Document of The World Bank FOR OFFICIAL USE ONLY Report No. 15680 IMPLEMENTATION COMPLETION REPORT REPUBLIC OF TUNISIA FOURTH URBAN DEVELOPMENT PROJECT (LOANS 2736-TIN) Miay 31, 1996 Private Sector Development, Finance and Infrastructure Division Maghreb and Iran Department Middle East and North Africa Regional Office 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. CURRENCY EQUIVALENTS Currency Unit: Tunisian Dinar (DT) 1989 US$ = DT 0.95 1990 US$ = DT 0.88 1991 US$ = DT 0.92 1992 US$ = DT 0.88 1993 US$ = DT 1.00 1994 US$ = DT 1.01 1995 US$ = DT 0.95 FISCAL YEAR January I - December 31 GLOSSARY OF ACRONYMS AFH Land Development Agency ARRU Urban Upgrading and Renewal Agency ASM Association for the Safeguard of Medina BCT Central Bank of Tunisia BDET Economic Development Bank BH Bank for Housing (replaced the CNEL after its restructuring) CNEL National Housing and Savings Fund CPSCL Local Communities Support Fund FOPROLOS Workers' Housing Fund MOE Ministry of Equipment MOH Ministry of Housing MOINT Ministry of Interior MOPF Ministry of Planning and Finance MTC Ministry of Transport and Communications ONAS National Sewerage Authority SNIT National Real Estate Company SONEDE National Water Production and Distribution Company SPROLS Social Housing Company STEG Public Electricity and Gas Company FOR OFFICIAL USE ONLY IMPLEMENTATION COMPLETION REPORT REPUBLIC OF TUNISIA FOURTH URBAN DEVELOPEMTN PROJECT (LOAN 2736-TUN) CONTENTS PREFACE EVALUATION SUMMARY ...................................... i-iv PART I: PROJECT IMPLEMENTATION ASSESSMENT. 1 A. INTRODUCTION .1 Housing Sector Situation .1 Bank's Role and Experience in the Sector. 2 B. EVALUATION OF PROJECT OBJECTIVES .3 C. IMPLEMENTATIOIN EXPERIENCE. 3 Upgrading of Substandard Settlements. 4 Sites and Services. 4 Subloans to the Beneficiaries. 5 Technical Assistance. 5 D. FACTORS AFFECTING THE IMPLEMENTATION PROJECT. 5 Delays in Implementation Schedule .5 Project Amendment. 6 Conditions for Provision of Subloans. 6 Financial Arrangements .7 Cost Recovery. 7 E. PROJECT RESULTS. 8 Physical Results. 8 Social and Poverty Alleviation Results. 9 Institutional Results. 9 Project Costs and Disbursement. 9 F. SUSTAINABILITY OF THE PROJECT .10 G. BORROWER'S PERFORMANCE .11 dTs doctument has a restricted disuribution and may be used by recipients only in the performance of their |ofricial duties. Its contents may not otherwise be disclosed wiihout World Bank authorization. CONTENTS (Continued) H. BANK PERFORMANCE ..................................... 11 I. KEY LESSONS LEARNED .12 Project Design .12 Sector Development Objectives .12 Cost Recovery .13 Participation of the Population .14 Quality of the Built Environment .14 PART H: STATISTICAL TABLES ........................... 15 Table 1: Summary of Assessments ............................. 16 Table 2: Related Bank Loans/Credits ........................... 17 Table 3: Project Timetable .................................. 18 Table 4: Loan/Credit Disbursement: Cumulative Estimated and Actual ... .... 19 Table 5: Loan Disbursement : Graph ........................... 20 Table 6: Loan Disbursement : By Category ....................... 21 Table 7: Project Costs .................................... 22 Table 8: Project Financing .................................. 23 Table 9: Status of Legal Covenants .............................. 24 Table 10: Execution Agencies' Audit and Reporting Compliance ............ 27 Table I1: Bank Resources - Staff Imputs ........................... 28 Table 12: Bank Resources - Missions ............................. 29 ANNEX: BORROWER'S REPORT ............................ 30 I. PROJECT OBJECTIVES ........ ......... .................... 32 1.1 General Objectives ....................................... 32 1.2 Specific Objectives ...................................... 32 II. RESULTS ........... . .................................... 33 2.1. Designing and Programming ................................ 34 2.2. Project Implementation .................................... 35 2.3. Project Impact ......................................... 36 2.4. Factors Affecting Project Implementation ........................ 37 III. EXPECTED PROJECT PERFORMANCE .......................... 38 IV. CONCLUSIONS ........................................... 38 IMPLEMENTATION COMPLETION REPORT REPUBLIC OF TUNISIA FOURTH URBAN DEVELOPMENT PROJECT (LOAN 2736-TUN) EVALUATION SUMMARY Background 1. The Fourth Urban Development Project (UDP) falls within the framework of a series of operations that started with the Second UDP with the objective of assisting the Government of Tunisia (GOT) in implementing its new housing sector policy. This policy was aimed, principally, at rationalizing Government intervention in the delivery of housing and urban services. The project was approved by the Board on July 3,1986, and declared effective on April 17, 1987. The total project cost was in the amount of US$ 67.4 million, out of which US$ 30.2 million was financed by the Bank. 2. The persistent housing backlog, despite the substantial efforts of the GOT over more than two decades, had necessitated the adoption of a new approach to the housing situation. Supported by the Bank, this approach was based on the principle of focusing public investments on lower-income groups that had not been efficiently served under the prevailing policy. It consisted mainly of (a) shifting Government intervention from housing construction, which would be left to private initiative, to the provision of infrastructure and serviced land, in order to remove the constraints to efficient urban growth and to reach a larger portion of the population; and (b) strengthening the performance of the existing institutional framework, while at the same time introducing cost recovery measures and reducing subsidies in the delivery of housing services. Achievement of Project Objectives 3. The project was intended to: (a) improve shelter and urban services for low-income households; (b) provide serviced land in urban areas affordable to low-income families; and (c) strengthen the capacity of sector institutions responsible for upgrading, land development and provision of shelter, as well as improve coordination amongst them. These overall objectives were designed to target, in particular, the low-income population and enhance the capacity of the sector. They were in line with both the ongoing Government sector policy aimed at redressing inequities in public housing intervention and rationalizing public investment, and the Bank lending strategy for the sector in Tunisia. These objectives directly translated into project components to become: (a) the upgrading of infrastructure and rehabilitation of existing underserviced settlements,executed by ARRU; (b) the development of serviced lots for low- income households, undertaken by AFH; and (c) technical assistance to improve AFH's capacity. During project execution, an amendment introduced housing construction by real estate developers as part of the land development component (para. 18 and 19). - ii - 4. The project achieved the first objective of providing shelter and urban services to low-income population, both in its physical dimension and as a policy measure. The upgrading of substandard set'iements was replicated through a national project due to the success it achieved in the Fourth UDP. The second objective was, however, partially achieved. The quantitative target set for AFH was not entirely met (para.27), and the development objective consisting of increasing the production of affordable sei-viced lots, in order to reach a lairger portion of the population, was not implemented as initially planned. Housing construction by the developers, which had absorbed a fair portion of the Loan amount, -er!aced the production of serviced lots. As a result, the importance of this policy objective was minimized (para. 44). Although the project institutional objective was focused on improving the capacities of AFH, it favorably contributed to further enhance the capacities of all the agencies involved in its BxeLution, and strengthen the coordination amongst them. Implementation Experience 4. The upgrading program has been satisfactorily implemented by ARRU, which proved its ability to successfully undertake rehabilitation operations despite their complexity. This program, initially comprising eighteen sites, was extended to eight more sites identified by ARRU during project execution. The execution of works on most sites was performed smoothly due to ARRU's efficient site management methods. The land development component was faced with serious difficulties from the very start of project execution. Although a list of sub-projects was established at appraisal, on the basis of which target and cost estimates for this component were determined, AFH was unable to begin the works as scheduled. Problems related to site preparation, such as complicated land issues, potential floodability of some sites, difficult road access, and connection to the networks were experienced. This had, evidently, caused delays and prevented AFH from delivering the number of serviced lots initially targeted. The technical assistance that was destined mainly to strengthen AFH in different capacities related to land development, in the form of training, expert services, and computerization had been reduced to the purchase of computer equipment. The expertise was provided by the bilateral aid. The cost recovery measures were not implemented, namely the establishement of the frontage tax by the municipalities, were not implemented. Factors Affecting the Implementation of the Project 5. Two major factors have impacted the execution of the project and have generated some changes in project design. The slow start of the project, mainly due to the problems encountered by AFH in selecting development sites, resulted in slow disbursement. The Bank and the Borrower reacted to this situation by introducing, on November 1988 and under the site and servicing component, developers to undertake housing construction. A number of housing construction sub-projects by public and private developers were identified by BH from its own mortgage loan portfolio to be financed under the project. Immediately operational, this activity was able to absorb, in about two years, a substantial amount of the Loan. It practically became a component by itself, and a major one. This has, however, substantially changed the original setting of the project and some of its objectives (paras. 19, 29, and 44). IMPLEMENTATION COMPLETION REPORT REPUBLIC OF TUNISIA FOURTH URBAN DEVELOPMENT PROJECT (LOAN 2736-TUN) PREFACE This Implementation Completion Report (ICR) describes the results of the analysis of the Fourth Urban Development Project, from preparation to completion. The Loan, in the amount of US$ 30.2 million equivalent, was approved by the Board on July 3, 1986 and became effective on April 17, 1987. The closing date of the Loan was extended by six months, from December 31, 1994 to June 30, 1995. The last disbursements were made on August 8, 1995 and reached 100 percent of the total Loan amount. This ICR was prepared by Dalila Tadjerouni of the Private Sector Development, Finance, and Infrastructure Division, Country Department of the Middle East and North Africa Region and reviewed by Anir Al-Khafaji, Division Chief, and Rene Costa, Project Advisor in Country Department 1. Preparation of the ICR is based on material in the project files, the supervision reports throughout the life of the project, the progress reports prepared by the Borrower, and interviews with task managers who supervised the project. A mission to Tunisia was conducted to examine in the field the accomplishments of the project and discuss with the agencies involved their own experience wilh the project. Visits to sites representative of each project component were also made. A report on project implementation was received from the Borrower and has been attached as an Annex. - iii - 6. The release of the subloans to the beneficiaries in connection with the upgrading and site servicing components for housing improvement and construction was delayed due to constraining lending conditions, both administratively and financially. In 1989, a ministerial memorandum relieved the administrative constraint by simplifying the whole procedure to one single document and lowering the interest rate applied from 7.5 to 5 percent. The financial constraint concerned the initial contribution that the beneficiaries had to provide. Fixed at 30 percent of the total cost of the lot and 20 percent of the construction cost, this contribution had proved difficult for the targeted low-income families to comply with. It was not, however, until 31 December 1994, the original closing date of the project, that an amendment had brought this downpayment to 20 percent. The extension of the project closing date by six months had made it possible to release the pending credit requests. Project Results 7. The project achieved remarkable physical results, particularly impressive for the upgrading component which was extended to most governorates of the country through 26 rehabilitation sites, and covered as much as 634 hectares. Community facilities were also provided as part of this program, as well as 3,765 housing improvement loans. Not more than 2,262 of the 8,500 planned serviced lots were delivered. In connection with these lots, 1,964 subloans were granted for self-help housing construction. Real estate developers produced 3,196 units, half of which were delivered by the public operator, SNIT. Through its original components; ie; upgrading and land development, the project was successful in reaching the target population. It benefitted directly about 134,000 persons (close enough to the 150,000 planned at apparaisal). This was less evident with the housing construction component both in terms of reaching the same target population and rationalizing the use of public financial resources (para.29). Sustainability 8. The replicability of project activities in their physical dimension is, by all means, possible and has already been proven both by ARRU and AFH, although the latter has still to demonstrate its capacity to develop lots for low-income buyers on a larger scale than it was possible in this project. The housing construction component was brought into the project under special conditions, and it is therefore difficult to assess the likelihood of its replicability (para.34). BH, a viable housing finance institution, has acquired the capacity to provide for long-term financing in similar operations from its own resources. The question remains whether BH would still be interested in continuing such efforts considering the low-profit character of these operations. 