India - Bombay Urban Development Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 16678 IMPLEMENTATION COMPLETION REPORT INDIA BOMBAY URBAN DEVELOPMENT PROJECT (CREDIT 1544-IN) June 10, 1997 Energy and Infrastructure Operations Division Country Department II South Asia 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 = Rupee (Rs.) Year U1S5j Rs. SDR I= US $ 1983 (Appraisal) I1 00 1.002 1985 (Credit Effectiveness) 12 05 1.17 1986 12 48 1.20 1987 12 63 1.25 1988 (Mid Term) 13 24 1.29 1989 1634 1.32 1990 (Original Credit Closing) 17 26 1.39 1991 20 73 1.31 1992 3006 1.45 1993 31 22 1.40 1994 (Revised Credit Closing) 31 36 1.40 All rates are as of April of each year except 1982 and 1985. The rate used for 1985 was of August 1985. Average rate over the implementation period was Rs. 20.33/US$. FISCAL YEAR OF BORROWER April I to March 31 ABBREVIATIONS AND ACRONYMS ALIS Affordable Low Income Shelter Program BMC Bombay Municipal Corporation BMR Bombay Metropolitan Region BMRDA Bombay Metropolitan Region Development Authority BUDP Bombay Urban Development Project CIDCO City and Industrial Development Corporation ERR Economic Rate ol Return FOP Finance and Operations Plan (model) FSI Floor Space Inde. GIS Geographic Information Systems GOI Government of India GOM Government of Maharashtra KMC Kalyan Municipal Corporation LISP Land Infrastructure Servicing Program LOGFAS Local Government Finance Administration and Services NMMC/NBMC Navi Mumbai Municipal Corporation/Navi Bombay Municipal Corporation MEIP Metropolitan Environmental Improvement Program MHADA Maharashtra lousing and Area Development Authority MIS Management Information Systems RCA Rent Control Act SAR Staff Appraisal Report SUP Slum Upgrading Program TATE Technical Assistance Training and Equipment TMC Thane Municipal Corporation ULCA Urban Land Ceiling Act Vice President Mieko Nishimizu Director - Robert S. Drysdale Division Chief Jean-Frangois Bauer Task Manager Argun Ceyhan FOR OFFICIAL USE ONLY IMPLEMENTATION COMPLETION REPORT INDIA BOMBAY URBAN DEVELOPMENT PROJECT (Credit 1544-IN) TABLE OF CONTENI S PREFACE E V A L U A T IO N SU M M A R Y ................................................... ...................................................................i PART I: PROJECT IMPLEMENTATION ASSESSMENT ................................................................1 A . P roject O bjectiv es .................................................. ................................................................... B . A chievem ent of Project O bjectives........................ ...................................................................3 C . M ajor Factors A ffecting the Project......................................................................................10 D . P roject S u stainab ility .............................................. ................................................................. 12 E . B ank P erform ance.................................................................................................................... I 2 F . B orrow er P erform ance .............................................................................................................13 G . A ssessm ent of O utcom e ........................................ ..................................................................15 H . F u tu re O p eration s .......... ....................................... ................................................................. I 6 1. K ey L essons L earned ............................................ .................................................................. 16 PART II: STATISTICAL ANNEXES Table 1 Summary of Assessments Table 2 Related Bank Loans/Credits Table 3 Project Timetable Table 4 Loan/Credit Disbursements: Cumulative Estimated Actual Table 5 Key Indicators for Project Implementation Table 6 Key Indicators for Project Operation Table 7 Studies Included in Project Table 8a Project Costs Table 8b Project Financing Table 9 Economic Costs and Benefits Table 10 Status of Legal Covenants Table 11 Compliance with Operational Manual Statements Table 12 Bank Resources: Staff Inputs Table 13 Bank Resources: Missions Appendix A: Mission's Aide-Memoire Appendix B: Borrower's Letter dated May 23, 1997. Appendix B-Annex I: Borrower Contribution to ICR. 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. IMPLEMENTATION COMPLETION REPORT INDIA BOMBAY URBAN DEVELOPMENT PROJECT (Credit 1544-IN) Preface This is the Implementation Completion Report (ICR) for the Bombay Urban Development Project (BUDP)* for which a Credit of SDR 137.7 million (equivalent to US$138 million at the time of appraisal) to India was approved on January 29, 1985. The Credit became effective on August 22, 1985. The Credit was closed on September 30, 1994 after being extended five times from the original closing date of September 30, 1990. Final disbursement took place on May 17, 1994. A total of SDR 93,495,400 (equivalent to US$124.89 million) were disbursed. A total of SDR 44,204,600 had earlier been canceled in 1991 and 1993. The ICR was initiated by a mission comprising of Mr. Evan Rotner (Mission Leader) and Ms. Kim Cuenco (Urban Planner)". The ICR was reviewed by Mr. Jean-Frangois Bauer, Chief, Energy and Infrastructure Operations Division and Mrs. Kazuko Uchimura, Project Adviser, Country Department II, South Asia Region. Preparation of this ICR began after the Bank's final supervision mission (September 1994). It is based on material in the project files. The Borrower assisted significantly in the preparation of the ICR by preparing their own evaluation of the project's execution and initial preparation, and commenting on the initial draft ICR as well as a subsequent revised draft. The Borrower's comments on the latter are given in Appendix B. The Bank's and the Borrower's conclusions on Bank Performance, Borrower Performance and Assessment of Outcome differ significantly. Because of this reason, the Borrower's contribution has been included in the ICR in its entirety (Appendix B). The name "Bombay" has been changed to "Mumbai". However, since the original name of the Project is Bombay Urban Development Project, the name Bombay was used in this ICR to refer to the current name of Mumbai. Mr. Sunil Mathrani, Consultant, contributed to the completion of the report, in early 1997. IMPLEMENTATION COMPLETION REPORT INDIA BOMBAY URBAN DEVELOPMENT PROJECT (Credit 1544-IN) EVALUATION SUMMARY Introduction 1. The Bank's initial involvement in urban development in India began in the 1970s and focused on three of India's largest cities -- Calcutta, Madras and Bombay. The objective of these interventions was to raise the level of services provided to the population, and to strengthen urban planning and service delivery institutions, particularly those of local government. The scope of these urban activities were subsequently broadened to include medium-sized cities. The Bombay Urban Development Project (BUDP) identified land, infrastructure and shelter development as being the most critically neglected Bombay Metropolitan Region (BMR) problems which were not addressed by the Bank's earlier projects. The Project formed part of the Government of Maharashtra's (GOM) Affordable Low Income Shelter (ALIS) Program in BMR for the period 1983/84-1989/90. The overall objective of ALIS was to reduce the absolute number of households living in slums by increasing the supply of affordable shelter particularly to the poor. BUDP also supported GOM's efforts to improve policies and institutions affecting the management of urban development. Project Objectives 2. The project aimed to increase the public supply of affordable land, infrastructure and shelter, particularly for low income families. It sought to improve local governments' financial and administrative capacity to deliver and maintain services, and to plan and execute urban projects. In so doing, it aimed to significantly reduce the cost of shelter investments through more efficient and equitable land use planning and pricing policies, appropriate performance- oriented design standards and development control and building regulations. Finally, it aimed to direct a larger proportion of private investment in land servicing and shelter construction into low cost units for low income families. 3. Although the objectives remained valid and unchanged throughout the life of the Project, the emphasis shifted away from slum upgrading to municipal services and infrastructure when the project was restructured in late 1990. Looking back, it is clear that these objectives although ambitious, were correct, given the problems identified at the time of project preparation. Implementation Experience and Results 4. The project had four major components: - 11 - (a) Land Infrastructure Servicing Program (LISP); (b) Slum Upgrading Program (SUP); (c) Local Government Finance Administration and Services (LOGFAS); and (d) Technical Assistance, Training and Equipment (TATE). Under LISP, physical targets for sites and services schemes were almost fully met. Affordable, serviced plots were sold to nearly ninety thousand low-income households. However, the target was achieved over a period of nine instead of five years, as expected at appraisal. This time overrun has been taken into account in the overall project evaluation. 5. Only 22 percent of the SAR target for SUP was achieved. The component proved very difficult to implement for a number of reasons, which shows the lack of a strong constituency for in-situ slum upgrading on a cost-recovery basis. The scheme was undermined by competition from several parallel programs that financed essential infrastructure in slums, or provided new, free (or almost-free) housing to slum dwellers (Part 1, para. 9). 