent in the 2nd quarter.52 The number of employees in the sector also shows an increase of approximately 30 percent compared to the values of the second quarter of 2022. 51"Expectations of construction enterprises in the 1st and 2nd quarter of 2023 regarding the prospects for the development of their business activity" 52The indicator,is calculated on the basis of prices and the current volume of orders for construction works and expected changes in the number of workers at construction enterprises in the next three months . The methodology is approved by SSSU Order No. 301 dated December 03, 2021. Page 51 of 61 The World Bank Ukraine Housing repair for People's Empowerment Project (HOPE) (P181200) Figure A.2.1. Comparison of construction activity by Oblast in 2021 and 2022 Data source: SSSU 16. Construction activity for completed construction work for 2022 is increasing. The MFB market started to pick up from the middle of 2022 and maintained this dynamic until the end of the year. This trend is not characteristic of newly built single-family houses (SFH), which showed a slight decline compared to the previous year, but kept the trend to the previous year. Furthermore, the construction activity curve does not show a seasonal slowdown in the 4th quarter compared to an annual seasonal trend, which might be related to a mild winter and/or the donors’ funding in emergency housing as the state importance objective. Some oblasts like Poltava and Vinnytsia increased, construction activity whereas in the eastern regions, the magnitude of slowdown was less than expected. Page 52 of 61 The World Bank Ukraine Housing repair for People's Empowerment Project (HOPE) (P181200) ANNEX 3: Demand and Disbursement Projections A. Demand Projection 1. The total applications received for the compensation under component 1 in the proposed Project would depend to a large extent on several factors. The RDNA2 estimates that there are a total of 883,000 housing units that fall under the category of minor and medium damaged. However, the proposed Project is only able to cater to housing units that are eligible per Resolution 381 and its amendment, and the upcoming Resolution for medium damage. In addition, application submission would require applicants to provide all necessary documentation including a property registration number in the eRegistry.53 Finally, the projection took into consideration the proportion of households who would not be willing to or able to apply for compensation during the life of the Project. This could include, for example (i) the large number of people who are currently living outside the country (ii) the share of population who are unable to access the DIIA app or reach local administrative centers to file their applications (iii) persons who may deem it easier to facilitate repairs without engaging with the compensation procedure and (iv) others. 2. In consideration of the extreme uncertainty and the novelty of the process, table A.3.1 below reflects 4 scenarios for overall demand for compensation under component 1 of the proposed Project, with the “Conservative” scenario being gauged as the most appropriate for this Project. Scenario 1, the optimistic scenario expects a high volume of applications as well as households who are successfully able to submit all requisite documentation including large volume of homeowners having successfully registering their properties on the eRegistry. In addition, it also assumes that a greater number of damaged housing units will not be located in occupied territories. Scenario 3 on the other hand presents a more conservative, or realistic outlook. The demand scenario projections rely on the following assumptions. a. Minor damage vs medium damage: It is assumed the volume of applications initiated as well as the volume of eligible applications for minor damage