9. Most importantly, the poor performance on the cost recovery aspect, would seem to seriously hamper the sustainability of this project. Although it was estimated at appraisal that most project costs would be recovered directly from the beneficiaries, this was not accomplished. Barely 23 percent of the subloan reimbursments were collected by BH, while the municipalities did not implement the frontage tax (taxe des riverains), the instrument through which the infrastructure cost was to be recovered. - iv - Lessons Learned 10. One lesson learned from the Fourth UDP is that the experience gained from previous Bank projects (Second and Third UDPs) was not used in an efficient and timely manner to benefit this project. The weaknesses of the project discussed in this ICR are, for the most part, a repetition of the same weaknesses experienced in the previous projects. The cost recovery issue remains the perfect example. The findings of this ICR suggest that the project only partially achieved its development objectives. If it has successfully contributed to demonstrate, at both the strategic and operational levels, the rational of the rehabilitation policy, it did not, however, pursue with the same rigor the equally important objective of land development for low-income families that was one of the cornerstones of the Government's housing strategy (para. 44). The experience of this project also suggests that active participation of the target population is necessary for the success of urban operations and their sustainability. Moreover, considering the physical dimension of such projects, more attention should be paid to the qualitative aspects of the buildings and spaces created (para. 49). Assessment of Project Outcome 11. In its physical dimension, the outcome of the project was highly satisfactory for the upgrading component, satisfactory for the housing construction by developers, and unsatisfactory for the land development component. The project succeeded in reaching the targeted low-income population through the upgrading and land development components. This was less evident in the case of the housing construction by developers (para.29). Furthermore, the project did not meet one of its development objectives (para. 4, page ii) and failed in the cost recovery, the most important element for sustainability. The project overall outcome was, therefore, mnixed and, on balance, rated "unsatisfactory". IMPLEMENTATION COMPLETION REPORT REPUBLIC OF TUNISIA FOURTH URBAN DEVELOPMENT PROJECT (LOAN 2736-TUN) PART I: PROJECT IMPLEMENTATION ASSESSMENT A. INTRODUCTION 1. The Housing Sector Situation: Since its independence, through rigorous and continuous efforts, Tunisia has succeeded in stimulating remarkable development in almost all sectors of its economy. The housing and urban services sector, one of the most visible areas of government intervention, has experienced an interesting and positive evolution over the last three decades. Despite a sustained urban population growth' of 3.7 percent a year since 1975, Tunisia has been able to considerably improve the general economic conditions of the urban poor, bringing the percentage of the urban population living below the Bank-defined poverty treshold from 20 percent in 1975 to 10 percent only ten years later. The urban population accounted in 1986 for about 54 percent of the total population, estimated at 7.6 million inhabitants. 2. Throughout the successive Development Plans, the housing sector has benefitted from a r-elatively important annual investment allocation, representing up to 15 percent of the national budget, in response to the urban housing needs and the growing number of spontaneous settlements generated by the rapid pace of urbanization. The government's prevailing housing policy from the early 1970s to the mid 1980s, consisted mainly of the provision of public housing, slum clearance, and subsidized housing schemes to rehouse displaced families. Building activity intensified during this period and the housing stock increased at an average annual rate of 4 percent reaching 1.3 million units in 1984. Public operators such as SNIT (Societe Nationale Immobiliere de Tunisie), AFH (Agence Fonciere de I'Habitat), and CNEL (Caisse Nationale d'Epargne pour le Logement), with the respective functions of housing construction, land development, and the mobilization of savings for housing, rapidly became important agencies in the sector. Housing conditions improved during this same period, as well as accessto3 basic utility services. 3. Yet, all of these efforts could not keep up with the rate of urbanization, which quickly outpaced the public sector's ability to provide, in an efficient and timely manner, the needed ' This high rate was a combination of a natural population growth of 2.6 percent a year, a massive influx of immigrant workers, in particular during the period 1975-1980, and an intensive rural-urban migration. 2 The bank-defined poverty threshold was estimated in 1984 at about TD 80 per household per month for an average of household size of 5.3 persons. 3 Rudimentary housing and one-room dwellings decreased respectively, from 13 to 9 percent and from 31 to 21 percent of all housing units. Electricity network coverage, water distribution, and household connections to the sewer systems reached respectively, about 97, 80 and 55 percent of urban population. 2 urban infrastructure to accommodate the constantly rising demand. Instead, low-income settlements continued to spread, in the form of unregulated urban growth patterns, in and around the cities, thus, necessitating the post facto provision of infrastructure, usually at a higher cost. The assessment of the sector in the Sixth Development Plan (1982-86) highlighted the persistent housing backlog. It also revealed that while the private sector provided 58 percent of the financing for 75 percent of the total constructed units, public housing had accounted for no more than 25 percent of the stock built since 1975, despite the substantive investments. 4. Moreover, housing provided by the public operators was not accessible4 to the low to medium-income population, and, actually benefitted, rather, the better off. It was, in fact, the infonnal sector, which contributed more than half of the stock delivered by the private sector, that could accommodate the urban poor. This, however, has taken place in areas mostly lacking adequate utility services and community infrastructure, often relying on self-help, informal savings, low-cost construction methods and also in violation of the urban regulations. This trend was already acknowledged in the Sixth Development Plan, since it was found that housing construction by both the public and formal private sectors would fall well short of the projected demand. 5. Bank's Role and Experience in the Sector: It was at this stage, that the Bank became involved in the specific area of housing in Tunisia. The partnership in the urban sector at large started earlier, in 1966, through six water supply projects, two sanitation projects, and the First Urban Project, which addressed the transport area. At the policy level, a housing sector study, in 1982, was conducted jointly by the Ministry of Housing and the Bank. It raised concern that housing was, already taking a big share of total public investment and that in light of the budgetary constraints, there was a need to focus this investment on the lower-income groups. 6. The Study recommendations, adopted by both the Bank and the Government, suggested a new approach, focusing on four main aspects: (a) the necessity for Government intervention to move away from housing construction, which would be left to private initiative, towards the provision of infrastructure and serviced land in order to remove the constraint to efficient urban growth; (b) the provision of urban services in squatter settlements and other spontaneous growth areas; (c) strengthening the perforrnance of housing sector institutions in policy making, provision of financing, and implementation of upgrading and land development projects; and (d) the introduction of cost recovery measures and non-subsidized prices in the delivery of housing services. 7. These recommendations became the pillars of the Bank's urban lending strategy in Tunisia. The Second Urban Development Project had already laid the foundation by introducing rational policies of upgrading existing squatter settlements instead of demolishing them, developing low-cost site and service programs, and recovering costs from beneficiaries. The Third Urban Development Project, launched in 1983, addressed mainly these issues, and included upgrading in four settlements in Greater Tunis and the North West area of Tunisia; sites and services in three of them; as well as a pilot program of upgrading and rehabilitation and renewal in the Medina of Tunis. 4 See the Project Completion Report of the Third Urban Project by the same author. 3 B. EVALUATION OF PROJECT OBJECTIVES 8. The Fourth Urban Development Project was intended to: (a) improve shelter and urban services for low-income households; (b) provide serviced land in urban areas affordable to low- income families; and (c) strengthen the capacity of sector institutions responsible for upgrading, land development, and provision of shelter, and improve coordination amongst them. These overall objectives were designed to target, in particular, the low-income population and enhance the capacity of the sector. This was in line with the ongoing Government strategy aimed at redressing inequities in public housing intervention by further addressing the segment of the Tunisian population that could neither afford the type of housing produced by the public sector nor obtain access to the existing housing finance channels. 9. Through its first objective, the project addressed the policy of both the Bank and the Government regarding spontaneous and substandard settlements. Tunisia, in the Second and Third Urban Development Projects, had set up, with Bank assistance, a challenging program aimed at upgrading the existing informal and slum settlements. To continue this effort, the Fourth UDP proposed a substantive upgrading program of selected sites. In line with the Bank's urban lending strategy in Tunisia, the project's second objective addressed an important constraint that the sector was facing: the lack of reasonably priced land for housing. To this end, it sought the development of serviced lots with the provision of the needed accompanying infrastructure and community facilities. 10. Although not spelled out in the statement of objectives, the Fourth UDP also addressed the issue of housing finance by providing funding to beneficiaries for both the acquisition of serviced lot and construction. The third objective was meant to support the Tunisian Government's efforts to strengthen the institutional framework of the sector that had just been consolidated under the authority of one single ministry5, the Ministry of Equipment and Housing created in august 1984, just two months before the project was appraised. The project was also designed to improve the technical, organizational, managerial, and operational capacities of the agencies in charge of implementing the project, through the provision of equipment, training, and consultant services. C. IMPLEMENTATION EXPERIENCE 11. The project objectives were directly translated into the three project components: (1) rehabilitation and upgrading infrastructure in existing underserviced settlements by ARRU6; (2) development of serviced lots for low-income households by AFH7; and (3) technical assistance. 