6. Financial objectives (affordable pricing for low income beneficiaries, while ensuring full cost recovery, charging real interest rates, and significant internal cash generation for project funding) were substantially achieved. A revolving fund created in the Bombay Metropolitan Region Development Authority (BMRDA), from part of the repayments to GOM by the implementing agencies is now operational. It is contributing to the development of capacity for financial intermediation in the area of municipal infrastructure. 7. Objectives regarding reforms in rent control, property tax and urban land ceiling were not fully achieved. They were considered essential for achieving the long-term objectives of ALIS, but no specific actions were explicitly included in the project conditionality. The Bank expected GOM to pursue these reforms in parallel with the project. It would appear that while there was agreement on the importance of reforms between the Bank and Government officials, the complexities and resistance to such reforms were not adequately taken into account. The Bank made a concerted attempt to promote these reforms and the unusually long delay in negotiating the project shows the extent of the efforts made (Part I, paras. 18-21). 8. The technical capacity of BMRDA, the Maharashtra Housing and Area Development Authority (MHADA) and the City and Industrial Development Corporation (CIDCO) to formulate, plan and implement projects was strengthened during the Project. Nevertheless, experience with this project has shown that the ability of BMRDA and GOM to successfully coordinate large, multi-agency programs remains weak. Hence, the overall achievement of this objective was only partial. - 111 - Project Sustainability 9. The project is unlikely to be sustainable because of the lack of political and institutional commitment to its approach. BUDP, with its emphasis on cost recovery, and offering products with limited visibility encountered difficulty in evoking political commitment, particularly as regards major legislative reforms. Frequent changes in leadership at the institutional level also contributed to this difficulty. The Project would be sustainable only if GOM demonstrates commitment to the project's approach and objectives, which has not been the case for slum upgrading. Sustainability and replicability of future sites and services schemes would be enhanced if they did not have to rely on governmental land, whose supply in the BMR is now limited. Project Cost, Financing and Schedule 10. The Project closed with a rupee expenditure of Rs. 435.81 crores (US$214.33 million) as against Rs. 282.33 crores (US$256.70 million) estimated in the SAR, but with a corresponding Credit utilization of SDR 93 million (US$124.889 million) instead of the estimated SDR 137.7 million (US$138 million). The SAR estimated a 6.5 year completion period, but this proved to be over-optimistic as nine years were required instead. The Project was restructured with two successive credit cancellations of SDR 37 million in December 1991 and SDR 7.20 million in June 1993 (Part I, para. 5). By June 1994, the balance of SDR 93 million was fully disbursed before the final closing date of September 1994. Major Factors Affecting Achievement 11. Communal disturbances in Bombay during the short period between December 1993 and February 1994, and the continuous depreciation of the rupee, particularly after the Gulf War in 1991, adversely affected credit utilization. These factors were not within GOI's control. Within Government control were several factors that influenced project implementation. First, efforts to reform the Rent Control Act (RCA) and the Urban Land Ceiling Act (ULCA) were ineffective. Second, the lack of government commitment to the SUP approach led to the continuation of grant-based improvement schemes and subsidized tenement programs which made SUP less attractive, and resulted in the limited achievement of these objectives. Third, although introduced for well-intentioned environmental considerations, the general ban on quarrying and development of coastal wetlands adversely affected project implementation (Part I, para. 30). Fourth, the unrealistic policy of retaining development plan reservations on slums held up the transfer of tenure to slum dwellers' cooperatives. 12. With the exception of MHADA, implementing agencies administered BUDP as a part of their other ongoing activities. This resulted in less attention being given to BUDP. There were also delays in bid evaluation and decisions regarding award of contracts by the Standing Committee which have been chronic problems in the Bombay Municipal Corporation (BMC). Many of the delays were mainly due to weak coordination at the governmental level which failed to resolve issues in a timely manner. - iv - Bank and Borrower Performance 13. Apart from a few shortcomings, Bank performance was generally satisfactory in the identification and preparation, and marginally satisfactory in appraisal and supervision of the project. The unbroken continuity of the Bank Task Manager (Part I, para. 42) and the BMRDA Manager responsible for the project was a positive feature. However, the Bank should have allocated more resources for supervision during the last three years of implementation. 14. The Project had six implementing agencies plus a coordinating body and four distinct components'. Performance varied according to agency and component and over time. It is extremely difficult to integrate this degree of diversity into a single measure of Borrower performance spread over a twelve-year period. Nevertheless, on balance, Borrower performance is rated as marginally satisfactory, although this assessment would not be justified for all implementing agencies. Assessment of Outcome 15. Despite the partial fulfillment of project goals, the overall outcome is assessed as marginally satisfactory, principally because of the success of the project's largest component, LISP 2. By meeting the objective of improving the supply of serviced public land to low-income households, the project has enabled over half a million persons to benefit directly from the investments undertaken by the project. The majority of the beneficiaries were close to, or below the poverty line (Part I, para. 26). These benefits imply the transfer of real assets to the poor and the project has thereby contributed to alleviating poverty. Finally, the ERR surpassed SAR estimates (Part I, para. 25) and the project's financial targets have also been met. Findings and Key Lessons 16. The Project has demonstrated that: (a) The design of urban development projects should explicitly take into account socio-political factors that have a key impact on sector policies and where possible, alternative less ambitious reform options should be considered (Part I, para. 22); 1/ Implementing Agencies Project Components Maharashtra Housing and Area Development Authority (MHADA) LISP, SUP, TATE City and Industrial Development Corporation (CIDCO) LISP, LOGFAS, TATE Bombay Municipal Corporation (BMC) LISP, SUP, LOGFAS, TATE Thane Municipal Corporation (TMC) LOGFAS, TATE Kalyan Municipal Corporation (KMC) LOGFAS, TATE Navi Bombay Municipal Corporation (NBMC) LOGFAS, TATE Bombay Metropolitan Region Development Authority (BMRDA) was the coordinating body. / Estimates at appraisal were 85,000 plots; they were revised to 88,000 plots during restructuring. Actually, 87,743 plots were developed under the program (Tables I and 2) (b) even holding up the processing of a substantial loan in support of investments is insufficient to bring about required legal and institutional reforms (Part I, para. 18). However important the reforms may be, they will only occur if there is sufficient political will to confront the vested interests resisting them. Once a loan becomes effective, attention is focused more on project-specific implementation objectives at the expense of broader and politically difficult sectoral reforms; (c) the Bank should not undermine its credibility by making explicit policy declarations to Borrowers and then ignore its own self-declared policy (Part I, para. 20); (d) a project's physical and financial objectives can be largely achieved despite distorted sector policies. As a result of BUDP, about half a million poor people have benefited from serviced plots and housing loans financed by the project. The implementing agencies have acquired substantial financial resources from plot sales as a direct result of their participation in the project and are thus in a position to replicate the physical achievements of the project (Part I, para. 51); (e) in order for such urban development programs involving multiple agencies to be implemented efficiently, it is necessary to strengthen the planning, coordination and management of urban services by these agencies. Improvement of procurement practices is also essential (Part I, para. 35 (e)); and (f) frequent changes of key personnel and staff, particularly from the Indian Administrative Service cadre have been a common problem in implementing long-term programs. This has also been true of important engineering positions in BMC and MHADA. The continuity of key personnel is critical to ensure commitment to project objectives. IMPLEMENTATION COMPLETION REPORT INDIA BOMBAY URBAN DEVELOPMENT PROJECT (Credit 1544-IN) PART I. PROJECT IMPLEMENTATION ASSESSMENT A. PROJECT OBJECTIVES Background 1. The Bank's initial involvement in urban development in India began in the early 1970s and focused on three of India's largest cities -- Calcutta, Madras and Bombay. The objectives of these interventions were to raise the level of services provided to the population, and to strengthen urban planning and service delivery institutions, particularly those of local government. The scope of these urban activities was subsequently broadened to include medium-sized cities. 