would be higher than that for medium damage given that household with minor damage are more likely to have continued residing within the unit and therefore have not only a higher willingness to undertake repair works but also have greater access to necessary documents and institutions for completing their applications. This assumption is also valid for the proposed project as the procedure and related subcomponent providing compensation for medium repairs would only be effective at a later stage and would not be launched concurrently with procedure determining compensations for minor repairs under resolution 381. 53 According to estimates by MCTID around two-thirds of applicants would likely not have their properties registered in the eRegistry. However, a new service initiated on the DIIA portal and linked to the eRestore procedure allows for applicants to submit an application for the property registration online and without having to provide multiple documents . https://mtu.gov.ua/news/34321.html. Given the ease of registering property on the eRegistry, and the incentive provided by the compensation procedure, it is likely that the number of applicants with an eRegistry number would increase during the lifetime of the project —although not substantially. Page 53 of 61 The World Bank Ukraine Housing repair for People's Empowerment Project (HOPE) (P181200) b. SFH vs MFB: Given the complexities around MFB management and ownership, it is assumed that homeowners of SFH units, particularly for the medium damage category are both more likely to apply. Table A.3.1. Demand projection for the Project Estimated number of Units damaged Minor Damage (up Nonstructural Medium Residential units to 20 percent) Damage MFB 447,048 367,407 SHF 30,579 38,475 Total 477,627 405,882 Max compensation (USD) 5400 9500 (Assumed) Median compensation amount 4000 7500 Estimated demand over the life of the Project Scenario 1: Overly Scenario 2: Cautiously Scenario 3: Conservative Scenario 4: Pessimistic Assumptions for Minor Damage (Subcomponent 1.1) Optimistic Optimistic SHF MFB SHF MFB SHF MFB SHF MFB Not already repaired 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 Eligibility Not located in occupied Coefficient territories 0.75 0.75 0.7 0.7 0.65 0.65 0.6 0.6 Submission of all required a. documents 0.6 0.6 0.5 0.5 0.5 0.5 0.4 0.4 b. Households willing and able to apply 0.8 0.8 0.7 0.7 0.7 0.7 0.6 0.6 c. Total applications submitted 8807 128750 5993 87621 5565 81363 3523 51500 Total applications 137557 93615 86928 55023 Total amount $ 550,226,327 $ 374,459,584 $ 347,712,471 $ 220,090,531 Scenario 2: Cautiously Assumptions for Nonstructural medium damage Scenario 1: Optimistic Scenario 3: Conservative Scenario 4: Pessimistic Optimistic (Subcomponent 1.2) SHF MFB SHF MFB SHF MFB SHF MFB Not already repaired 0.95 0.95 0.95 0.95 0.95 0.95 0.95 0.95 Not located in occupied Eligibility territories 0.75 0.75 0.7 0.7 0.65 0.65 0.6 0.6 Coefficient Submission of all required a. documents 0.5 0.5 0.5 0.5 0.4 0.4 0.3 0.3 b. Households willing and able to apply 0.7 0.5 0.6 0.4 0.5 0.3 0.4 0.3 c. Total applications submitted 9595 65444 7676 48865 4752 27225 2895 20733 Total applications 75039 56541 31977 23628 Total amount $ 562,793,260 $ 424,056,891 $ 239,824,053 $ 177,207,321 Total Compensations 150156 118905 78650 Page 54 of 61 The World Bank Ukraine Housing repair for People's Empowerment Project (HOPE) (P181200) Total estimated financing needed over Project life $ 798,516,474 $ 587,536,524 $ 397,297,852 B. Disbursement Projection 3. It is expected that by end of the calendar year, a total of US$210 million would likely be disbursed under component 1 of the Project. Disbursement projections, based on the conservative demand scenario, reflect possible amounts that could be absorbed by the end of the calendar year, detailed in