5 The building and housing related activities used to be split between various ministries and the responsibilities were rather diluted. 6 ARRU was created in 1981, before the Third UDP in which it played a major role in its implementation and was instrumental in setting up the national policy for upgrading the low-income settlements and the old traditional quarters. 6 Created in 1973, AFH is a public organization, operating under private law, authorized to assemble and service land. 4 During execution, the project was amended to introduce a fourth component (para. 19), consisting of housing construction by real estate developers. Two lines of credit were to finance the first two components with, respectively, about US$ 18.5 million and US$ 11.1 million. The remaining amount of the Loan was to finance the TA component. The Loan structure was reorganized later, after the amendment. 12. Upgrading of Substandard Settlements: This component concerned the improvement of the living conditions of the low-income groups inhabiting substandard and squatter settlements through the provision of the lacking infrastructure networks, consisting mainly of: primary and secondary roads, water distribution, construction of sewer system, stonn water drainage and electricity. It also included land acquisition, compensation or rehousing of households affected by demolition, regularization of ownership and occupancy status, and construction of community facilities where needed. ARRU was the implementing and coordinating agency for this component, acting on behalf of the municipalities. Eighteen sites were originally identified and appraised. Early in the execution of the project (1989), ARRU was able not only to launch the works on all selected sites but also to identify new sites, bringing the total of project intervention to twenty-six operations. 13. The upgrading program has been satisfactorily implemented by ARRU, which proved its ability to successfully undertake upgrading operations despite their complexity, such as land status and ownership, the precarious state of the buildings, the multiplicity of intervening agencies, and the cumbersome financial mechanisms used. Most importantly, the inhabited character of these settlements not only makes it difficult to proceed with the civil works but often implies the need to resettle the occupants. ARRU, in this project, succeeded in avoiding demolitions and therefore rehousing. The restructuring of these settlements enhanced the market value of the buildings and the land, making the inhabitants reluctant to sell any vacant land or infill plots, in view of the potential profit that could be derived from holding onto it. This, coupled with other factors (dispersement of the sites and the vacant land within the sites) had made it not worthwhile for ARRU to develop infill plots as was originally planned. Furthermore, ARRU extended its experience to a specific operation in one of the core areas of Tunis, "la Petite Sicile", a decayed residential quarter that was falling in ruin, endangering the lives of its inhabitants and necessitating immediate attention8. This intervention was successfully designed and implemented as an integrated operation that comprised upgrading, rehabilitation, site servicing, and rehousing of the affected population. It allowed ARRU to capitalize on the different aspects of its experience. This constituted the perfect example of what urban rehabilitation programs in the city centres should be about and how they should be implemented. 14. Sites and Services: AFH was responsible for implementing this component, which consisted of developing and subdividing land into plots for housing, sized between 80 and 160 sqm; providing the needed infrastructure, and developing serviced land for community facilities. Based on eligibility criteria9 agreed with the Bank, AFH selected twenty sites for a 8 Despite the important character of such an operation, the Bank did not, however, finance it under the project, except for the rehousing of 54 families amongst the most endangered of the quarter's population. 9 These criteria include the availability of nearby and existing infrastructure, site accessibility, growth potential, income of beneficiaries, cost, and expected demand for the serviced sites. 5 total estimated cost of US$ 26.8 million. Due to difficulties encountered at the beginning of project execution (para. 17), the accomplishments for this component were much less than expected. Out of the 8,500 lots originally estimated to be delivered, only 2,262 have been completed. This drop in target was due not so much to AFH's incapacity to deliver as to the design and preparation of the project. Indeed, the difficulties that AFH faced were related to the preparation of the sub-projects. A list of sub-projects'° was retained and made part of project appraisal and documentation, but as soon as execution started most of these sites presented access problems, difficulties regarding connection to the networks, potential flooding, and complicated land issues. The technical documentation (feasibility or other type of studies) on which appraisal estimates were made were incomplete but were accepted in view of their completion later. This, evidently, caused delays in the launching of the works and later led to the introduction of a new element in this component (para. 18). 15. Subloans to the Beneficiaries: Long term financing in the total amount of US$ 10,5 million was to be made available by CNEL to the project beneficiaries in connection with the upgrading and site servicing components for land acquisition, construction of housing units and upgrading of existing housing in the squatter settlements. Difficulties in granting the subloans by CNEL/BH11 (paras. 20-22) generated delays in delivering this product to the beneficiaries and caused marketing problems for AFH in selling the developed lots. 16. Technical Assistance: Mainly directed to AFH to train its staff in areas related to land management, accounting, computerization, administration and institutional aspects, the technical assistance component comprised 2.75 years of experts and computer hardware acquisition for both AFH and CPSCL 2, for a total allocation of US$ 0.45 million out of the proceeds of the loan. This component was later reduced to the purchase of computer equipment. The expertise was cancelled due to the fact that bilateral aid agencies were offering the same services. D. FACTORS AFFECTING THE IMPLEMENTATION OF THE PROJECT 17. Delays in Implementation Schedule: The project benefitted from a long preparation and took more than four years to materialize. It was approved in July 1986 and the Loan became effective only on April 17, 1987 (Table 3). The project activities did not start immediately, however. The most significant delays encountered concerned the sites and services component executed by AFH. The latter, for more than a year after the project became effective, could not identify enough sites to produce the number of lots initially estimated during appraisal. The housing credit component also experienced delays, since it was directly tied to the sites and servicing component13. This early slippage was not completely recovered during the 10 Both the SAR and the Loan document provided a list of sites which formed the basis for estimating the number of lots to be delivered as well as all the related costs. " CNEL is an autonomous, public savings and loan agency, created in 1974 with the role of mobilizing domestic savings for housing construction. Since then it has become the main finance institution, accounting for about 30% of institutionally-financed housing investment and has evolved into a housing bank, BH. 12 Established in 1975, it is a financial institution empowered to borrow from local and international sources and lend to the local public administrative bodies for the financing of public facilities. 1 The housing construction loan is issued when the lot is made available to the beneficiary by AFH. 6 implementation period, and had caused the closing date, originally set for December 31, 1994 to be extended to June 30, 1995, while most other activities of the project were completed long ago. 18. Project Amendment: The slow start in project activities resulted in a slow disbursement, which extended over a period of more than a year, after the Loan became effective. This had caused concern for both the Bank and the Borrower due to the similar situation experienced with the Third UDP and the risk that this would impact the negotiations of the Fifth UDP, then under preparation. It was in this context, that the idea of financing housing construction undertaken by public and private developers was introduced and accepted by both parties. It materialized in an amendment of the Loan in July 1988 and which became effective in November 1988. BH, quickly identified a number of housing operations, already awaiting financing and amongst which many were already under construction. 19. Although this new "component", in view of the already identified housing construction operations, was expected to absorb a fair amount of the Loan, this was not reflected in the amendment. It was, instead, brought under the category of the Loan that was destined to finance the subloans tied to the site servicing component. This category, which had, originally, been allocated the amount of US$ 2,9 million, remained unchanged in the amendment. The housing developers, under this amendment, were to produce low-cost housing on lots developed either by themselves or by AFH. This change had affected AFH since it, automatically, minmized its role in the project. It was not clear, however, whether AFH was still expected to produce the same number of plots as originally expected'4. This new element, as it was sought, had positively impacted the project in terms of consumption of the Loan since only few months after the amendment, disbursement increased by over US$ 2 million and the substantial amount of US$ 11 million was committed. This was done, however, at the expense of the other components: it had substantially reduced the part of the Loan allocated to AFH for site servicing, and the amount of the Loan for upgrading decreased despite the satisfactory level of commitment shown for this component. 20. Conditions for Provision of Subloans: Through a line of credit managed by BH, financing was made available under this project for land purchase, housing construction and/or improvement, and housing acquisition from real estate developers. In the first years of project execution, this component was faced with some difficulties due to the lending conditions, which caused significant delays in the release of these subloans to beneficiaries many of whom were in need of immediate assistance. 21. In connection with the upgrading component, subloans were granted for the improvement or extension of houses located in the areas undergoing upgrading. The procedure for acquiring these subloans was somewhat cumbersome in terms of the administrative and legal documentation that the beneficiaries had to produce for guarantee purposes; and the lending conditions constraining. Considering the complexity of the legal situation concerning land '4The amendment did not specify a reduction in the expected number of lots to be produced by AFH. The initial figure of 8500 lots was reconducted in the amendment. However, the dollar amount allocated to Category 1B representing the civil works of the site servicing component was reduced in december 1988 (BTO Report) from 7,6 to 1,6 million; then went up to 3.5 in 1989. 7 issues that usually characterize the type of settlement involved in the project as well as the social background of the population concerned, it has proven rather difficult for the beneficiaries to comply with these conditions. As a result, more than three years after the project was launched and despite the fact that the civil works were in progress in most of ARRU's upgrading sites, very few loans were granted. The Minister of Equipment, therefore, issued a memorandum in october 1989, which simplified the whole procedure and also authorized a decrease in the interest rate applied, from 7,5 to 5 percent. The positive effects of this policy, coupled with the decentalization of the subloans management to several towns of the country, made them more accessible and speeded up their approval. 22. Similarly, the slow commercialization of the serviced lots developed by AFH was partly15 due to the initial contribution that the beneficiaries had to provide in order to get the subloan for plot acquisition. This contribution fixed at 30 percent16 of the total cost of the plot and 20 percent of the cost of the construction, represented a sizable amount of money for most of the targeted low-income households. It was only at the end of the implementation period that remedial action was taken. An amendment to the loan was made, in December 1994, to reduce the beneficiary down payment to 20 percent. With the extension of the closing date by another six-month period, this had helped process the awaiting requests. 