2. The Bombay Urban Development Project (BUDP), prepared in 1982-83, identified land, infrastructure and shelter development as the most critically neglected problems in the Bombay Metropolitan Region (BMR). These had not been addressed by the Bank's earlier single-sector urban projects in Bombay, which had focused on the transport, water supply and sewerage sectors. The Project formed part of the Government of Maharashtra's (GOM) Affordable Low- Income Shelter (ALIS) Program in the BMR for the period 1983/84-1989/90. This program's long-term objective was to reduce the absolute number of households living in slums by increasing the supply of affordable shelter particularly to the poor. BUDP also supported GOM's efforts to improve policies and institutions affecting the management of urban development. Statement of Objectives 3. The main objectives of the Project were as follows: (a) to increase the public supply of affordable land, infrastructure and shelter particularly for low income families and small businesses; (b) to improve local government's financial and administrative capacity to deliver and maintain services, particularly infrastructure created under BUDP; (c) to strengthen the government's institutional capacity to plan, coordinate, implement, and evaluate BUDP projects. programs, and policies, and to replicate the achievements; -2- (d) to improve public sector cost recovery and to reduce in a major way public and private costs of shelter investments through more efficient and equitable land use planning and pricing policies and more appropriate performance-oriented design standards, development control and building regulations; and (e) to direct a larger proportion of private investment in land servicing and shelter construction into low cost units for low income families. 4. These objectives were translated into physical and investment targets as shown in Table 11. Objectives (a) and (d) were directly and substantially supported by the investment program. Objective (b) was partly supported by the investment program and technical assistance component. Objective (c) was supported through the broadly defined technical assistance and training component. However, objective (e) entailed legislative reforms, particularly in the Rent Control Act and Urban Land (Ceiling and Regulation) Act. Table 1. Bombay Urban Development Project Project Components Original SAR (1985) Restructured (Dec. 1990) COMPONENTS Ph3sical Financial 1% Toial Physical Financial % Total S(Rs crores) ( Rs crores) 1. Land Infrastructure 85,000 196.3 69 88,000 366.3 67 Servicing Program (LISP) plots plots of which: Not incl. (109.2) (20) la. New Infrastructure works 2. Slum Upgrading Program 100,000 53.4 19 60,000 21.6 4 (SUP) house- house- holds holds 3. Local Government 30.8 11 146.5 27 Finance Administration & Services (LOGFAS) of which: Not incl. 3a. Additional services for 12 BMR towns. 4. Technical Assistance, 1.9 1 10.0 2 Training & Equipment (TATE) TOTAL 282.4 100 544.4 100 5. The Project was formally restructured in December 19902 because only 37 percent of the Credit had been disbursed at its original closing date (September 1990). A three-year extension of the closing date was proposed and additional infrastructure investments costing about US$ 35 I/ Further details for physical targets (appraisal, revised and actual) are given in Part II; Table 5. 2/ A memorandum (No. R90-156) dated 14 December 1990, seeking appro, al for the restructuring was submitted to the Board. -3- million, such as water supply and storm drainage were included in the project scope. The Credit was also redistributed within categories, but no partial cancellation was envisaged at that point. The respective scopes of LISP linked to off-site infrastructure and that of LOGFAS was considerably increased as part of the restructuring, while the SUP target was reduced and the funds allocated to it cut by US$ 35 million (Part II, Table 5). Other BMR municipalities were also brought within the scope of the project. Evaluation of Objectives 6. Although the objectives remained valid and unchanged throughout the life of the Project, the emphasis shifted away from slum upgrading to municipal services and infrastructure when the project was restructured. Looking back, it is clear that these objectives although ambitious, were correct, given the problems identified at the time of project preparation. While the importance of urban land and rent policy changes was widely recognized, given their highly political nature, it was unrealistic to expect that these reforms could be achieved as a result of pressure from the Bank through the limited leverage of the Project alone (para. I1). B. ACHIEVEMENT OF PROJECT OBJECTIVES Physical Components 7. The LISP component (accounting for nearly 70 percent of disbursements), comprised sites and services schemes that predominantly developed 25-40 square meter sized plots with access to public utilities and community facilities. The plots were sold at prices that varied according to size, location and access to amenities. A covenant in the Project Agreement obliged GOM to ensure that at least 55 percent of the plots were sold to households at or below the Bombay poverty line. The LISP physical targets were fully met, but were achieved over nine instead of the expected five years. However, the SUP target was achieved only to the extent of 22 percent of the SAR target, despite the four-year extension of the project period. The physical and financial progress of these components are given in Table 2. Table 2. Project Implementation Performance SAR Original Restructured (Dec. 1990) Attual Actual as % ofre*tactamd Conponent Physical Financial Physical Financial Physical Financial Phyrical Anancial (Rs croresi (Rs croresi (Rs crores) % % 1 - la LISP si'0 orp 3 88,00(1 36o3 ','43 2977 997 31 plots plots plots 2. SUP 100,000 53.4 60,000 21.6 22,204 7.5 37.0 35 households households households 3. LOGFAS - 30.8 - 146.5 - 118.1 - 81 4. TATE (including - 1.9 - 10.0 - 12.5 - 125 MEIP * BUDP Total - 282.3 544.4 435.8 - 80 * MEIP: Metropolitan Environmental Improvement Program -4- Slum Upgrading Program 8. This component was intended to cover in-situ improvements for about 100,000 households, living mainly within the BMC area and accounting for about 12 percent of total number of households estimated to be living in hutments in 1981. The component consisted of infrastructure improvements, loans for home improvement and leasehold tenure. 9. The component proved very difficult to implement for a number of reasons, which boil down to the lack of a strong constituency for in-situ slum upgrading on a cost-recovery basis. First, the scheme was undermined by several parallel programs that financed essential infrastructure in slums, or provided new, free (or almost-free) housing to slum dwellers. A substantial proportion of the target slums for SUP were thus reassigned to the Prime Minister's Grant Project, launched in 1987, which provided nearly Rs. 60 crores to GOM for slum relocation as well as in-situ improvements. The GOM budget also allocated Rs. 3 million per year to each Member of the Legislative Assembly (MLA) for slum improvement grants in their constituencies. Second, most of the slums were on land that had been classified for other public uses. Reclassifying the land use encountered resistance from MHADA/BMC, which would have preferred this land to have remained in the public, non-residential domain for future development by these public agencies. Third, in-situ improvements were also disliked by their staff because they did not lead to public works contracts for them to administer. Finally, granting legal tenure to slum dwellers was also disliked by some local politicians as it diminished their influence because slum dwellers relied on these politicians to protect them from eviction. 10. The project's approach to slum upgrading thus did not serve as a model for other schemes. On the contrary, politicians encouraged slum dwellers to opt for 'free' schemes and their demonstration effect (even if demand far outstripped supply), reduced community demand for the Bank-funded SUP. Programs requiring unsustainable levels of subsidies, quite contrary to BUDP principles and approaches, thus became more popular amongst the target beneficiaries. 11. With hindsight, it appears that the decision taken at the time of project restructuring (December 1990) to retain this component' in the project was not justified. It should have been canceled' because the nature and extent of the obstacles to implementing SUP was apparent to Bank and Project staff by that stage. In August 1991, a letter from the Bank to the Metropolitan Commissioner, BMRDA, stated that tenure for slum dwellers was as important as physical improvements and contained a warning that the Bank would "discontinue financing" the SUP component in the absence of remedial action. However, this threat was not acted upon, even though it would appear' that no further slum households benefited from the project over the remaining three years of implementation. 3/ Albeit with a 40 percent reduction in the target number of households to 60,000. 4/ However, it should be recognized that there would probably have been considerable reluctance on the part of the Bank as well as GOI to explicitly recognize that the SUP was a failure due to the power of vested interests which could not be overcome. 