the four scenarios below. Once applications are submitted, it is envisaged that a certain proportion of submitted applications are likely to not be approved for various reasons, including, applications being stalled as indicative repair costs are higher than those provided for by the procedure, the detection of structural damage to the housing asset and ineligibility of the applicants based on document verifications carried out. As such, it is more likely for an application with medium damage to be stalled than those applying for minor repairs under subcomponent 1.1. The disbursement projections below rely broadly on 2 variables: a. The trajectory of application submission. This variable captures the number of applications submitted each month for both subcomponents. As of the end of May 2023, more than 15 thousand were applications received via DIIA according to the MCTID, 54 with a large volume of applications received within the first few days of the announcement of the compensation program. Since then, the MCTID has reported a sharp decline in applications received. The rate of applications initiated is likely to dwindle over time with an upsurge in applications once the disbursement of compensations begins. b. The efficacy of the local commissions: The share of eligible applicants that would finally receive compensation would be determined to a large extent by the capacity of the local entities carrying out the verifications and approvals as well as the risks related to Russia’s invasion of Ukraine, which is ongoing The projections below assume that LSGAs will increase their efficiency as the compensation program advances given the dedicated support structures for local commissions and authorities to discharge their tasks with integrity and with enhanced identification of bottlenecks and targeted assistance possible only with the data gathered during implementation. Table A.3.2. Assumption and coefficient applied Assumption and coefficients applied month 1 month2 month 3 month 4 month 5 month 6 month 7 month 8 month 9 month 10 month 11 Trajectory of A: Sharp drop in application after 12 and 15 percent application the first month followed by a respectively of total submission steady increase and then a of "demand (coefficient) gradual decline projection scenario 0.4 1 1.2 1.2 1.2 1.1 1.1 1 0.95 0.95 54 However, it is unclear at what stage Page 55 of 61 The World Bank Ukraine Housing repair for People's Empowerment Project (HOPE) (P181200) B: Sharp drop in applications after 3" applications for the first month followed by surge minor and medium and then gradual decline 0.40 1.00 1.25 2.00 0.90 0.90 0.90 0.90 0.90 0.90 A: Commission efficiency Performance increases fast, and they are able of to start processing backlogs 0.70 0.77 0.85 0.93 1.02 1.13 1.24 1.36 1.50 1.65 1.82 commission B :Commission efficiency (coefficient) increases gradually 0.70 0.74 0.77 0.81 0.85 0.89 0.94 0.98 1.03 1.09 1.14 Table A.3.3. Disbursement projection till end of CY23 (US$) Disbursement Projections till end of CY23 (based on the conservative demand projection scenario) Total 31- Month May 30-Jun 31-Jul 31-Aug 30-Sep 31-Oct 30-Nov 31-Dec # Submitted (minor) 10431 4173 4173 5216 10431 9388 8449 7604 application submission and Case 1: Assumption B for commission efficiency # Submitted (medium) 4796 1919 1919 2398 4796 4317 Assumption A for Application dropped (minor) 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9 Application dropped(medium) 0.7 0.7 0.7 0.7 0.7 0.7 Compensation approval (minor) 0.77 0.85 0.93 1.02 1.13 1.24 1.36 Compensation approval (medium) 0.77 0.85 0.93 1.02 1.13 Total compensations disbursed, number (minor) 7229 3181 3499 4811 10584 10478 10373 50155 Total compensations disbursed, number (medium) 0 0 2585 1138 1251 1721 3785 10480 Total amount disbursed (US$) 28915769 12722938 27568075 