23. Financial Arrangements: As in the previous project, the funds for financing the upgrading component were channelled through CPSCL. To obtain a loan, the municipalities were to enter into agreement with CPSCL for each subproject to define the cost and conditions for lending of each sub-project. Although this was a safe way to administer public investment, this proved a lengthy process and caused delays in payments to contractors and the executing agency, ARRU, which, often had to bear the cost of such delays. Indeed, pursuing good management practice in its development sites, ARRU, had often remedied to the situation by making advance payments to the contractors to avoid delays that could increase costs. Reimbursement by the municipalities in such cases, took a long time due to the way the funds were channelled. Another important factor related to the arrangements for lending to the municipalities. The authorization"7 for the municipality to borrow from the Government for the upgrading subprojects was tied to its capacity of debt reimbursement. Thus, the budgetary allowance for these subprojects was set within the framework of the municipality's residual financing capacity. This had impacted the upgrading program for certain municipalities, which had to be either reduced or only partially implemented. 24. Cost Recovery: It was estimated that 80 percent of total project costs would be recovered directly from the beneficiaries. This would include the recovery of on-site infrastructure costs; the costs of land acquisition and land servicing; and the subloans for housing purchase, construction and improvement. The remaining 20 percent, funded through 5 It was also due to the site locations and the lack of market studies prior to final site selection. 16 The SAR suggests that this 30% contribution should be made in three payments. One third would be paid at the time of reservation of the plot and two thirds in installments during site servicing works. In practice, this contribution was requested from the beneficiaries as one single payment. 17 A decree must be promulgated authorizing the municipality to borrow from CPSCL for each subproject. 8 budgetary allocations 8 would be recovered under the central taxation system. Repayment of subloans made to the beneficiaries was the responsibility of BH, and the recovery of infrastructure cost was the responsibility of the municipalities through the frontage tax. Yet, at the end of the implementation period, June 1995, very little was recovered. 25. The Housing Bank, BH, collected no more than 23 percent of the subloans repayments. A sizable part of these repayments was attributed to the beneficiaries who had purchased a housing unit from the developers. This category of beneficiaries, represented a relatively higher income level than the rest of the project population, due to the higher cost of the unit produced by the developers (para.29). The frontage tax for the recovery of the secondary infrastructure was not established and therefore no repayment was made. The only portion of the infrastructure works that was recovered directly was the one tied to the cost of the utility connections. The utility companies ONAS, SONEDE and STEG, having the possibility of recovering the costs incurred through their tariffs. E. PROJECT RESULTS 26. Physical Results: The project has attained its physical objectives for almost all its components. In the case of the upgrading program, the total number of operations was brought to 26 in 25 municipalities, thus extending the intervention of the project to most governorates of the country in a comprehensive national program. This extension of the program was made possible due to the efficiency of ARRU's implementation methods. The quantitative results of this component are, therefore, impressive since ARRU was able to produce more with actually less dollars than initially estimated. The total recipient area of the infrastructure works undertaken under this component alone has reached 634 hectares. In addition to the improvement/extension of the infrastructure networks, the project has provided the concerned population with community facilities (8 health centers, 10 schools, and a market) and with 3,765 loans for the improvement of their dwellings. Furthermore, savings made by ARRU have allowed the municipalities and their communities to benefit further by acquiring equipments for solid waste collection. The whole upgrading component did cost 23,100 million TD, ie about US$ 25.5 million (exclusive of management fees) as against US$ 40 million initially estimated. 27. The project target figure of 8500 serviced lots was not met, owing to the difficulties encountered by AFH at the beginning of project execution. A total of thirteen sites were developed by AFH in different areas of the country, servicing 2,262 lots. Most of these lots have been allocated to their beneficiaries and BH has granted 1,964 subloans for their purchase. Housing construction by the real estate developers has achieved substantial results rapidly. Eighteen sub-projects for a total of 3,196 social housing units, scattered throughout the country, were financed from the proceeds of the Loan. Half of these sub-projects were entrusted to the public operator SNIT, which delivered 1570 units. The rest was built by the private sector. This component has significantly19 enhanced the disbursement of the Loan. The introduction of the developers was also beneficial to the project and the sector as whole since it "8This part of the project cost covered construction and land for community facilities, off-site infrastructure. '9 It used existing sub-projects from BH mortgage loan portfolio. 9 succeeded, despite the low-profit attached with such operations, in attracting some private entrepreneurs into an area traditionally dominated by the public sector. 28. Social and Poverty Alleviation Results: The project benefitted directly some 134,000 persons, most of whom, through the upgrading program. Indeed, the benefits of this program alone were extended directly to more than 107,000 inhabitants by improving their immediate living environment, providing them with decent housing conditions at affordable cost. Often those benefits were extended to communities at large, where the upgrading sites are located, through the provision of off-site infrastructure, community facilities, and enhanced overall environment. The site and servicing component could not reach the 60,000 persons originally estimated. Instead, about 2,000 families acquired a lot and a loan to build a house and nearly 3,200 others purchased a housing unit from the developers. 29. The project was successful in targeting the low-income population in both the upgrading and site servicing components. This was, however, less evident for the Developers component. The cost per housing unit delivered by the developers exceeded largely 20 the cost of a unit produced through the site servicing process. It was, therefore, not accessible to the same income level population. Furthermore, the beneficiaries of this component, obtained financing to purchase their house with better lending conditions (FOPROLOS) than the remaining low- income population of the project. As a result, this has not proved to be the best use of Government financial resources. 30. Institutional Results: The project institutional goals focused on the strengthening of executing agencies' capacities, and in particular, AFH. In this context, it has favorably impacted the institutions and agencies involved in its execution. ARRU has further consolidated the remarkable expenence it gained with the previous project and has shown its capacity to handle complex projects at the technical, financial, organizational, and managerial levels. AFH's restructuring, under its current management team, resulted in the creation of a specialized department for the sites and services for the low-income population. The computerization of its various services has helped to greatly enhance the quality of its work, both with the client and on the grounds. BH, which during the implementation period had been restructured into a housing bank,2' evolved into a viable housing finance institution. The project has also helped strengthen the relationships and the coordination among all these agencies. 31. Project Costs and Disbursement: The project was estimated to cost a total of US$ 67.4 million, out of which US$30.2 million was to be financed by the Bank. The counterpart financing was estimated to break down into: US$ 24.2 million from the Government, US$ 6 million from BH, and US$ 7 millions from AFH. The changes that have occurred during implementation caused the allocations of the amount of the Loan to change along with the respective counterpart funds. Specifically, the amount allocated to AFH for site servicing was reduced from US$ 7.6 to US$ 3.5 million due to the introduction of the Developers. AFH's 20 In fact, this component alone did cost, out of the proceeds of the Loan,(Iet alone counterpart financing) almost as much as the cost of the two other components combined. 21 That was done in the context of the 5th Urban project which one of its major objective was to turn CNEL from a saving oriented institution into a housing bank. 10 own contribution was about US$ 3 million. ARRU also had its share of the Loan proceeds reduced, from US$14.55 million to US$ 11.60 million. The reallocation benefitted the category of the Loan under which the developers were brought into the project. Supervision documents show that the first reallocation, shortly after the amendment, brought this category (category 4 in Schedule 1 of the Loan document) from US$ 2.9 million to US$ 11.0 million, and then to US$13.0 million. The last change brought it down to US$ 12.5 million (1989). At the closing of the project, this category disbursed US$ 14.2 million.. As a whole, the project did disburse the full amount of the Loan. F. SUSTAINABILITY OF THE PROJECT 32. Despite the positive physical results achieved, the overall sustainability of the Fourth UDP is rather mixed. If ARRU, through the upgrading program, has largely proven its ability to replicate such operations this is less true for other components and aspects of the project. One area that has made the sustainability of the project questionable is the cost recovery, in which the project has poorly performed. 33. ARRU, has immediately been able to demonstrate its capacity to apply the experience gained into other operations. Indeed, In 1992, and in parallel to its activities in the project, ARRU became involved in the PNRQP ( Progranme National de Rehabilitation des Quartiers Populaires) and led the implementation of this sizable rehabilitation program at the national level. This program, covering a large number of substandard settlements throughout the country, was conducted under the authority of the Ministry of Interior, and was entirely financed by the Government. 34. In regard to the housing construction component, and despite its rapid execution, the likelihood of its replicability is rather difficult to assess. It should be noted, though, that: first, the cost recovery rate in this component was as low as in the other components; and second, the real estate developers were not brought into the project within a prepared framework2 that would have ensured continuity and sustainability, but rather as a way to compensate for AFH lagging behind the expected results. Furthermore, this component had benefitted from special conditions that are unlikely to be replicated under normal circumstances. 35. The Housing Bank, has now evolved into a viable housing finance institution. It has developed the capacities to replicate the role it has played in the Fourth UDP in providing long- term housing finance to the low-income groups, even from its own resources. However, the question remains whether BH would still be interested in continuing this effort in view of the low-profit character of these operations, and the lack of incentives23. It must be noted that BH has not been effective in recycling the funds generated from the project into similar operations. 22This was not done in the context of a preconceived and organized program meant to promote the participation of the private developers into this area of low-cost housing.ln fact, half of sub-projects were from the public operator SNIT. 23 BH was not adequately remunerated for its management of such operations (3 percent for its management fees and I percent for loan recovery). This certainly impacted the rate of cost recovery. I1 The slow rate of cost recovery constituting, certainly, an impediment to this and to the sustainability of the project, as a whole. G. BORROWER 'S PERFORMANCE 36. ARRU's performance was more than satisfactory. It showed throughout the different phases of the project cycle the same commitment to rigorously undertake the various tasks under its responsibility in an efficient and timely manner. During the course of this project, ARRU further enhanced the technical and managerial skills of its staff as well as the quality of the services rendered by its various departments, in part by setting up of a Management Information System. In assisting the municipalities in their urban planning and management functions, and coordinating among different institutions, ARRU demonstrated its capacity to provide guidance and technical assistance. As a result of this valuable experience, ARRU has been propelled to the forefront of the profession, and has become a leading institution in the conception and management of upgrading and rehabilitation programs. 