5/ The Bank's letter of August 22, 1991 states that about 22,000 households had been covered by SUP at that point. The total number of benefiting households at loan closure in September 1994 was unchanged. -5- Institutional Strengthening and Capacity Building 12. Objective (b) was addressed through the Local Government Finance and Administrative Systems (LOGFAS) component and partly supported by the Technical Assistance, Training and Equipment (TATE) component. The technical capacity of BMRDA, MHADA and CIDCO to formulate, plan and implement projects was strengthened during the Project. Nevertheless, experience with this project has shown that the ability of BMRDA and GOM to successfully coordinate large, multi-agency programs remains weak. Hence, the overall achievement of this objective can only be considered as partial. 13. Objectives (b) and (c) were supported by a large number of studies and consultant services (Part II, Table-7). In particular, technical assistance succeeded in significantly developing institutional capacity in the following areas: (a) formulation and evaluation of land development projects targeted mainly towards low-income beneficiaries through the use of computer-based models in BMRDA, MHADA and CIDCO; (b) use of a computerized lottery system for beneficiary selection and commercial accounting for monitoring and collection of accounts receivable in MHADA; (c) use of a network-based, computerized Project Management System and computerized tracking of procurement, expenditure and Credit utilization in BMRDA; and (d) introduction of a Geographic Information System (GIS) for use in regional land use planning, transportation, other infrastructure planning and environmental management activities in BMRDA. 14. As a municipal finance agency, BMRDA made effective use of computerized Finance and Operations Plan (FOP) models for loan appraisals. On the other hand, the organization and management studies carried out under the TATE component for MHADA, the Thane Municipal Corporation (TMC), the Kalyan Municipal Corporation (KMC) and the Navi Mumbai Municipal Corporation (NMMC) have had very little institutional impact. While the studies were good, they were not utilized by the implementing agencies. 15. The project's cost reduction objective was directly related to LISP. This objective was addressed by obtaining GOM's approval to modify land use and design standards for LISP. Similar standards were later incorporated in the Development Control Regulations (1991) of the revised Development Plan of Bombay, thus substantially meeting this objective. The project demonstrated that in the metropolitan shelter sector, increasing the supply of affordable serviced land through modifications in land use regulations and provision of trunk infrastructure to promote private land development for all income groups is fundamental. The direct investment by public agencies in land development was an important part of the overall strategy with important demonstration effects. -6- Reform of Sector Policies 16. There was limited success in directing a larger proportion of private investment in land servicing and shelter construction into low cost units for the poor (Objective e). These actions depended on legal and sectoral reforms in rent control, property tax and urban land ceilings, which have not taken place. They were considered essential for achieving the long-term objectives of ALIS, but no specific actions were explicitly included in the project conditionality. The Bank expected GOM to pursue these reforms in parallel with the project. 17. BMRDA and GOM, also attempted several times to implement a pilot scheme of 'Guided Land Development' to attract private investment for low-income housing construction within the existing legal framework with financial support from the Project. However, as a first step, BMRDA was to develop sites and services on land acquired though compensatory acquisition. This scheme could not be implemented successfully either because of the refusal of landowners to give up their properties. Then, BMRDA changed its approach to guided land development, and began promoting commercial development at a district center. Under this modified approach, land was acquired notionally by GOM and returned to the owners provided they agreed to develop it along the guidelines set by BMRDA. In the end, this approach stimulated land assembly, public use and the commercial development of the district center as originally envisaged by BMRDA. Presently, BMRDA is using FSI as incentive and mechanism to bring about guided development, e.g. landowners get bonus FSI if they agree to allocate a portion of their land to smaller plots for the poor. Hence, GOM has not given up on guided land development but rather has enlarged its scope as part of its land policy mechanisms. Since then, BMRDA has extended the concept of Guided Land Development which is based on incentives in the form of development rights in its draft Regional Plan'. 18. The Project Appraisal team sought amendments to the Rent Control and BMC Acts in the second half of 1983, prior to negotiations. Even at that stage, DEA had advised GOM that rent control reform was outside the scope of the issues which were relevant to the IDA interest in project'. Since rent control reform by any single state raised national issues, GOI felt that they should not be a condition of negotiations. Nevertheless, the Decision Memo issued after the review of the Issues Paper records that 'GOM should be requested to furnish IDA with a statement of intention prior to negotiations which should include its detailed action plan for rent control reform and a reasonable timeframe within which this objective would be achieved'. The subsequent letter from the Bank to GOI conveyed these conditions of negotiations'. 19. GOM attempted to satisfy this condition by drafting legislative amendments by the time the Bank was ready to negotiate the Credit following Loan Committee clearance in January 1984. However, DEA formally responded to the Bank's insistence on a statement of intent by stating that 'it is not the policy of GOI or the state government to submit statement of intentions 6/ Draft regional plan for the Bombay Metropolitan Region, 1991-2011, BMRDA, 1994. 7/ Para. 23 of the Issues Paper dated 13 September 1983. / Letter from the Country Programs Division Chief to the Joint Secretary, DIA, dated 31 October, 1983. -7- since it is not possible for any government to commit the legislature in this manner'. There was no progress on this issue during the first half of 1984. 20. Thereafter, Bank staff attempted for several months to find a compromise which would enable negotiations to take place. Finally, in October 1984, the Regional Management sought and obtained the approval of the Senior Vice President, Operations (SVPO) to proceed with negotiations, even without a statement of intentions, on the grounds that these reforms were not critical in the short term to the financial viability of the project'. However, the SVPO suggested that the project size be reduced and GOI be advised that the Bank 'would not be prepared to undertake further lending for urban housing projects whose long-term viability is affected by rent control, unless satisfactory progress is made by GOM in enacting the envisaged amending legislation'". 21. The negotiations were completed in December 1984, eleven months after initial Loan Committee approval. The GOI delegation succeeded in convincing the Bank to retain the original size of the project without giving any specific assurance on rent control and property tax reform. The agreed minutes of negotiation record that 'rent control reform was an important objective of the Government, as reflected in the Approach Paper of the Seventh Five-year Plan, and there was every intention to achieve this objective during the Seventh Plan Period'. 22. In conclusion, it would appear that while there was agreement on the importance of reforms between the Bank and Government officials at a technocratic level, the political risks to any government in Maharashtra of such reforms were not adequately taken into account. The Bank made a concerted attempt to promote these reforms and the unusually long delay in negotiating the project shows the extent of the efforts made. However, the political power of the 'renters lobby' which has prevented any reform in the State till today, should have been apparent to both sides even at that time. The Project showed the futility of using a single investment project to leverage major reforms when the political commitment does not exist. Nevertheless, although ULCA and RCA were not repealed, partial reforms did take place at the State level. Some exemptions to the ULCA were given provided the landowner was prepared to develop land in a manner similar to sites-and-services. There were also some minor changes to the RCA. Additionally, BUDP tried to change existing standards that governed the land development process which limited public-private partnership and raised the cost of housing for the poor. Under the Project, the Bank succeeded in obtaining a GOM sanction to modify land use and design standards of the LISP component. The LISP provided serviced sites, including community facilities, core houses and housing expansion loans to over 110,000 households of which the majority were in lower income groups. Similar standards were later incorporated into the 1991 Development Control Regulations of the Revised Plan of Bombay. With regard to the acquisition of land for slums under the SUP component, although these were planned prior to project approval, the Project encountered many unanticipated problems, such as the coastal zone management plan (excluded coastal land), ban on quarrying for reclamation materials, changes of 9/ Memo from the RVP to the SVPO, dated 23 October, 1984. 