Jordan - National Urban Development Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No.6739-JO STAFF APPRAISAL REPORT HASHEMITE KINGDOM OF JORDAN NATIONAL URBAN DEVELOPMENT PROJECT May 15, 1987 Urban and Regional Development Projects Europe, Middle East and North Africa Region 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 = Jordan Dinar (JD) JD 0.33 = US$1.00 JD 1.00 - US$3.03 JD 1.00 = 1,000 fils FISCAL YEAR January 1 - December 31 MEASURES AND EQUIVALENTS Kilometer (km) = 0.62 mile Square kilometer (km2) = 0.386 square mile Hectare (ha) - 2.47 acres Centimeter (cm) 0 0.3937 inches Meter (m) - 39.37 inches = 3.28 feet (ft) Square meter (in) - 10.8 square feet (ft2) Cubic meter (m3) = 264 US gallons Liter (1) = 0.264 US gallons Liter per capita per day (lpcd) = 0.264 US gallons per capita per day ABBREVIATIONS AND ACRONYMS ARA - Aqaba Region Authority CB - Central Bank CVDB - Cities and Villages Development Bank GOJ - Government of Jordan RABITAT - United Nations Centre for Human Settlements HB - Housing Bank. HC - Housing Corporation HSG - Housing Strategy Group IDB - Industrial Development Bank IDECO - Irbid District Electricity Company JCO - Jordan Cooperative Organization JEA - Jordan Electricity Authority JEPCO - Jordan Electric Power Company JIM - Jordan Institute of Management JVA - Jordan Valley Authority LA - Local Authorities LCHD - Low Cost Housing Department LIHRF - Low Income Housing Revolving Fund MMRAE - Ministry of Municipal and Rural Affairs and Environment MOF - Ministry of Finance MOP - Ministry of Planning SOE - Statement of Expenditures SU - Shelter Unit (in Ministry of Planning) UDD - Urban Development Department UDP - Urban Development Project VTC - Vocational Training Corporation *IAJ - Water Authority of Jordan  FOR OMCIAL USE ONLY HASHEMITE KINGDOM 0l JORDAN NATIONAL URBAN DEVELOPMENT PROJECT STAFF APPRAISAL REPORT TABLE OF CONTENTS Page No. LOAN AND PROJECT SUMMARY . .................................... i - ii I. INTRODUCTION . .................................................. 1 II. URBAN SECTOR BACKGROUhD ..2 A. Urbanization Trends ................. ..................... 2 B. Institutional Fiamework. 2 C. Mana&ement of Urban Growth ................................ 3 Infrastructure Services. 3 Land Use Planning and Zoning. 4 Social Services. 4 D. Housing. 5 E. The Government's Emerginji- Urban and Housing Policies 6 F. Bank Group Role in the Sector. 8 III. THE PROJECT .............. ..................... 10 A. Project Objectives ........................................ 10 B. Main Features of the Project .10 C. Detailed Project Description .11 Upgrading .11 Land Development for Sites and Services .12 Core Housing and Housing Loans .12 Community Facilities ............... ................. 13 Institutional Development ..........* ................. 14 D. Project Costs and Financing ............................... 14 Project Costs .14 Financing Plan and Flow of Funds .15 E. Implementation Arrangements ............................... 17 Status of Project Preparation .17 Implementation Schedule .17 Procurement ......... ................................. 19 DisbursemenLs .21 Reports, Accounts, and Audits .21 Monitoring and Evaluation .22 Supervision Requirements .22 IV. INSTITUTIONAL ARRANGEMENTS ....22 A. The Project Entities .... 22 General. . 22 The Urban Development Department ...23 The Housing Bank of Jordan . . .25 The Cities and Villages Development Bank ... 28 Local Authorities . . .29 B. Subproject Cycle . . .30 General ...30 Identification and Preparation . . .30 Appraisal ...30 Final Design .... 32 Implementation, Supervision, and Monitoring ... 32 C. Project Coordination ... 33 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 disclesed without World Bank authorization.  Page No. V. COST RECOVERY, MARKETING AND AFFORDABILTTY ..................... 33 A . Cost Recovery . ............*................ .......... ....a 33 B. Market Considerations .......... .. . . .. * .. ..*...*......*.*.. . .. . . . . 34 C. Affordability ... . .* .......... ......*....... ...... * . . 4 ...... *.4**44 36 VI. PROJECT JUSTIFICATION ......................... * ........ 37 A. Project Benefits 37 Economic Justification ........... 38 Economic Rate of Return ............ 38 B. Project Risks .................... .. *........ .. 39 C. Environmental Impact 39 VII. ASSURANCES AND PECOMMENDATION . .......... 40 TEXT CHARTS, &AD TABLE3 1II-1. Project Costs Summary ..................................... 16 III-2. Sunmary Project Financing Plan ............................ 18 III-3. Flow of Funds ....... ..a............. *4** 440 44a* *.44*44* 18 111-4. Procurement Arrangements ............ ......... 20 IV-1. Project Preparation and Implementation Process ............ 3i V-1. Cost Recovery Sources and Mechanisms ...................... 