37. From the start of project implementation, AFH was faced with serious difficulties in selecting suitable sites. This hampered its ability to quickly produce the expected number of serviced lots, of which less than one fourth were delivered. Nevertheless, AFH's developed sites are characterized by a qualitative intervention. The infrastructure works are well executed, and the site surroundings immensely improved (extension of the roads, sewerage, water supply). AFH has also improved, during the course of this project, its managerial, organizational and technical capacities. It has also been able to change its prevailing mode of operation and land selling policies by establishing a pricing system that allows selling the land at its replacement cost and at prices compatible with market conditions. This was coupled with cross-subsidization in favor of smaller lots destined for low-income families. The entire system has worked effectively and had allowed AFH to successfully target the low-income population and therefore serve the objectives of this project. 38. The Housing Bank, BH, played a major role in the management of the Loan by bringing in the developers in order to make the best use of the funds available. However, some deficiencies occurred, namely, the double financing of the developers component, singled out by the auditors. BH prefinanced the housing construction undertaken by the developers from the proceeds of the Loan and also financed the acquisition by the beneficiaries of the housing units produced from FOPROLOS 24. This mistake, that occurred during the transition from CNEL to BH, had to be corrected. However, the Ministry of Finance, although informed by BH early enough, did not take immediate steps to remedy the situation. At the eve of project closing, it was decided that BH did not have to reimburse the Government and that the funds should be recycled into other social housing operations. H. BANK PERFORMANCE 39. Overall, the Bank contributed satisfactorily for the implementation of this project and maintained close contact with the Borrower throughout the life of the project. Frequent and 24 FOPROLOS, is a social fund for the promotion of housing for public workers. 12 rigorous supervison in the field ensured that the tasks and responsabilities of each agency were being complied with as expected and on schedule. The Bank was responsive to the Borrower's needs and provided continuous and timely guidance. The Bank was also able to adapt quickly to the practical situation of project execution by showing flexibility and effecting meaningful changes whenever needed. 40. During the preparation phase of the project, the Bank's performance was, however, less than satisfactory. Although this part of the project cycle took a relatively long time, it did not effectively benefit every component of the project. This was particularly the case of the site and servicing component. The Bank based it estimates of this component on non-conclusive feasibility (or other) studies. It was also stated in the SAR that all the land on which AFH was going to intervene had been already acquired and that subdivision plans had been completed and approved, which would ensure inimediate start of the works. In reality AFH, long after project start, was not ready to launch the works (paras. 14 and 17). This reveals that the Bank, in the preparation phase, had come up with unrealistic objectives aDd targets for this important component of the project. In the same process, AFH's capacity to deliver was overestimated. Furthermore, the Bank did not take advantage of the postponement of the date of effectiveness (Table 3) to require the Borrower to complete the preparatory work and possibly avoid the problems and delays encountered. I. KEY LESSONS LEARNED 41. Project Design: In its original design, the Fourth UDP was, to a great extent,25 a mere repetition of its predecessor. In this respect, it was meant to continue the efforts the Government engaged in the Third UDP. The repetitive character of this project should, though, have created the opportunity to better conceive the different aspects of the project and to focus, in particular, on those elements, such as the cost recovery, that had achieved poor results in the previous projects. This was not done. It must be noted that the Fourth UDP was prepared when the Third UDP was approved. A similar situation occurred between the Second and the Third UDP. A link, thus, has to be made between project design and project sequencing. 42. Indeed, one issue worth considering in some depth is the sequencing of Bank's operations and projects. In this regard, the observation that could be derived from the case of these three successive urban projects is that there was not enough time between the Second, Third, and Fourth UDPs to have learned from the experience of one project and incorporate remedial measures into the design of the other. The result was a series of projects that carried on the same successes, fortunately, but also the same weaknesses. Such weaknesses, properly addressed could have been avoided should enough time had been allowed between the launching of a project and the preparation of the next one. 43. Sector Development Objectives: The Fourth UDP had set development objectives that were compatible with the sector strategy (chapter B). Two pillars of this strategy had directly concerned this project (and its predecessors). One, was the shift of Government effort and 25 Except for the rehabilitation of the old quarter of Hafsia in the Medina of Tunis, which was a success story in the 3rd UDP and was not replicated in the current project. 13 resources from housing construction, which would be left to private initiative, to the provision of infrastructure. The other, consisted in the strengthening of the sector institutional framework (para. 6 and 7). They materialized in the project through the upgrading of the existing substandard settlements and land development to guide future urbanization. The success of the upgrading program extended beyond the project scope. At the policy level, it proved that rehabilitating these substandard settlements is the right approach. The impressive physical results achieved have won the approach to be applied countrywide. As a result, the contribution of the project to the achievement of the sector development objectives in this area is certain. 44. As far as site servicing is concerned, achievement of development objectives are less evident, both in this project and in the previous ones. The Fourth UDP, in its original design was to strengthen AFH's institutional capacity to fully assume the important role it was assigned in the implementation of the sector strategy, by increasing its production capacity and reorienting its efforts towards the low-income population. However, by bringing into the 26 project the housing developers, this particular objective faded away. The diligence with which the developers were able to absorb the loan had quickly blurred the role AFH was to play in this project. Hence, serviced lots were replaced by the construction of finished housing units using Government resources, in contradiction to the sector strategy (para.43) to move away from this trend in order to reach a larger population. 45. Cost Recovery: Cost recovery would have been a strong instrument in support of the Government policy aiming at reducing public investment and subsidies and introducing participatory mechanisms. This was one of the objectives of the project, and although it was stated in the SAR and other project documents that almost all costs incurred would be recovered, the reality was somewhat different and proved SAR estimates to be unrealistic. At best, only 23 percent27 of the amount allocated to the subloans for acquisition of serviced lots, housing construction, and housing improvement was actually reimbursed at the closing of the project. This ratio is much lower when compared to the total project cost. 46. Most important, is the recovery of the secondary infrastructure cost, financed by the local government. The Frontage Tax or "Taxe des Riverains" was the instrument for the infrastructure cost reimbursement. It was to be instituted by the municipalities, necessitating the promulgation of decrees. This did not take place for a number of reasons, the most important being: (i) political sensitivity on the part of the municipalities which were reluctant to impose taxes on their communities; (ii) lack of implementation and monitoring measures to follow up on this particular issue, both at the project level and in the concerned institutions; and (iii) lack of awareness amongst the population concerned. 26 Although, this was advantageous in other aspects as already mentioned. "7This figure does not express the real recovery rate since it is inclusive of the subloans made to the beneficiaries for the purchase of the housing units produced by the Developers and which was financed from FROPOLOS. This was additional resources injected in the project by mistake (explained in para 36). The rate exclusive of this amount, would represent less than 4 percent of total cost of the project. 14 47. Although both parties lacked commitment regarding the execution of this aspect, it was the role of the Bank to ensure that such an important objective was pursued. This effort should have started at project inception to ensure that the ingredients for success were incorporated into the design, considering the failure of the cost recovery in the two previous projects. To this effect, the lessons that could have been derived from the past experience are two fold: (a) the municipalities have a leading role to play in the issue of cost recovery and as such their active participation in the design and implementation process of this important aspect of the project was necessary; and (b) in view of the fact that the frontage tax formula did not work in the previous projects, other instruments and mechanisms better adapted to the situation should have been proposed. 48. Participation of the Population: The involvement of the target population in a participatory process, is essential for the sustainability of urban operations, especially when dealing with their direct living environment. In addition to the issues discussed above, the following four major aspects important to the success and replicability of urban projects are directly related to the involvement of the beneficiary population: (a) sharing part of the financial burden with the Government in the current context of shrinking public resources; (b) improving the design of the different project elements to better fit the needs of the population concerned; (c) realistically assessing the affordability of services offered for the target groups and their willingness and capacity to pay, which in this project proved not very accurate2; and (d) creating the feeling of ownership which will give the inhabitants control of their environment once the project is completed and help sustain project benefits. In recent years, the promotion of local associations that has taken place in Tunisia, would make the direct participation of the population a most feasible enterprise. 49. Quality of the Built Environment: Because the project was focused mainly on physical implementation, in the form of infrastructure and building production, the qualitative aspects were, therefore, important. However, little attention was paid to them as they were often neglected to the benefit of the quantitative aspect. Yet, little more efforts would have sufficed to capitalize on the important investments already made and further enhance their value. These efforts would be required at two levels: upstream, at the inception of the sub-projects to ensure their harmonious integration in their environment and urban fabric; and downstream, during the self-construction and housing upgrading process to ensure that the architectural quality of the spaces and building produced is acceptable. This could be achieved through technical assistance that could be provided by local services at a negligible cost. And yet, the positive visual impact this would generate in the perception of the physical patrimony of our towns and cities, would further beautify the outcomes of this project. 28 The estimates made at appraisal regarding this aspect were not realistic since not only the cost are not being recovered but also the subloans conditions were not accessible to most beneficiaries and an amendment had to be made (para 21). 