10/ The Bank ignored its own self-declared ban on further lending by proceeding with other urban projects in India even though there was no progress in rent control reform. -8- reservations in the master plan for the transfer of tenure (the master plan was concurrently under revision at the time of project preparation), etc. Financial Objectives 23. The Project's financial objectives included affordable pricing for low income beneficiaries, while ensuring full cost recovery, and the charging of real interest rates to beneficiaries. These have been substantially achieved. Households were granted loan funds for part of the cost of the plots at unsubsidized conditions (12 percent interest rate over 20 years). Some problems were inevitably encountered with loan repayments by beneficiaries, but these have not jeopardized inflows to the BMRDA Revolving Fund (para. 24). Internal cash generation by the project in the sites and services component exceeded the minimum 50 percent of project costs projected at appraisal. This is due to income derived from the much higher than projected sale prices and revenues generated by the sale of middle and upper income residential and commercial plots. 24. In addition, the BMRDA-BUDP Revolving Fund was created in BMRDA in 1988, in part to assist the agency in developing the capacity for financial intermediation in the area of municipal infrastructure. The Revolving Fund is fed by 45 percent of the principal to be repaid by the implementing agencies to GOM and is intended for use in financing future programs similar to BUDP. Annual inflows are currently about Rs. 20 crores and approved loans (at 12 percent for 15 years) to BMR municipalities to date amount to Rs. 32 crores. Economic Rate of Return (ERR) 25. The project was designed as a program consisting of discrete components. The ERR was not therefore worked out for the overall project, but was estimated for representative sub-projects. The SAR estimated a weighted average rate of return based on prototype LISP and SUP sites to be 20.4 percent (17.9 percent and 31.0 percent, respectively). The LISP ERR was estimated to range from 13 percent in Thane-Kalyan areas to 18 percent in Greater Bombay and 27 percent in New Bombay. The methodology adopted included all costs net of taxes, and took as economic benefits the rental values of residential, commercial and institutional plots. Following a similar methodology, the ERRs for three representative sites in Thane, Greater Bombay and New Bombay have been re-estimated on the basis of actual costs incurred (net of taxes), market prices and rental values at the time of first allotment of plots. The re-estimated ERRs work out to be 42.7 percent, 33.5 percent and 40.9 percent respectively (Part II: Table-9). Despite the longer period of construction, the ERRs are higher on account of the substantial increase in real estate prices and rental values in the BMR. The SAR estimate of the ERR was based on land sale prices of Rs 45-600 per sq. meter while the ex-post ERR has been calculated using Rs 750-4500 per sq. meter. Other non-quantified benefits from the project include: (a) substantial private investment in building construction; (b) considerable employment generation through small contractors who built single- storied simple structures for low-income cooperatives; and -9- (c) poverty alleviation. The ERRs of individual schemes in SUP were also above the SAR estimates, mainly because of the substantial increase in real estate rental values and the transfer of land tenure being an integral part of SUP. Social Objectives and Gender Concerns 26. The social objectives of the project focused on poverty alleviation and the lack of access of the poor to urban services. In particular, the LISP component had an explicit target of 45 to 55 percent of plots to be allocated to families below the poverty line, and 10 to 20 percent of plots for income groups immediately above the poverty line. A comparative profile of LISP beneficiaries and income distribution based on household survey carried out for BMR1 in 1989 showed that this objective was met in terms of number of sites developed and the beneficiary proportions. Similarly, under SUP, a large proportion of beneficiaries were below the poverty line, as confirmed in the base line surveys carried out by the BMRDA. While no formal survey has been conducted on plot resales, the percentage is likely to be about 15-20 percent. Plot layout and sizes have limited the transfers to the same low-income income group, with newer migrants buying plots from more established residents with already existing housing arrangements. The reason for this is that the eligibility criteria used for selection of household required a minimum period of residency in the city. This left out a large category of poor households who are recent migrants to the city and in search of a more stable residence. Although the project did not have any explicit gender objectives, the Borrower adopted a policy of granting land tenure under SUP jointly to both the spouses of a household. Environmental Objectives 27. The project was prepared in 1982-83, at which time environmental concerns were not explicitly addressed. Nevertheless to the extent that the project provided basic infrastructure services, it had beneficial environmental impacts. LOGFAS investments, particularly in storm water drainage, assisted in flood prevention. 28. Moreover, a set of environmental studies for the Bombay Metropolitan Region were included in the scope of the restructured project as part of the Bank-executed Metropolitan Environmental Improvement Program (MEIP). These studies were successfully implemented under the TATE component. They were: a) an environmental management strategy for the Bombay region; b) integrated environmental management of the Chembur-Thane-Belapur industrial as; and c) a solid waste management study. 1/ Multipurpose household survey conducted jointly by ORG and BMRDA, 1990. - 10- A considerable number of follow-up investments and policy initiatives emerged from this work. Some have been taken up by the private sector, but there are several which the Government of Maharashtra and donors could support in the areas of solid waste management and water supply improvements, low cost sanitation and hazardous waste treatment. C. MAJOR FACTORS AFFECTING THE PROJECT 29. There were two sets of factors outside government control which had a significant effect on project implementation. These were the communal disturbances and bomb blasts in Bombay during the short period between December 1993 and February 1994, and the continuous depreciation of the Rupee, particularly after the Gulf War in 1991. Between Effectiveness and Credit closing, the SDR strengthened by about 285 percent against the Rupee while the Indian Consumer Price Index rose much less (about 220 percent). Hence the amount of the Credit available in real terms rose sharply. Credit utilization in SDR terms (93.5 million) therefore appears poor as compared to the initial SDR 137.7 million. On the other hand, spending in Rupee terms (436 crores) was much higher than projected (Rs. 282 crores). 30. Within government control were several factors that influenced project implementation. First, efforts to reform the RCA and ULCA were ineffective. Second, the lack of government commitment to the SUP approach led to the continuation of grant-based improvement schemes and subsidized tenement programs which made SUP less attractive, and resulted in the limited achievement of these objectives (para. 9). Third, although introduced for well-intentioned environmental considerations, the general ban on quarrying and development of coastal wetlands adversely affected project implementation because the LISP component depended on stone from the closed quarries and also some of the area to be developed lay within the coastal wetlands. Due to the absence of proper planning and administrative measures to resolve this problem, implementation of LISP was considerably delayed. Fourth, the unrealistic policy of retaining development plan reservations on slums held up the transfer of tenure to slum dwellers' cooperatives. 31. Of the factors within the control of implementing agencies, several had an important impact on implementation. First, with the exception of MHADA, implementing agencies administered BUDP as a part of their other ongoing activities. This resulted in insufficient attention being given to BUDP. Realizing the need for closer monitoring and review, BMC subsequently assigned these responsibilities to the Chief Engineer of the Project Planning and Monitoring Cell, and Additional Municipal Commissioner after 1990. Second, delays in bid evaluation and decisions regarding award of contracts by the Standing Committee have been chronic problems in BMC. Although BMRDA produced monthly reports which compared progress vis-a-vis annual targets, it lacked the authority to introduce the necessary measures to speed up contract award. The Technical and High Power Committees constituted by GOM were largely ineffective in enforcing recommended actions. 32. The Project was conceived more as a program based on prototype projects rather than as a conventional fully designed investment project where the entire investment is appraised upfront. Certain deviations in the costs were therefore inevitable. Estimation of physical quantities, base unit costs and price contingencies were largely adequate. In fact, there were initial cost - 11 - underruns, particularly in land reclamation. However, as the initial IDA Credit was determined using a constant exchange rate, significant rupee depreciation meant that an increase in investments in rupee terms could be supported without difficulty by the Credit. The project closed with a rupee expenditure of Rs. 435.81 crores (US$214.3 million) as against Rs. 282.3 crores (US$256.7 million) estimated in the SAR, but with a corresponding Credit utilization of SDR 93 million (US$124.9 million) instead of SDR 137.7 million (US$138 million) estimated in the SAR. The Project was implemented through 1,327 contracts, out of which 1,248 smaller contracts were awarded through Local Competitive Bidding (LCB) procedures. The performance of contractors was generally satisfactory, although in most cases there was some time overrun. 