25215495 48904833 50944948 61365098 $ 255,637,156 # Submitted (minor) 10431 4173 4173 5007 6008 7210 7931 8724 application submission and Case 3: Assumption B Case 2: Assumption A for # Submitted (medium) 4796 1919 1919 2302 2763 3315 commission efficiency Assumption A for Application dropped (minor) 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9 Application dropped(medium) 0.7 0.7 0.7 0.7 0.7 0.7 Compensation approval (minor) 0.77 0.85 0.93 1.02 1.13 1.24 1.36 Compensation approval (medium) 0.77 0.85 0.93 1.02 1.13 Total compensations disbursed, number (minor) 7229 3181 3499 4618 6096 8047 9737 42407 Total compensations disbursed, number (medium) 0 0 2585 1138 1251 1652 2180 8806 Total amount disbursed (US$) 28915769 12722938 27568075 24445757 30954548 40860004 50394460 $ 215,861,552 # Submitted (minor) 10431 4173 4173 5216 10431 9388 8449 7604 Assumption B for submission and # Submitted (medium) 4796 1919 1919 2398 4796 4317 for application commissions efficiency Application dropped (minor) 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9 Application dropped(medium) 0.7 0.7 0.7 0.7 0.7 0.7 Compensation approval (minor) 0.74 0.77 0.81 0.85 0.89 0.94 0.98 Compensation approval (medium) 0.74 0.77 0.81 0.85 0.89 Total compensations disbursed, number (minor) 6900 2898 3043 3994 8387 7926 7490 40639 Page 56 of 61 The World Bank Ukraine Housing repair for People's Empowerment Project (HOPE) (P181200) Total compensations disbursed, number (medium) 0 0 2468 1036 1088 1428 3000 9021 $ Total amount disbursed (US$) 27601416 11592595 25128119 21417520 39263243 39203494 45708686 209,915,07455 # Submitted (minor) 10431 4173 4173 5007 6008 7210 7931 8724 application submission and Case 4 :Assumption A for commission efficiency # Submitted (medium) 4796.5 1919 1919 2302 2763 3315 Assumption B for Application dropped (minor) 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9 Application dropped(medium) 0.7 0.7 0.7 0.7 0.7 0.7 Compensation approval (minor) 0.74 0.77 0.81 0.85 0.89 0.94 0.98 Compensation approval (medium) 0.74 0.77 0.81 0.85 0.89 Total compensations disbursed, number (minor) 6900 2898 3043 3834 4831 6087 7031 34625 Total compensations disbursed, number (medium) 0 0 2468 1036 1088 1371 1728 7692 Total amount disbursed (US$) 27601416 11592595 25128119 20778479 25038173 31548098 37193956 $ 178,880,836 55 This assumes full disbursement of the compensations for minor damages and 70% of the compensations for medium damage. Page 57 of 61 The World Bank Ukraine Housing repair for People's Empowerment Project (HOPE) (P181200) ANNEX 4: Scenario analysis for estimation of ceiling costs in component 1 Average cost Scenario 1 Scenario 2 Scenario 3 Scenario 4 of a unit; List of repair works Unit Resolution 381 (UAH) Price for Price for Price for Price for completed Units complete Units completed Units complete Units work d work work d work Slots Replacement of damaged interior doors blocks 9983.26 19966.52 2 29949.78 3 49916.3 5 39933.04 4 Replacement of metal entrance doors —“— 14414.89 14414.89 1 14414.89 1 14414.89 1 0 0 Replacement of damaged glazing/double- 13206.91 glazed windows (without replacing the sq. meters 4192.67 7127.539 1.7 25156.02 6 29348.69 7 3.15 05 window frame) Replacement of the window unit, taking into 29880.88 sq. meters 5242.26 41938.08 8 15726.78 3 15726.78 3 5.7 account window boards, low tides 2 Restoration of slopes: plastering, sand-free —“— 1342.15 5368.6 4 1342.15 1 4026.45 3 4026.45 3 preparation, painting Floors (construction) Restoration of the integrity of a damaged —“— 1589.42 0 0 0 0 0 0 4768.26 3 concrete floor up to 200 millimeters thick Dismantling monolithic floors up to 200 —“— 1018.92 0 0 0 0 0 0 3056.76 3 millimeters Arrangement of floors on wooden beams —“— 2162.66 0 0 0 0 0 0 0 0 with a shield roll in brick buildings Walls/finishing Dismantling