15 Implementation Completion Report Republic of Tunisia Fourth Urban Development Report (Loan 2736-TUN) PART Il: STATISTICAL TABLES Table 1: Summary of Assessments Table 2: Related Bank Loans/Credits Table 3: Project Timetable Table 4: Loan/Credit Disbursement: Cumulative Estimated and Actual Table 5 Loan Disbursement: Graph Table 6: Disbursement by Category Table 7: Project Costs Table 8: Project Financing Table 9: Status of Legal Covenants Table 10: Execution Agencies Audit and Reporting Compliance Table 11: Bank Resources - Staff Imputs Table 12: Bank Resources - Missions 16 Implementation Completion Report Republic of Tunisia Fourth Urban Development Project (Loan 2736-TUN) TABLE 1: SUMMARY OF ASSESSMENTS A. Achievement of Obiective Substantial Partial Negligible Not applicable Macro policies 2 g [HI Sector policies 0] I3 0 Financial objectives LII E] 0x 0 Institutional development 0I lx 0I L0 Physical objective [HI f0 0 Poverty reduction [2 n 0 0 Gender issue FI LI 0 3 Other social objectives IIF] lx Environmental objectives El LI [ [ Public sector management LI I] lxi Development of private sector LI Ix L El Creation of Employment El L] LI LI B. Project sustainabilitv Likely Unlikely Uncertain OI 0 lx] C. Bank performance Highly satisfactory Satisfactory Deficient Identification 0 lx L] Preparation [] [] lX] Appraisal [j 0XI Supervision [] Fl] D. Borrower performance Highly Satisfactorv Deficient satisfactory Preparation ] x Implementation ] x 0 Covenant Compliance El El 0 E: Assessment of Outcome Highly Satisfactory Unsatisfactory Highly satisfactory Unsatisfactory LI lx LI 17 Implementation Completion Report Republic of Tunisia Fourth Urban Development Project (Loan 2736-TUN) TABLE 2: RELATED BANK LOANS Loan (name) Loan n° Purpose Year of Status Original loan amount approval Preceding operations First Urban Development Projet Essentially, an urban transport project with the Closed in 1982. objectives of: establishing a regional planning Contributed to the preparation of context (Distict de Tunis), renewal and the 3rd Urban Project in expansion of the public transport fleet, including, creating the District of Tunis. the railway lines of TGM and the improvement of traffic conditions in the center of Tunis. Loan 1705-TUN Introduced a new approach to the prevailing May 22, Closed 12/31/85 Second Urban Development policies in the housing sector and urban 1979 The first Bank interventionn in Project services for the low income population through the housing domain in Tunisia US$19 M of which 4 M was upgrading and site and services programs. and a milestrone of a series of canceled and I M was urban projects. umdisbursed. Loan 2223-TLN Same objectives as previous project with an Dec. 21, Closed on 06/30/93. Third Urban Development enlargement of the scale. Introduced renovation 1992 Continued the efforts of the Project and rehabilitation as pilot project in the Medina former project and contributed US$25 M of Tunis. to the creation of ARRU, and the promotion of rehabili-tation of old quarters. Subsequent Operations Loan 3064-TlJN Strengthening the housing production capacity May 18, On-going. Fifth Urban Development for low income population by supporting the 1989 Closing date scheduled after Project US$58 M newly created housing bank. two extensions on 12/31/96. Loan 3507-TUN Development of the local authorities capacities July 2, On-going. Municipal Development Project (municipal and regional) in the implementation 1992 The project concentrates on the US$ 75 M of urban programs. institutional weaknesses, especially at the local level. 18 Implementation Completion Report Republic of Tunisia Fourth Urban Development Project (Loan 2736-TUN) TABLE 3: PROJECT TIMETABLE Steps in project cycle Date planned Actual Date Identification (Executive Project Summary) November 1982 Preparation January 1983 to Oct. 1984 Appraisal Oct. 1984 & April 1985 Negotiations April 24, 1985 then January June 2, 1986 13, 1986 Board presentation June 19, 1985 July 3, 1986 Signig July 18, 1986 Effectiveness September 30, 1986 April 17, 1987 Closing of Loan December31, 1994 June30, 1995 19 Implementation Completion Report Republic of Tunisia Fourth Urban Development Project (Loan 2736-TUN) TABLE 4: LOAN DISBURSEMENT: CUMULATIVE ESTIMATED AND ACUTAL (In Milliorns of USS) FY87 FY88 FY89 FY90 FY91 FY92 FY93 FY94 FY95 Appraisal Estimate 0.30 2.03 6.14 10.97 16.40 21.53 25.45 28.21 30.20 in % 0.99 6.72 20.33 36.32 54.30 71.29 84.27 93.41 100.00 Actual 0.00 0.90 12.28 18.59 23.71 24.26 25.90 26.05 30.20 in % 0.00 3.00 40.70 61.60 78.50 80.30 85.70 86.20 100.00 Actual as % of estimate _ 0.00 44 200 169 145 113 102 92 100 Date of final disbursement l l 08/08/95 0 U 0 Ut F8 8 8 8 8 8 8 8 c$ 0.,.-H CD ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~C rn ... ........ ~ ~ ~ ~ ~ . .. ... . ... ~ ~ ~ ~ ~ ~ ~ 21 Implenlentation Cofli9PefOn Report Reubi of Tunisia Fourth ranDelOpment Pfo`t (Loan 23~L LO>DISBXp,SE,IIENT TA1LF, LOAI'NS~UMW C T~ It I I RehSIl peSe V. TCCWAOfSl f 22 Implementation Completion Report Republic of Tunisia Fourth Urban Development Project (Loan 2736-TUN) TABLE 7: PROJECT COSTS (In Millions of US$) COMPONENTS COST ESTIMATES AT ACTUAL COSTS APPRAISAL Local Foreign Total Local Foreign Total 1. Urgrading Civil Works 14.45 11.39 25.84 9.49. 11.31 20.80 Sub loans for I** 2.43 2.91 5.34 1.88 2.11 3.70 Total* 21.46 18.18 39.64 11.07 13.42 24.49 2. Rehousing 0.18 0.18 0.36 0.18 0.20 0.38 3. Site Servicing Civil Works 10.02 6.05 16.07 1.12 2.28 3.40 Subloans for HC*** 2.36 2.88 5.24 2.00 1.20 3.20 Total* 15.58 11.21 26.79 3.12 3.48 6.60 4. Housing Developers NA NA NA 25.16 13.00 38.16 5. Technical Assistance Expert Services 0.00 0.38 0.38 0.00 0.00 0.00 Computer Equip. 0.00 0.07 0.07 0.00 0.08 0.08 Total 0.00 0.45 0.45 0.00 0.08 0.08 6. PROJECT TOTAL 37.22 30.19 67.41 39.50 30.20 69.70 * Includes contingencies ** Housing Improvement * Housing Construction NA: This component was introduced later 23 Implementation Completion Report Republic of Tunisia Fourth Urban Development Project (Loan 2736-TUN) TABLE 8: PROJECT FINANCING (In Millions of US$) AT APPRAISAL ACTUAL Bank 30.2 30.2 Government 24.2 11.25 AFH 7.0 3.12 BH 6.0 25.16* * BH financed the acquisition of the housing units produced by the developers from FOPROLOS, funded by the Government. Therefore, the part of Government financing in the project is US$ 36.5 million. Implementation Completion Report Republic of Tunisia Fourth Urban Development Project (Loan 2736-TUN) TABLE 9: STATUS OF LEGAL COVENANTS Section Covenant Present Description of Covenant Comments type status Loan Agreemen1 2.06 9 C AFH shall furnish to the Bank not later than six weeks A quarterly report is sent. after the end of each semester a semi-annual progress report. 4.01 1 SOON AFH shall furnish to the Bank audit report 1992 audit report received. 1993 report for each fiscal year by June 30 each year. received. 1994 and 1995 not yet received. 2.07 9 C ARRU to submit to the Bank not later than six weeks after A quarterly report is sent. the end of each semester a serni-annual progress report. X, 4.01 1 SOON ARRU to furnish to the Bank audit report for each fiscal Audit report for 1993 received. year by June 30 each year. 2.02 (b) 10 C Special Account in the Central Bank. Complied with. 2.02 (c) 10 NC Closing date is December 31, 1994. Extended to June 1995. 3.02 (a) 2 C Borrower makes available to CPSCL under a Subsidiary Done March 1987. L.A. $7,520,000 out of the proceeds of the loan. Section Covenant Present | Description of Covenant Comments type status l l Loan Agreement 3.02 (b) 2 C Borrower makes available to CNEL (BH) under a Done March 1987 for AFH. Amendment to subsidiary L.A. $14,530,000 out of the proceeds of the include developers prepared by BH in July loan. 1988 was signed by the Borrower. 3.02 (c) 2 C Borrower makes available to ARRU, ONAS, SONEDE Done with ARRU and BH (for AFH). ONAS, and STEG and AFG an aggregate amount of $8,150,000. SONEDE and STEG are not directly involved. 3.03 (b) 3 C CPSCL enters into a "Convention de Pret"with the Done since august 24, 1987 for 17 Municipalities in which site is eligible under part A of the municipalities and then for 8 othe Project. municipalities. Project Agreement 3.05 2 NC Borrower takes measures for the establishment by ARRU has prepared documents. Not enacted Municipalities of a "Contribution des Riverains"to recover by the municipalities. cost of on site infrastructure. 3.07 2 C Borrower shall cause AFH to take measures to establish a Done. plot system and to ensure cross-subsidization. 3.08 2 CP Borrower causes CNFL (BH) to lend to beneficiaries of Done march 1987. The introduction of new plots an aggregate amount of $6,6580,000 for Developers has decreased the amount needed housing construction. for this subcomponent. 3.09 10 C ARRU, AFH, CNEL (BH), Municipalities and Done. Developers respectively to participate in the selection of Beneficiaries. Section Covenant Present Description of Covenant Comments ______ type status | 3.10 10 C ARRU to continue to employ an urban planner and an Done (paid by Italian bilateral grants). engineer. 3.11 3 C Conversion of AFH's debt to the Borrower into equity Done in 1987. according to a plan of conversion. 3.12 10 C Procurement of goods and works for ARRU and AFH, and Done. employment of consultants by AFH according to L.A. and Project Agreement. 3.14 1 C CNEL (BR) and Developers funish to the Bank financial, Done. economic and engineering feasibility studies. 4.01 3 C The Borrower shall have project accounts including Special 1992 accounts audited and received. 1993 Account, for each fiscal year audited, and furnish report to report received. 1994 and 1995 reports the Bank before June 30 each year. expected soon. 4.02 1 C CNEL/BH accounts for each fiscal year audited and furnish Reviewed in Urban V Project. to the Bank before June 30 each year. Amendment 3 C "Convention de Retrocession" between Ministry of Finance Ministry of Finance signed Convention end of and BH amended to introduce subloans to developers. December 1994. Covenant types: Present Status: I Accounts/audits 8. Indigenous people C = Covenant complied with 2 Financial performance/generate revenue from beneficiaries 9. Monitoring, review, and reporting CD = Complied with after delay 3 Flow and utilization of Project Funds 10. Implementation CP Not complied with partially 4 Counterpart funding 11. Sectoral or cross-sectoral budgetary or other resource allocation NC Not complied with 5 Management aspects of the project or executing agengy 12. Sectoral or cross-sectoral regulatory/Institutional action SOON = Compliance expected in a reasonably short time 6. Environmental covenants 13. Other NYP = Not yet due 7. Involuntary resettlement Implementation Completion Report Republic of Tunisia Fourth Urban Development Project (Loan 2736-TUN) TABLE 10: EXECUTION AGENCIES'AUDIT AND REPORTING COMPLIANCE 1987 1988 1989 1990 1991 1992 1993 1994 1995 FS PR PA FS PR PA FS PR I PA FS PR PA FS PR PA FS PR PA FS PR PA FS PR PA FS PR PA ARRU _ _ _ j l X J F x | 1 | I Mx | [ | [1 x 3 1x Fx-1 El [ 13 AFH -X- E- [El [ r | _ T _ _ CPSCL __ I= ___ |== 4TH Audiit report Audit report Audit report Audit report Audit report Audit report Audit report Audit report Audit report UDP Not Available Available Available Available Available Available Available Not Available Not Available Code: FS = Financial statement audits PA = Project account audits PR = Progress Report [El = Received Implementation Completion Report Republic of Tunisia Fourth Urban Development Project (Loan 2736-TUN) TABLE 11: BANK RESOURCES - STAFF INPUTS Stage of project cycle 83 84 85 86 87 88 89 90 91 92 93 94 95 96 Total Preparation/Evaluat./Effectiveness -m staff/weeks 0.3 41.8 70.4 19.5 0.5 132.6 - in US$ (in thousands of US$) 0.8 84.2 155.9 47.8 1 2 289.9 Supervision 7.2 8.0 12.0 7.9 7.7 7.9 10.4 10.9 12.1 5.4 89.6 - in staff/weeks - in US$ (in thousands of US$) 16.3 19.5 31.7 23.6 24.2 26.5 35.4 33.1 26.3 8.3 245.0 Completion - in staff/weeks 5.0 5.0 - in US$ (in thousands of US$) 7.2 7.2 TOTAL - in staff/weeks 227.2 - in US$ (in thousands of US$) 542.1 29 Implementation Completion Report Republic of Tunisia Fourth Urban Developement Project (Loan 2736-TUN) TABLE 12: BANK RESOURCES - MISSIONS Project Rating Activity Date Number of Days in field Specialized lmplementn. Development Types of persons staff skills Objectives problers3 I ______________________ reDresented Identification Not Available N A N A NA N APP N APP N APP Preparation April 1983 4 7 TM,L0,F N APP N APP N APP Jul/Aug 1983 3 _ 12 F, TM, UP N APP N APP N APP _____________ Sept/Oct 1983 2 7 LO, E N APP N APP N APP Pre-Appraisal Oct/Nov 1983 3 15 TKF,C(EG) N APP N APP N APP Mar/Apr 1984 4 16 TM,C(EG),C,E N APP N APP N APP Appraisal Oct 19S4 6 21 TM,2F,UP, N APP N APP N APP ___________ ~~~~~~~~~~~C(EG),E February 1985 2 12 TM,E N APP N APP N APP Appraisal Apr/May 1985 2 11 TM,E N APP N APP N APP Supervision Apr/May 1987 2 7 TM,C(EG) HS HS September 1987 2 8 U TM S _ HS Supervision Mar ch 1988 4 8 TM,UP,2C N N _ Jun/Jul 1988 3 6 TM,UP,F N N Supervision Oct/Nov 1988 4 8 TM,UP,C,L S S PM Supervision Jan/Feb 1989 1 10 TM S S PM Supervision Mav/Jun 1989 1 7 TM N N N Supervision October 1989 _ 7 TM S HS P, APF Supervision December 1989 2 7 TM,C S HS Superviion February 1990 2 7 T7 cS HS HS Supervision June 1990 1 5 TM S HS Supervision Nov/Dec 1990 1 8 TM S HS APF, PM Supervision July 1991 1 10 TM S HS PM Supervision Feb/Mar 1992 10 TM S HS Supervision November 1992 2 8 TM,F S HS Supervision December 1993 2 14 TMC(EG) S HS July 1994 2 10 TM,C(EG) S HS Supervision Nov/Dec 1994 3 14 TM,F,C(EG) HS HS June 1995 3 9 TM,EG, HS HS C(EG) Comipletion June 1995 1: 2. A = Architect E = Economist HS = Highly Satisfactory LO = Loan Oficer C = Consultant U = Unsatisfactory CD = Division Chief EG = Engineer N APP = Not Applicable TM = Task Manager (A) UP = Urban Planner S = Satisfactory F = Financial Analyste CS = Computer Specialist NA = Not Available L = Law-yer 3: TA = Technical Assistance L = Legal Clauses S = Studies P = Procurement T = Training APF = Audit Performance PM = Project Management 30 ANNEX -- BORROWER'S REPORT IMPLEMENTATION COMPLETION REPORT FOURTH URBAN DEVELOPMENT PROJECT -ooOoo- 31 CONTENTS I. PROJECT OBJECTIVES ............................... 