33. The SAR estimated a 6.5 year implementation period. However, achieving the LISP target could only be accomplished with the extension of the credit closing date by four years to September 1994, for reasons given in para. 35. Some project completion works continued up to May 1995. 34. According to the initial SAR disbursement profile, SDR 137.7 million was to be fully utilized by September 1990. However, actual disbursement at that time was only SDR 40 million (42.8 percent - Part II, Table 4a). Subsequently, there have been two cancellations. SDR 37 million in December 1991 and SDR 7.20 million in May 1993. By June 1994 the remaining SDR 93 million was fully disbursed before the final closing date of September 1994. 35. The reasons for the project delays were as follows: (a) Although the original implementation schedule appeared appropriate at that time in order for the project to have a significant sectoral impact, the delays that have occurred during implementation have shown it to have been unrealistic; (b) many of the delays were due to weak and uncommitted coordination at the government level which failed to resolve issues in a timely manner. For example, substantial land for LISP was allotted to MHADA only after being made a condition for Credit extension; (c) the ban on quarrying and the restrictions on reclaiming coastal wetlands added to the other administrative problems faced by the Project; (d) there was an inordinate delay in deciding the policy of granting tenure to slums located on land reserved for public purposes under the Development Plan; (e) of the implementing agencies, BMC encountered major problems in the selection of contractors and had generally slow and inefficient procurement practices. For example, it used 120 to 150 days as the bid validity period instead of the normal 90 days; and (f) Frequent changes of key personnel and staff, particularly from the Indian Administrative Service cadre have been a common problem in implementing long-term programs. This has also been true of important engineering positions - 12- in BMC and MHADA. The continuity of key personnel is critical to ensure commitment to project objectives. D. PROJECT SUSTAINABILITY 36. The project is unlikely to be sustainable because of the lack of political and institutional commitment to its approach. BUDP, with its emphasis on cost recovery, and offering products with limited visibility encountered difficulty in evoking political commitment, particularly as regards major legislative reforms. Frequent changes in leadership at the institutional level also contributed to this difficulty. 37. The Project would be sustainable only if Government demonstrates commitment to the project's approach and objectives, which has not been the case for slum upgrading. Sustainability and replicability of future sites and services schemes would be enhanced if they did not have to rely on governmental land, whose supply in the BMR is now limited For that purpose, mechanisms such as Transfer of Development Rights (TDR) and other land policy innovations promoting land assembly through private sector and servicing will be of crucial importance. 38. The replicability of the project's off-site infrastructure investments will require greater participation by private financial intermediaries. The BUDP Revolving Fund managed by BMRDA (para. 24), could serve as a catalyst for a larger financial intermediation function by BMRDA in support of urban infrastructure investments. The prospects for the sustainability of the Revolving Fund are good and the main implementing agencies have accumulated substantial financial resources as a result of their participation in the LISP component. They are therefore in a position to replicate this scheme, provided adequate public land is available. E. BANK PERFORMANCE 39. Apart from a few shortcomings, Bank performance was generally satisfactory in the identification and preparation of the project. Bank performance at appraisal and supervision performance are rated as "marginally satisfactory" (paras. 41 and 42). At the identification stage, the Bank correctly diagnosed the problems in the urban sector. It carried out two key studies in 1980 which helped identify the priorities and policy issues which had not yet been addressed by the Bank's involvement in other sectors. These studies helped develop consensus on the project's approach during the preparation phase. 40. Given the multi-sectoral issues faced in project design, project preparation was strengthened by the participation of an interdisciplinary team with expertise in physical and environmental planning, municipal engineering, solid waste management, financial analysis and urban economics. Bank staff worked with the local team to formulate the project design and did not propose the use of consultants for formal preparation. This contributed to borrower ownership and commitment, particularly by BMRDA, which was the coordinating agency. However, the Bank appears to have overestimated implementation capacity at the time of appraisal and did not anticipate that the project would be handled by the implementing agencies as part of 'normal' business at a sluggish pace. - 13 - 41. The Bank also unsuccessfully attempted to use the Project as a vehicle to bring about legislative changes, even though GOM had expressed its inability to give any assurances on legislative matters. This delayed negotiations by nearly one year without producing a firm GOM commitment in this area. Eventually, the Bank's pre-condition for negotiations was dropped in lieu of 'satisfactory progress' being made by the state in amending the relevant legislation". In retrospect, attempting to achieve such far-reaching and politically sensitive policy changes by holding up the Project was perhaps naive. More attention might have been given to alternative ways of achieving some of the same effects. 42. In all there were 19 supervision missions. These missions contributed significantly to maintaining the momentum of the project, and supporting the project coordinating mechanism. BMRDA found that the analysis of the status of the Project reflected in the supervision aide- memoires strengthened their ability to follow up on some difficult issues with GOM and other implementing agencies. Of these missions, 13 took place to September 1990, the original credit closing date. Thereafter, the supervision effort slackened off in intensity and frequency. Oddly, this happened soon after the formal restructuring, when there would have been grounds for an enhanced supervision effort. During the last three years of its life, the project was not supervised adequately (six short missions at long intervals). 43. The change in supervision intensity may have been caused by the transfer of the Task Manager to another Department. South Asia Country Department II did not assign a new task manager and the original TM continued the supervision. Although continuity of the TM who had established a strong rapport with the local counterpart team and promoted the project as a collaborative effort was a positive feature, in retrospect it is concluded that the Bank should have allocated more resources for supervision during the last years of the project. From the documents included in the Project Files, it appears that the Project received insufficient attention without much scrutiny, even when an exceptional fifth extension of closing date was agreed upon by the Bank. In total, the 133 staff weeks (sw) devoted to supervision over nine years was significantly less than the 175 sw estimated in the SAR for a shorter six and a half year period. F. BORROWER PERFORMANCE 44. The Project had six implementing agencies (MHADA, CIDCO, BMC, TMC, KMC, NBMC) plus a coordinating body (BMRDA) and four distinct components (LISP, SUP, LOGFAS, TATE -- para 4). Performance varied according to agency and component and over time. It is extremely difficult to integrate this degree of diversity into a single measure of Borrower performance spread over a twelve-year period. Nevertheless, on balance, Borrower performance in implementation is rated as marginally satisfactory, although this assessment would not be justified for all implementing agencies. Whether the use of private agencies to 12/ There has been almost no progress in this area during the past decade. An Amendment to the Delhi Rent Control Act has been prepared with the objective of introducing some flexibility in rent structures and encouraging house construction activities. The proposed legislation would serve as a model to other states seeking to pass similar legislation. In 1986, some reforms were introduced by GOM in the Rent Control Act, but they deal mainly with new properties. These changes allow for a five year moratorium on rent restriction and thereafter limit the rents to a return of 15 percent per annum on the cost of land and building at the time of first letting. In addition, the Model Rent Control Bill prepared by the GO[ has not yet been passed by the Maharashtra State Legislature. - 14- implement the Project could have been more effective can be debated, but certainly the need for coordination among multiple agencies is important. This was a critical function performed by BMRDA under the Project, and was particularly important since many of the problems were of a regulatory or legal nature, which would have been difficult for the private sector alone to sort out. Moreover, may subprojects involved more than two agencies; it seems unlikely that a private agency would have been the appropriate agency to conflict resolution. 