35 ANNEXES 1. Subproject Eligibility Criteria 41 2. Detailed Project Costs ......................................... 48 3. Detailed Description of Aqaba Subprojects ...................... 50 4. Anticipated Work ProRram for UDD................................ 55 5. Procurement Rules Clarified during Negotiations ...... 56 6. Estimated Schedule of DibLsemnt.................. 58 7. Project Execution Responsibilities ...... .. 59 8. Project Cost Summary, Financial Tables.......................... 60 9. Incomes and Affordability ...................................... 71 10. Economic Analysis ... 84 11. Pipeline of Potential Subprojects .............................. 87 12. Key Indicators .......... ........;. 88 13. Contents of Project File .............6............. 6 ....... 89 Charts Cl. Organization of the Jordan Housing Bank......................... 90 C2. Organization of the Urban Development Department...... 91 C3. Organization of the Cities and Villages Devrelopment Bank........ 92 Photographs, Successful Upgrading in Amman Map (IBRD 19915) Location of Subprojects in Pipeline  HASHEMITE KINGDOM OF JORDAN NATIONAL URBAN DEVELOPMENT PROJECT LOAN AND PROJECT SUMMARY Borrower : Government of the Hasnemite Kingdom of Jordan Implementing The Urban Development Department (UDD) of the Ministry of Agencies: Municipal and Rural Affairs and the Envircnment (MMRAE), the Jordan Housing Bank (HB), and the Cities and Villages Development Bank (CVDB). Amount : US$26.4 million. Terms Seventben years, including four years of grace, at the standard variable interest rate. Onleuding The Borrower would onlend US$4.2 million to BB for loans to project Terms : beneficiaries for house construction and improvement. The maturity and grace period for the onlent funds would be the same as under the Bank loan but the interest rate would be fixed at 7.92 percent. About US$10.1 million would be passed by the Borrower to UDD to finance construction of infrastructure facilities and core houses. This amount and interest charges (calculated at 7.92 percent per annum) would be recovered through sale of plots. The remaining US$12.1 million would be passed to UDD for construction of social facilities and off-site infrastructure works; these costs are not recoverable from project beneficiaries. The Borrower would bear the foreign exchange and interest rate risks. Project The proposed project would finance, through a line of credit, Description: subprojects located throughout Jordan comprising: (a) upgrading and new site development to benefit about 8,000 households; (b) mortgage loans for about 5,000 families in these sites to enable them to purchase plots and finance house construction or improvements; (c) community facilities, such as schools, clinics, and community and training centers; and (d) advisory services, training, and logistical support for institutional strengthening. The UDD would plan, design, and implement the subprojects; the HB would appraise the individual subprojects, and provide construction finance to UDD and mortgage loans to project beneficiaries; the CVDB would appraise the social faLilities and channel Government funds for their construction, and when necessary, provide construction finance. Benefits and The principal benefit of the project would be improved provision risks: of shelter and related services at prices affordable to low-income households without resorting to large Government subsidies. At least 60 percent of the investment would benefit households between the 10th and the 40th percentiles of the urban income range. The project would also mobilize a large amount of private savings for acquisition of homes and house improvements. The proposed proje_t would extend a development model which has proven successful in two previous Bank-financed projects in the Greater Amman area; the demand for small plots has been high and comnunity support for the upgrading works has been strong. Nonetheless, the expansion of this type of activity to smaller townsiand cities introduces some uncertainty about market demand and community acceptance.  - ii - Project Cost Summary Local Foreign Total US$ million---------- A. Site Development Land 32.67 0 32.67 Infrastructure 9.69 9.16 18.85 On-plot development 4.13 2.75 6.88 Building & Material Loans 5.72 2.95 8.67 Community Buildings, Furniture & Equipment 7.25 8.61 15.86 Subtotal 59.46 23.47 82.93 B. Design and Supervision 1.06 0.46 1.52 C. Project Management 2.43 0.27 2.70 D. advisory Services, Training & Equipment 0.58 1.13 1.71 Total Base Line Cost 63.53 25.33 88.86 E. Price Contingencies 3.38 1.09 4.47 TOTAL PROJECT COST /a 66.91 26.42 93.33 /a of which taxes are US$0.8 million Financing Plan Households 17.3 - 17.3 Housing Bank 29.3 - 29.3 Government 20.3 - 20.3 World Bank - 26.4 26.4 Total 66.9 2 93.3 Estimated Disbursements 1987 1988 1989 1990 1991 1992 1993 -------------