32 1.1 General objectives ................................. 32 1.2 Specific objectives ................................. 32 II. RESULTS ......................................... 33 * Upgrading component ............................... 33 * Sites and services .................................. 33 * Self-help construction and housing improvement loans component ... . 33 2.1. Designing and programming ........................... 34 2.2. Project implementation .............................. 35 2.3. Project impact ................................... 36 2.4. Factors affecting project implementation .................... 37 III. EXPECTED PROJECT PERFORMANCE ..................... 38 IV. CONCLUSIONS ..................................... 38 32 1 - PROJECT OBJECTIVES 1.1 General objectives The Fourth lTDP reflected the Government's commitment to continue its efforts to provide urban services and serviced plots to low-income urban populations, whose demand for those amenities was only partially being met by the housing financing systems then in place and the housing and land development institutions. The project also aimed to improve the institutional structure of agencies operating in the housing sector. It further aimed to grant housing loans to beneficiaries with no other sources of financing. 1.2 Specific objectives On July 18, 1996, the World Bank signed a loan agreement granting Tunisia a line of credit to finance part of the project expenses. The project originally comprised three components: - JUpgrading of 18 existing neighborhoods through improvement of infrastructure and construction of community facilities, for an estimated cost of TD 28 million. This component was intended to benefit around 100,000 inhabitants. In addition to regularizing occupancy status and developing and servicing infill plots, the project aimed to facilitate the installation and extension of road and footpath and utility networks (potable water, electricity, sewerage and drainage) and the grant of home expansion and improvement loans. By the end of the project it was expected that 11,000 dwellings would be hooked up to the sewerage network, 6,000 to the main water supply, and 4,000 to the electricity system. - Another major component, designed to prevent the development of squatter settlements, consisted of the creation of self-help construction sites for low-income groups. It was planned to produce 8,500 small-sized plots on some 20 sites across the country, and loans would be granted for core housing construction. The estimated cost of this component was TD 18.9 million. - The third component covered technical assistance, involving the purchase of computer hardware and the introduction of measures to improve administrative performance. AFH would receive guidance in setting up a computerized management information system. The upgrading component was entrusted to ARRU and the serviced plots component to AFH. The component providing loans for self-help construction and housing improvement was to be managed by the BH. 33 H - RESULTS * Upgrading component As a result of the experience acquired with the Third UDP, ARRU was able to accomplish the goals it was assigned. The achievements were as follows: - of the 18 sites selected and approved by all of the partners (DGCPL, the municipalities, World Bank), two sites (Mzara in Beja and Moalla in Gafsa) were financed out of the undisbursed balance of the Third UDP, while the remaining 16 were financed under the Fourth UDP; nine additional neighborhoods were identified and upgraded; - a resettlement operation was carried out to ensure the safety of households living in buildings in danger of collapse. This extension of the project to include new sites was made possible by the appreciation of the dollar in relation to the dinar, and to the savings achieved on certain projects after more work was done on the detailed engineering studies and the action program was revised. Sites and Servicing Of the 20 subdivisions initially identified, comprising 8,500 plots, 13 were finally selected and 2,262 plots developed. In developing these subdivisions, AFH encountered several different problems, mainly involving accessibility, network connections, the danger of flooding in certain locations, and land issues. * Self-help construction and housing improvement loans component The hold-up in starting on the sites and servicing sub projects led to a delay in the consumption of loans earmarked for this purpose. The Loan Agreement was amended in 1988 to include a new component for low-cost housing construction. This has made the pace of loan consumption pick up noticeably. The funding covered: - the development of serviced subdivisions - loans for self-help construction - loans to improve housing on upgraded sites - housing promotion productoion by developers. 34 In quantitative terms, the project results may be summed up as follows: - upgrading of 26 neighborhoods in 25 communes, municipalities, including a rehousing operatoion, affecting a total population of 107,000, at an overall cost (excluding management fees) of TD 23.023 million; - construction of 111 km of roads; - laying of 117 km of sewer pipes and construction of eight pumping stations, that have allowed some 11,000 dwellings to be connected to the system in the first stage; - laying of about 27 km of pipes to extend the drinking water supply network; - creation of public lighting networks in a dozen neighborhoods, with the installation of 1,250 street lamps; construction of 10 primary schools and one extension; construction of eight dispensaries; - upgrading of a municipal market, and provision of garbage collection vehicles and equipment in 10 communes; award of 3,765 housing extension and improvement loans, for a total of TD 3.399 million; - financing of 18 construction projects involving the erection of 3,196 low-cost dwellings by private and public promoters, for a total of TD 13.019 million; - award of 1,876 self-help construction loans, for a total of TD 5,357 million; development of 2,262 serviced plots, for a total of TD 1.346 million. Beyond the goals set and the quantitative results obtained, a few comments are in order concerning project design and implementation. 2.1 Design andprogramming - Under the original setup the State was to contribute an average of 25%. This percentage was intended to maintain government subsidization within reasonable proportions, thereby also making it possible to hold down off-site expenditures This average was exceeded in some of the projects, a fact explained by the need to install network connections, most often those linking the plots to the sewerage system. 35 Thanks to these connections, however, it was possible to bring the service to larger areas than those originaly targeted by the project. - The project component for infill plot development was not carried out. This may be explained in part by the large number of projects, their dispersal across the country, the type of tenure of the unbuilt lands (oint tenancy, absence of registration) and the lack of eagerness on the part of the landowners to sell their lands. - The number of demolitions and resettlements to make room for upgrading activities and utility installation was considerably lower than the estimates given in the preliminary studies. - Recourse to expropriation for the acquisition of land was not automatic. - At the request of the municipalities, the end-of-project savings were used to purchase garbage collection equipment and to develop green spaces. - TThe sports fields originally provided for in the project did not materialize, since a nationwide program was launched at the same time by the "Ministre de la Jezinesse et de En7fance". 2.2 Project implementafion - 'JUpgrading component Overall, this component progressed at a satisfactory pace, over 90% of the works being completed by December 1992, two years before the programmed completion date of December 31, 1994. This performance was made possible thanks to the experience gained by ARRU during preparation and implementation of UDP3. ARRU's decision to set up field units in the southern and central parts of the country was undoubtedly a factor in improving project management and monitoring and in reducing implementation periods. However, a few delays did occur in the execution of project extensions financed out of the undisbursed balances of loans to the communes, which took a considerable time to prepare, approve and implement (for example, Bir Aniba in Tunis, and El Ghodrane in Sousse). The process of awarding housing improvement and extension loans got off to a slow start. Here again, the experience of UDP3 enabled us to make changes during project implementation that led to improved handling of loan applications and a faster pace of loan consumption. 36 * Loans component Despite startup delays affecting certain components, the project achieved its overall objectives thanks to the introduction along the way of various modifications and corrections. The loan agreement was signed on July 18, 1986, but the first requests for reimbursement did not come in until November 1988. Consequently, and with a view to expediting loan fund withdrawals and thereby reducing commitment fees, the Government proposed to amend the loan agreement through the introduction, as of November 8, 1988, of a new "Promoters" component, for which the Bank's contribution was approved at US$11 million. Moreover, and to expedite consumption of funds earmarked for the housing expansion and improvement component, a circular dated October 11, 1980 from the Minister of Equipment and Housing introduced a provision making the conditions of this type of loan more flexible and authorizing interest rate subsidies for borrowers. These amendments had positive repercussions on the consumption of finds. A Serviced plots component AFffs action program was curtailed to 13 low-cost subdivisions as a result of the technical constraints and land-tenure problems mentioned above. The marketing of some of these sites also proved difficult. This was attributable to the size of the self-financing contribution initially required of plot recipients. This contribution was reduced from 30% to 20% as the project neared completion, a move that improved the rate of sale of the serviced plots. 23 Project impact Although it may be premature, in the absence of a special study, to assess the project's impact, the following outcomes have been noted: integration of upgraded neighborhoods into the rest of the city; - improvement of living conditions for beneficiaries (access to urban services, to educational and health facilities, etc.); creation of a self-investment dynamic in the area of housing improvement and expansion; 37 upgrading of neighborhood image through higher costs of real estate (land and buildings); - the loans for expansion and improvement have been considerable factors in improving housing and living conditions; - demonstration effect on municipal investments and on efforts to popularize the policy for upgrading under-integrated areas; access of a low-income segment of the urban population to decent and affordable housing; 2.4 Factors affecting project implementafion Attention is drawn to the existence of certain factors that have partially affected achievement of the project objectives: The financial eligibility of the communes for this project was based on their residual indebtedness capacity. The financial setup adopted was designed not to mortgage that entire capacity, in fact at least 50%/o was to be left intact. Because of this constraint, it happened in certain cases that a budget, while being within the reach of the commune concerned, was inadequate to cover implementation of an integrated upgrading program. This meant that programs had to be curtailed to fit into the commune's financial capacities. For instance, certain neighborhoods have so far only been connected to a sewerage network and are still without roads, footpaths, or a public lighting system. - The inadequate performnance of certain poorly qualified consulting firms and of certain contractors was, to a lesser extent, a cause of delay on certain sites. - Where the low-cost subdivisions were concerned, the lack of projects properly identified at the outset and the choice of certain technically or socioeconomically inappropriate sites held up the implementation of this component. - The lack of coordination among the various actors (absence of a body to coordinate the actions of the different operators). - The rate of recovery of loans awarded under this project is very low (23% at June 30, 1995). This raises a basic issue concerning the replicability of a project of this type. However, the Housing Bank will continue its efforts to improve the recovery rate, with a view to ensuring the sustainability of this activity. 