45. The technical inputs of BMRDA's planning unit in identifying preparing and appraising the project were satisfactory. Government also demonstrated its initial commitment to the project by appointing the interdepartmental coordinating committee. However, GOM commitment to some Project goals later turned out to be lacking. 46. In contrast to project preparation, Borrower performance during the implementation phase suffered from several shortcomings. As a coordinating agency, BMRDA was strong in identifying problems based on its Management Information System (MIS) but weak in enforcing solutions. In 1985, BMRDA issued a reporting procedure manual which provides information on various issues. These include agency performance outside BUDP, procurement, marketing and allotment of plots, financial covenants and others. Unfortunately, the use of this manual was limited to getting project specific expenditure data necessary for disbursement applications and recovery of monthly dues. BMRDA maintained a highly satisfactory record of procurement activity which formed the basis for the review of physical and financial progress by Bank supervision missions. In consultation with the implementing agencies, BMRDA prepared a yearly work program and translated it into monthly expenditure targets. Its monthly progress reports compared the progress with these targets and brought out important issues to the attention of heads of implementing agencies and government. However it did not have the powers to enforce any of the decisions and the project coordinating mechanism got energized only during the IDA supervision missions. Although the Chief of the Planning Division of BMRDA, the main coordinating officer for the project, did not change for the entire duration of the project, there were frequent changes in the membership of the High Powered Coordinating Committee, BMRDA and other heads of implementing agencies. These changes adversely affected the progress of the project and commitment to its objectives. 47. The roles of the public and private sectors are complementary rather than adversarial. The primary function of a metropolitan planning agency such as BMRDA is to provide an effective framework for regional planning and development. It is clear from past experience that at least two conditions are necessary to enable these agencies to perform this function effectively. First, the agency must have sufficient political influence to perform its function effectively, and second, it should have adequate financial resources to put in place a few strategic infrastructure investments to which the market can respond to. Purely advisory agencies, such as a Council of Governments, are too weak and not taken seriously. Metropolitan planning agencies play an important role in laying the groundwork for private sector development by setting the rules of development, financing a few strategic investments, and facilitating the process of land use and building (zoning, subdivision regulations, etc.) The private sector would not invest unless governments provide these benefits under consistent and reasonable rules of engagement. In fact, cities with strong urban growth management regulations have flourished economically and have become very desirable places to live. It is precisely the cities with weak planning and - 15- growth management that have stagnated. The market on its own cannot be expected to seriously improve the urban environment, nor will it address poverty concerns. BMRDA has been an effective metropolitan planning and development agency because it controls some resources that enable it to perform the functions above. It is unlikely that the Bombay Metropolitan Regional Plan would be taken seriously if BMRDA had not evolved as a serious player in the real estate market. However, BMRDA's actions under the Project did not distort the land market and thus crowd out private investment, because BMRDA's influence has been limited by the size of its holdings". The Agency has been able to generate resources from its activities with its land holdings not because BMRDA owned a significant large amount of land overall in the city's real estate market, but because of the fact that the real estate market was booming at the time BMRDA owned the land (it has since effectively dropped to 50%). Moreover, BMRDA has no intention to pursue a similar model or to operate in the land market in a big way. BMRDA has since entered into partnership with the private sector (ICICI, HDFC, and IL&FS14) to set up a financial intermediary to finance state-wide urban infrastructure, and to solve major sectoral needs to support more efficient urban management. The success of this public-private arrangement in the future will be worth watching. 48. MHADA's performance on LISP was highly satisfactory, but barely satisfactory on SUP. CIDCO's performance in LISP varied from being rated as satisfactory to deficient, particularly on marketing of plots. BMC's performance on SUP was deficient. Implementation was stopped in 1991 after the announcement of a 2.5 floor space index (FSI) scheme for slum redevelopment as an alternative approach involving private real estate developers, but this has not yet had any significant results either. Although BMC's performance on procurement was procedurally correct, it encountered considerable delays in the pre-award and post-award stages, which resulted in overall unsatisfactory performance. TMC and KMCs performance in implementing LOGFAS was generally satisfactory. Overall it is rated as marginally satisfactory. 49. Compliance with loan covenants was rated satisfactory with respect to procurement, progress reports, accounts and audits, pricing and cost recovery. However, it was deficient in the case of sector policies and institutional development. Overall, compliance with loan covenants too is rated as marginally satisfactory. G. ASSESSMENT OF OUTCOME 50. Despite the partial fulfillment of project goals, the overall outcome is assessed as marginally satisfactory, principally because of the success of the project's largest component, LISP. By meeting the objective of improving the supply of serviced public land to low-income households, the project has enabled over half a million persons to benefit directly from the investments undertaken by the project". The majority of the beneficiaries were close to, or 13/ Bombay has 537 sq.km of land within the BMC of which BMRDA has only 150 acres (in Bandra-Kurla) at its disposal. 14/ ICICI: Industrial Credit and Investment Corporation of India; HDFC: Housing Development Finance Corporation; IL&FS Infrastructure Leasing and Financial Services Limited. 15/ This is a very conservative estimate, based on 88,000 plots under LISP and 22,000 households under SUP (Table 2) and about 5 persons per family. - 16- below the poverty line. These benefits imply the transfer of real assets to the poor and the project has thereby contributed to alleviating poverty. Finally, the ERR surpassed SAR estimates and the project's financial targets have also been met. H. FUTURE OPERATIONS 51. The expenditure required to complete ongoing works after final Credit closing can be met by the various agencies from their own resources. MHADA and CIDCO have generated cash surpluses of Rs 93.8 crores (US$ 30.3 million) and Rs. 28.3 crores ( US$ 9.1 million) respectively. These will be more than adequate to complete ongoing works. In addition substantial revenue is expected from the sale of the balance of plots. For BMC, the expenditure involved is rather small as compared to its annual budget. TMC has completed all works already while KMC has already applied for financial assistance from the revolving fund established in BMRDA. Given the resources available, it is possible to finance the completion of the project. 52. The assets created in the project are in the form of municipal infrastructure. Adequate institutional provisions have been ensured for their use and maintenance. No major problem is envisaged in this regard. 53. The BUDP program is linked to overall sector performance. If shelter supply remains inadequate even for middle income groups, it is likely that plots meant for low income beneficiaries in the project will get transferred to higher income groups. Hence, any future evaluation will have to be of the sector as a whole and not of the Project alone. BMRDA is attempting to develop a regional information system to provide a basis for such a periodic evaluation. I. KEY LESSONS LEARNED 54. This project has demonstrated that: (a) The design of urban development projects should explicitly take into account socio-political factors that have a key impact on sector policies and where possible alternative less ambitious reform options should be considered; (b) even holding up the processing of a substantial loan in support of investments is insufficient to bring about required legal and institutional reforms (para. 18). However important the reforms may be, they will only occur if there is sufficient political will to confront the vested interests resisting them. Once a loan becomes effective, attention is focused more on project-specific implementation objectives at the expense of broader and politically difficult sectoral reforms; (c) the Bank should not undermine its credibility by making explicit policy declarations to Borrowers and then ignore its own self-declared policy (para. 20); (d) a project's physical and financial objectives can be largely achieved despite distorted sector policies. As a result of BUDP, about half a million poor people - 17- have benefited from serviced plots and housing loans financed by the project. The implementing agencies have acquired substantial financial resources from plot sales as a direct result of their participation in the project and are thus in a position to replicate the physical achievements of the project (para. 51); (e) in order for such urban development programs involving multiple agencies to be implemented efficiently , it is necessary to strengthen the planning, coordination and management of urban services by these agencies. Improvement of procurement practices is also essential (para. 35 (e) ); and (f) frequent changes of key personnel and staff, particularly from the Indian Administrative Service cadre have been a common problem in implementing long-term programs. This has also been true of important engineering positions in BMC and MHADA. The continuity of key personnel is critical to ensure commitment to project objectives. 