damaged brick walls and cube. 2354.54 0 0 2354.54 1 2354.54 1 partitions meters Page 58 of 61 The World Bank Ukraine Housing repair for People's Empowerment Project (HOPE) (P181200) Masonry of brick walls taking into account —“— 7783.39 0 0 7783.39 1 7783.39 1 openings and arrangement of jumpers Masonry of internal brick reinforced sq. meters 1281.27 0 0 3843.81 3 0 0 partitions Reflecting the damaged plaster of the walls —“— 77.83 0 0 0 389.15 5 Plastering of walls, sand-free preparation for —“— 661.7 0 0 0 0 9925.5 15 9925.5 15 painting/wallpaper Preparation of ceilings for internal equipment with preliminary cleaning of —“— 206.62 0 0 7231.7 35 0 0 paint, soot, smog Restoration of damaged interior wall —“— 252.34 0 0 6308.5 25 20136.732 79.8 3785.1 15 equipment (painting) Restoration of damaged interior wall —“— 97.24 1361.36 14 0 5892.744 60.6 0 0 decoration (wallpaper) Restoration of damaged internal wall —“— 937.81 0 0 11253.72 12 25320.87 27 0 0 equipment (ceramic tiles) Arrangement of wall cladding with 0 0 30844.8 48 30844.8 48 plasterboard plates sq. meters 642.6 (false walls) on a metal frame 0 0 0 0 0 Arrangement of facing slopes with —“— 545.99 0 0 5459.9 10 1637.97 3 5459.9 10 plasterboard sheets with glue Arrangement of partitions on a single-row metal frame with plasterboard sheathing in —“— 1154.84 0 0 0 0 0 0 0 0 one layer with insulation in residential buildings Restoration of damaged internal equipment —“— 1149.86 0 0 22997.2 20 40245.1 35 0 0 of the ceiling (painting) Restoration of damaged internal equipment —“— 294 0 0 0 0 0 0 0 of the ceiling (wallpaper) Restoration of the damaged internal equipment of the ceiling with the —“— 103.44 0 0 0 0 0 0 0 0 arrangement of the frame (plasterboard) Floor Dismantling of cement floor coverings sq. meters 92.3 0 0 0 0 0 0 0 Installation of waterproofing —“— 748.2 0 0 0 0 0 2244.6 3 Page 59 of 61 The World Bank Ukraine Housing repair for People's Empowerment Project (HOPE) (P181200) Installation of cement screeds up to 60 —“— 306.17 0 0 0 0 0 918.51 3 millimeters thick Restoration of a damaged ceramic tile floor —“— 716.63 0 0 0 0 0 1433.26 2 Restoration of a damaged laminate floor —“— 778.03 0 0 0 0 0 34233.32 44 Restoration of a damaged parquet floor —“— 1938.16 0 0 38763.2 20 0 0 0 0 Arrangement of self-leveling screeds from a —“— 217.06 0 0 0 0 0 651.18 3 cement mixture Restoration of a damaged linoleum floor —“— 367.91 0 0 0 3311.19 9 0 0 Replacement of individual boards in the chap. 220.25 0 0 2202.5 10 1762 8 0 0 floors (in case of local damage) meters Restoration of wooden floors sq. meters 1191.18 0 0 0 36926.58 31 0 0 Painting of wooden floors sq. meters 161.22 0 0 0 4997.82 31 0 0 Engineering networks Restoration of a damaged network: water supply or sewerage, or heating, or gas one place 3693.43 7386.86 2 7386.86 2 29547.44 8 14773.72 4 supply, or electricity supply Replacement of a toilet with a directly pieces 3930.43 0 0 0 0 0 0 0 attached cistern Replacement of the washbasin together —“— 5738.7 0 0 5738.7 1 0 0 0 0 with the faucet Replacement of a washbasin without a —“— 4636.69 0 0 0 0 0 0 0 faucet Replacement of bath tubs —“— 6659.54 0 0 0 0 0 0 0 Replacing the shower tray pieces 5339 0 0 0 0 0 0 0 Replacing faucets with a shower —“— 2390.76 0 0 0 0 0 7172.28 3 Replacement of kitchen sinks —“— 2718.96 2718.96 1 2718.96 1 2718.96 1 2718.96 1 Replacement of kitchen faucets —“— 1799.34 1799.34 1 1799.34 1 1799.34 1 1799.34 1 Replacement of boilers —“— 7666.56 0 0 7666.56 1 0 0 0 0 Replacing the gas column —“— 8117.71 0 0 0 0 0 0 0 0 Replacement of a two-circuit gas boiler —“— 44321.5 0 0 0 0 0 88643 2 Total UAH 102082 198885.06 349713.5 310002.8 Total USD 2796. 5448.9 9581 8493 Page 60 of 61 The World Bank Ukraine Housing repair for People's Empowerment Project (HOPE) (P181200) ANNEX 5: Tentative list of the PMT Page 61 of 61