38 Im - EXPECTED PROJECT PERFORMANCE Following on from the preceding urban development projects, the Fourth UDP aims to improve the institutional capacities of the agencies operating in the housing sector. In ARRUYs case, a test was made of its capacities for designing, preparing and implementing integrated projects. Thanks to ARRUs experience with the Third UDP and the assistance it received within the framework of the present project, it was able to improve the performance of its staff and to upgrade its capabilities as delegated contracting authority "maltre d'ouvrage dtlegue" for the municipalities. In addition, with its project monitoring and evaluation unit and computerized monitoring system, ARRU has been able since April 1989 to put out monthly progress reports and to upgrade its project management system. IV - CONCLUSIONS The following lessons may be drawn from implementation of this project: 1. The loan, in the form of a line of credit, was able to include new operations, provided they met the eligibility criteria, and thus to exceed the project's original objectives. 2. The necessity of defining the functions and responsibilities of the delegated contracting authority and of institutionalizing this type of intervention to benefit the municipalities. 3. The use of simplified setups and less complex financing procedures and circuits makes it possible to shorten the implementation period for this type of project. It is true that restructuring of CPSCL has helped improve the financial management of operations. 4. Ensure greater participation by the municipalities and local inhabitants in the identification of priorities and definition of upgrading programs. The population needs to be inforned of the project cost, of the financial effort demanded of it, and of the financing terms (prefinancing and recovery). 5. Review the question of recovery of expenses based on the residents' tax [tace d5e riverains] and propose another method of recovery. 6. Thanks to its experience with the various upgrading programs, ARRU is in a position to draw up a list of reputable contractors experienced in upgrading work. This list could serve as a reference for the award of the various work contracts. 39 7. Ensure that the necessary means are in place to maintain the newly installed infrastructure. What generally happens is that the communes pay little heed to a project's survival when there are pressing needs elsewhere demanding their attention and the execution of new projects. 8. The technical and economic feasibility of low-cost subdivisions intended to meet part of the urban housing demand has proven conclusive. There is still a need to consolidate this project and to provide better supervision for the self-help construction activities. 9. The choice of location for a subdivision needs to be carefully studied. Likewise, the choice of candidates will henceforth be the exclusive responsibility of AFH and BX and will be based on solvency, with a view to guaranteeing the beneficiarys participation. It has also been decided to apply an equalization formula to the cost price of a plot and to increase plot size to approximately 150 m2. 40 KEYDATES Fourth Urban DevelopmentProject Loan agreement signed 07/18/1986 Loan effectiveness date 04/17/1987 First amendment 11/09/1988 Closing date (original) 12/31/1994 Closing date (extended) 06/31/1995 Loan amount - upgrading component (1 A) US$11,600,000 Cost of works performed (I A) TD 17,971,135 Project cost - upgrading component TD 23,023,996* Beneficiary population 107,214 Number of housing units 15,600 Number of households 19,351 Number of neighborhoods 26 Number of communes 25 Area covered by the upgrading component 634 ha * Excluding management expenses (Nextpage: Geographic distnbution of subprojects carried out by ARRU) 41 Housing Development Agency (AFH) Fourth Urban Development Project Table 1: AFH Implementation Plan Date issued: June 30, 1995 Pursuant to Loan Agreement No. 2736 concluded between the Tunisian Govemrnment and the World Bank on July 18, 1986, the overall amount to be allocated to the serviced plots and self-help construction component is TD 6.6 million, of which TD 3.6 million represents the World Bank's contnbution and TD 3 million is to be provided out of the government budget. Number of sites: 14 Number of plots: 2,262 Total number of contracts: 1,964 N.B. Twelve sites are fully completed. One site (Ouec Ellil) is 700/o complete. 42 Housing Bank (BH) Fourth Urban Development Project Table 2: Serviced Plots and Self Help Construction Sites/AFH Plots to be Amount Total Credit Awarded World Bank Released Funding Produced Budgeted Number Amount ivil worKs Const. bubloans T'-T0= ESSAADA (SOUSSE) 279 775 338 275 751 634 229 501 522 133 751 634 ERRIADH (JENOUBA) 252 697 738 224 574 088 110 180 463 908 574 088 EL ONS (LE KEF) 126 307 919 125 435 326 24 879 410 447 435 326 SAHBI III (KAIROUAN) 247 591 794 243 601 706 128 009 473 697 601 706 SILIANA 253 640 269 249 545 900 119 773 426 127 545 900 SIDI BOUZID 197 474 527 197 575 838 96 071 479 767 575 838 HAMMAM ZRIBA 135 362 094 118 310 246 71170 239 076 310 246 SRIBA (KASSERINE) 153 429 517 98 254 350 73 601 180 749 254 350 SIDI BOULBAB (GABES) 132 381 469 48 166 787 69 000 97 787 166 787 SOUASSI 146 480 527 121 408 707 94 722 313 985 408 707 CHEBBA 104 361 656 47 162 857 107 800 143 157 250 957 THALA (KASSERINE) 167 591 178 30 101 331 198 500 101 331 299 831 OUED ELLIL (CHABBAOU) 154 548 201 101 468 071 22 900 468 071 490 971 TOTAL 2345 6 642 227 1 876 5 356 841 1 346 106 4 320 235 5 666 341 Housing Development Agency (AFH) Fourth Urban Development Project Table 3: Sites and Services -- Financial Situation Sub- No. of Plots No of Cost of Actual Prefinancing S a I e s Consolidated Division Plots Works Expenses Obtained No. of Plots Amount Prefinancing 1 SILANA 253 196 185 000 159 384 000 129 483 000 250 282 439 000 129 490 000 2 LE KEF (ONS) 126 168 717 000 50 440 000 12 160 000 125 173 336 000 12 145 000 3 JENDOUBA RLADH 252 273 192 000 237 636 000 112 837 000 234 402 995 000 112 827 000 4 HAMMAM ZRIBA 135 124 825 000 113 243 000 91 922 000 118 170 030 000 91 922 000 5 SOUSSE ESSAADA 279 464 797 000 368 958 000 221 556 000 278 376 937 000 221 513 000 6 KAIROUAN SIDI SAHBI 247 21 208 200 173 299 000 133 699 000 243 331 136 000 126 599 000 7 SIDI BOUZID 197 155 841 000 121 673 000 32 852 000 197 298 392 000 32 852 000 8 SBIBA 152 222 531 042 114 602 000 38 600 000 98 130 949 000 38 610 000 9 THALA 167 450 000 000 359 351 761 198 500 000 30 59 922 000 19 094 000 10 ECHABBA 104 280 155 000 117 492 627 120 800 000 47 125 693 000 61 575 054 11 SOUASSI 146 310 436 614 184 015 191 145 000 000 123 286 401 000 145 000 000 12 GABES SIDI BOULBABA 52 162 000 000 49 016 323 69 000 000 48 80 696 000 69 000 000 13 OUED ELAH 152- 173 630 000 71 488 347 71 500 000 101 282 413 000 TOTAL 2 262 2 807 332 856 2 120 599 249 1 377 909 000 1 892 3 001 339 000 9 307 184 259 44 Housing Bank (BR) Fourth Urban Development Project Table 4: Housing Developers Component DEVELOPERS/SITES No. of WB Funding WB Funding Purchasers' Housing Units Authorised Released Credit PRIM (FOUCHANA) 746 2 816 555 2 816 555 000 5 333 111 EDHAMEN (DJEDAIDA) 81 319 129 319 129 000 610 320 EDHAMEN (BEJA) 191 760 376 689 554 029 1 276 952 EDHAMEN (KSOUR ESSAF) 44 180 000 180 000 000 322 697 LA RUCHE (M'HAMEDIA) 305 1 090 873 1 090 873 000 2 098 638 LOGECO (ZAGHOUAN) 37 159 590 159 590 000 313 164 SNIT SUD (SFAX) 429 1 671 151 1 671 151 000 3 504 106 SNIT NORD (BEJA) 185 810 000 609 503 930 1 128 711 SNIT NOR (KEF) 320 1 273 500 1 088 239 882 2 313 037 SNIT CENTER (KASSERINE) 42 142 200 142 200 000 231 693 SNIT CENTER (SOUSSE) 389 1305 901 1305 350 601 2 353 194 SNIT CENTER (KAIROUN) 81 279 000 279 000 000 554 957 SNIT CENTER (MAHDIA) 53 184 500 184 500 000 333 426 SNIT CENTER (KALAA KEBIR 40 135 000 133 937 454 337 658 SNIT CENTER (KSAR HELLAL 31 109 800 109 800 000 209 751 IBTIKAR (KSOUR ESSAF) 77 570 810 508 056 000 940 344 HABIT MORENE (DOUAR HIC 57 513 263 332 266 000 615 308 L'ARCHE (SFAX) 88 698 050 610 065 000 1129 750 TOTAL 3196 13 019 698 12 230 270 995 23 657 317 45 Housing Bank (BH) Fourth Urban Development Project Table 5: Subloans Granted for Housing Improvement Sites Amount Loans Granted Budgeted Number Amount MAHDIA 60 000 54 59 938 MAKTHER 140 000 128 140100 ZAGHOUAN (EL FAHS) 305 000 320 294 800 KELIBIA 98 000 108 90 900 TATOUINE 144 000 207 142 460 MEDNINE 120 000 102 117 400 MENZEL BOURGUIBA 136 000 201 136 100 MOKNINE 90 000 83 88 500 MONSTIR 21 000 29 21 000 KEBILI 124 000 169 124 000 GABES 240 000 154 236 100 HAFFARA (SFAX) 78 000 70 77 000 EL GHODRANE (SOUSSE) 445 000 312 445 000 SIDI MOSBAH (BEN AROUS) 211 200 177 188 594 SIDI BOUZID 168 000 243 168 000 MENCHIA (KAIROUAN) 120 000 221 120 000 BIR ANIBA 40 000 23 38 300 KASSERINE 336 000 653 334 500 BIZERTE (ENNAKHLA) 120 050 134 120 050 TOZEUR 96 000 78 96 000 BIR ZITOUN (TEBOURBA) 32 000 81 79 740 METLAOUI 300 000 218 281 200 TOTAL 3 474 250 3 765 3 399 682 Urban Rehabilitation Agency (ARRU) Fourth Urban Development Proiect Table 6: Upgrading Component SUBPROJECT COSTS PHYSICAL PROJECTS SITE - CIVILWORKS COMMUNITY LAND SUBLOANS SOIL GRAND ROADS SEWERAGE CONNECTIONS LIGHTING SCHOOLS HEALTH MISC. PRIMARY SECONDARY CONNECTNS. FACILITIES IMPRVMNTS STUDIES TOTAL (ml SYSTEM (M) SEWERAGE IVLK iuwL CENTERS Ben Arous - Sidi Mosbah 88590 590747 118 401 38 607 27160 188584 45 438 1 0955U44 1400 7 200 700 U 800 40 Pt I Hhh Center Tunlis . BirAniba 73 691 273 710 5594 53373 12 331 38 300 2 381 459 350 1000 940 105 U It - A I r Bizee - Ennakhla 198 481 398 855 44 248 173 526 9000 120050 11820 955 98 2800 3 880 201 U 400 60 Pt I School I Htnh Center Carthage - Med Ali - Yasmina 364 236 436 000 87 98 2 050 10 749 900 993 5 300 6700ni + lstatn. 700 U El Fahs Mechta 213 99 252 808 82 477 20 000 294 800 28 469 892 553 900 2 838 423 U 136 Pt Gabes - Mintake El Oued 496 975 596245 88 278 17100 236100 1434 98 10100 2sttin.o 3870m 570U 67 rt Hammarnet - Erriadh 98 828 190 000 54 364 8 994 352 184 2 900 lstatn.+ 3535ml 185 U Kairouan - El Menchia 441888 1 023 340 1450QO 161 732 3 259 120000 12569 1907 788 17 468 9858 1111 U 1 School 1 HithCenter Mur - Kasserine - Ennour 348 509 708033 212 587 120 350 54 000 334 500 34 371 1 812330 2432 14 735 1809 U 3130 112Pt I School Kebili - Nozta Charguia 226 983 411 510 56 257 22 488 124 000 19133 8W 369 8 425 lstatn.+ 6599ml 473 U 55 Pt _ am.. Kelibia - Assimer 104 021 205 200 13 677 50 771 10152 90 90O 11121 485 842 1 700 1 650 690 U 3 000 Type lIl Mahdia - Lakouach 466 201 270498 58 206 129641 50581 59938 22918 1 057 983 4 700 5272 468 U 1 050 35 Pt 8Classrmo Makthar Ksiba 65832 118469 24729 41717 140100 3727 394574 971 1 568 190U 831 2 nar/n Z Medenine - Judet 41 963 304 781 95 382 78 740 117 400 18 211 850 457 4 510 1 900 168 Pt 2cls.htth C Type IIl Menzel Bourguiba - Ennajah 142 445 499 384 41549 47 840 88 804 136100 29 269 983 391 2 263 7120 529 4 700 79 Pt 1 Hnlh Center Metlaoui - Trabelsia 128 039 282 223 281 200 23 087 714 549 5 000 Moknine Kheireddine 143 973 340 784 32175 131 542 87 254 88 500 31 723 855 951 2 270 4 365 1 100 I Scholj Monastir * Essalem 107 465 457 544 28 957 138 070 so 192 21 000 20 051 819 279 7 070 a ciasosros STax - Haffara 73 823 154 810 16 475 23872 77 000 2 821 348 601 1 650 2 533 1e0 U 870 S&di ouzid - F O Belhedi 146 965 392 589 8 639 102182 14 751 168 000 20 091 911 217 7 734 8 395 479 U 4 395 97 Pt 1 School Tunis - Souidet 43 457 70 482 7 677 22 847 315000 2 350 177813 1980 485 49 U Sousse-EI Ghodrane 442 076 808 778 78170 203101 145 781 445 0CO 45 243 2168149 11 250 10 200 761 U 2950 63 Pt 1 School 1 Hlth Center Tataouine - Erriadh 168 s9e 299 718 8 990 43 087 32 144 142 460 21 653 716 646 5 735 1 628ml + 1 statn. 52 U 1 845 198 Pt Type IUI Teboufba - Bir Ztoun 195 874 295016 92 529 127000 40 492 79 740 18 204 848 855 2 000 Istatn.+ 5580ml 451 U 43 Pt 1 School Tozeur - El Hadhar 297 853 342 491 128813 68 13 96000 871 570 1200 8600+ 1sttn. 800 U C0P n SOUSTOTAL 5 120 761 9 723 813 1 489 530 1 637 031 887 488 3 399 82 444 371 22882878 110658 102 U35 + 8statn. 9898U 28 981 1174 Pt IOSchools 81HnhlCenters Relgement - Petite Sicile 170 860 170680 341320 TOTALGENERAL 5 291 421 9 894 473 1 49 530 16 37 031 887 488 3399882 444 371 23 02399 110558 117 O + 8sttn. 10904U 26961 1253Pt 10 choo 8 HtCenbn MAP SECTION IBRD 28052 TUNISIA 9° 10 lM c t r n BRD 285 FOURTH URBAN Bzj. Mediterranean DEVELOPMENT PROJECT BIZT *RT! E S e a (LOAN 2736) IRINA -37/ Arous .L JENjOUBA J> , _, Jendoubao '> Zj Nobeul % '-1- ,,, - -' /ZAGHOUAN K (S W a . \ * * < * . ) Gu'i ol Ho,on-et 30' *A El Kof I SILIANA EL KEF 1 IIons 1 ) Monust -36' OMONASTIR t(AIROUAN OKar a _ M NA T rt 5 (- t KAIRolJANe F )Sf~~9,j Mahdio ~A *SMb7 KASSERINE t K AMAHDIA ~~~~''^ (*L. 35~ Jt Kosserine \sidi Brid