55. Most of these lessons are equally relevant for other urban and infrastructure projects in India. - 18- PART II: STATISTICAL ANNEXES Table 1: Summary of Assessments A.. Achievement of Objectives Substantial Partial Negligible Not applicable Macro policies 1 II I U Sector policies [[1 Financial objectives E I I Institutional development I [ II Physical objectives 1 I Poverty reduction I Gender issues I I I U Other social objectives li I Environmental objectives II 0 I [i Public sector management W Private sector development I I U Other (specify) 8A Project Sustainability Likely Unlikely Uncertain U Highly Marginally C Bank Performance Satisfactory Satisfactory Satisfactory Deficient Identification I] E I I I I Preparation assistance I I N I I Appraisal H m II Supervision II I m Highly Marginally D. Borrower Performance Satisfactory Satisfactory Satisfactory Deficient Preparation I I I [I Implementation I 1 U Covenant compliance HI IU Operation (if applicable) 1 I I I Highly Marginally Highly E. Assessment of Outcome Satisfactory Satisfactory Satisfactory Unsatisfactory Unsatisfactory [1 II 1 0 | L1 - 19- Table 2: Related Bank Loans/Credits Loan/Credit Title Ln./Cr. Purpose Year of Status Number. Approval A. Preceding Operations * Bombay Water Supply and Sewerage Cr. 390-IN Water supply and 1974 Completed Project conveyance sewers in Greater Bombay * Second Bombay Water supply and Cr. 842-IN Water supply and waste 1979 Partially Sewerage Project water treatment and completed. disposal in Greater Residual Bombay works now proposed at B.3 # Third Bombay Water Supply and Ln. 2769-IN Expand water supply by 1987 On-going Sewerage Project Cr. 1750-IN 455 mid in Greater Bombay * Bombay Urban Transport Project Ln. 1335-IN Augmentation of bus 1977 Completed fleet, depots & workshops, traffic management & fly-over in Greater Bombay * Maharashtra Water Supply Project Cr. 899-IN Water supply and 1979 Completed Sewerage in Thane- Kalyan-Bhiwandi subregion B. Following Operations * Bombay Urban Transport II Improvement in railway Preparation commuter networks, in progress traffic and transportation management in BMR * Bombay Urban Resettlement and Preparation Rehabilitation under way * Bombay Sewerage Disposal Project Sewerage disposal Under through deep marine preparation outfalls and aerated lagoons * Fourth Bombay Water Supply and Develop middle Under Sewerage Project Vaitarna for additional preparation water supply 450 mid. * Maharashtra Water Supply Project - To augment water Under Stage 11 supply to Thane Kalyan preparation Bhiwandi areas by developing Peshir water works - 20 - Table 3: Project Timetables Date Planned Actual Identification (Executive Project Summary) January 1981 Preparation June 21-July 3, 1982 Appraisal June 27-July 17, 1983 Negotiations November 1984 Board Presentation January 29, 1985 Signing March 1, 1985 Effectiveness August 22, 1985 Project Completion March 1990 March 31, 1995 Credit Closing date (original) September 30, 1990 First Extension with telex of 9/28/90 to September 30, 1991 Second Extension with telex of 10/25/91 to March 31, 1992 Third Extension with telex of 03/31/92 to September 30, 1992 Fourth Extension with telex of 10/14/92 to September 30, 1993 Fifth Extension with telex of 09/28/93 to September 30, 1994 Actual Credit closing date September 30, 1994 Table 4. Credit Disbursements: Cumulative Estimated and Actual (US$ thousands) FY-85 FY-86 FY-87 FY.88 FY-89 FY-90 FY-91 FY-92 FY-93 FY-94 Appraisal Estimate 5,500 31,700 74,100 110,700 129,900 136,900 138,000 Actual 7,109 11,573 21,273 34,745 48,798 62,964 21,308 101,371 124,889 Actual as % of SAR Estimate 0% 22.4 15.6 19.2 26.7 35.6 45.6 Date of Final Disbursement: May 17, 1994 -21 - Table 5: Key Indicators for Project Implementation Physical Targets Actual Components/Agencies SAR Revised September 1994 1. Land Infrastructure Servicing Program (LISP) 85,000 88,000 87,743 of which: (a) MHADA Greater Bombay: Serviced sites 40,000 55,200 55,297 (b) Thane/Kalyan: Serviced sites 25,000 3,800 4,709 BMC Greater Bombay: Offsite Infrastructure Completed and Community Facilities Rehabilitation of Water Mainst *** Partly Completed Priority Storm Water Drainage Works *** Transferred to other Bank project Waste Water Treatment (Aerated Lagoons) ** Water Supply to Eastern Suburbs *** Completed (c) CIDCO New Bombay: Serviced sites and Infrastructure 20,000 29,000 27,737 Master Balancing Reservoir at Shil and Transmission Completed Mains *** Drawl if 30 nld water from Patalganga *** Completed 2. Slum Upgrading Program (SUP) 100,00 60,000 22,204 of which: (a) MHADA Greater Bombay: On Public Land 70,000 40,000 21,604 (b) On Private Land 10,000 0 0 (c) BMC on MCGBI Land 20,000 20,000 600 3. Local Government Finance Administration and Services in Rs. Crores (LOGFAS) Equipment and Civil Works for improving the maintenance of municipal services in BMC, NMMC, TMC and KMC Equipment 197 350 Road Maintenance 24 New 26 Solid Waste Management 123 works Sewerage Maintenance 50 added as 23 Water Maintenance 0 perthe 9 Fire Fighting 0 study 68 Others 0 under 25 Civil Works TATE Mahalaxmi Refuse Transfer Station Completed Augmentation of Water Supply in Kalyan and Dombivali Ongoing ** Storm Water Drainage Works in Thane & Kalyan *** Completed Improving & Developing Services in Municipal Councils Ongoing ** 4. Technical Assistance Training and Equipment (TA TE) For improving the capacity of the project implementing Completed and coordinating agencies Training 9 Studies 3 23 Equipment-Computers 35 Note: ** Being funded by BMRDA from the BUDP Revolving Fund. *** New works included in the project at time of restructuring (December 1990). **** Metropolitan Environment Improvement Program included - 22 - Table 6: Key Indicators for Project Operation No key Indicators for Project Operation were given in the SAR. Table 7: Studies Included in the Project Name of Study Purpose as Agreed Status Impact of Study Organization Structure and Financial Top design organizational structure and Completed Accounting system has been Management Estate financial management systems for MHADA implemented. Organizational study was not acted upon. Benchmark Study of Slum Upgradation Program To establish pre-improvement conditions in the Completed Benchmark conditions were established. slums be followed-up with a post But program not being implemented on implementation study a large scale, post implementation study has not been carried out. Maharashtra Refuse Transfer Station feasibility To design refuse transfer station in Bombay Terminated MBC did not agree with consultants City. design. Project was redesigned and executed without stationary compactors. Study of plots advertisement awareness in Due to low response to first advertisement of Completed The study concluded that the low Chakop LISP in Greater Bombay, MHADA proposed to response was due to poor marketing divert the smaller plots to the next higher strategy and advertisement. The study income group. suggested that a wider circulation and communication should improve the response. MHADA adopted the suggestion and received better response for its future advertisements for low income plots. Urban Management for Municipal Corporation Two separate Corporations were constituted in Completed Civil works and equipment identified for of Thana and Kalyan 1982 and 1983 for the newly areas of Thane municipal maintenance services have and Kalyan respectively. Two independent been procured under DUBP. Other studies were carried out for each of the recommendations have remained Corporations to propose a development unimplemented. management system, organization structure and municipal finance systems. Design of Water Supply Project for New to prepare, design and cost estimates for Project executed under BUDP. Bombay using Patalganga as a source augmenting water supply to New Bombay by using Patalaganga as a source Mathematical Model for Siltation of Thane To study the hydrological impact of landfill in Completed Other environmental impact of Creek the Thane Creek. reclamation on mangroves and marine life do not allow reclamation. Municipal Services Requirement in 11 The Municipal Councils have been Completed BMRDA has commenced extending Municipal councils experiencing rapid growth in population, financial assistance through the BUDP. industrial and other economic activities. The Revolving fund to the municipal council purpose of the study was to develop FOP for by using study recommendations for each Municipal Council and identify capital appraisal of loan application. investment program based on service requirement. Geological Survey in Bombay Metropolitan To estimate the building materials requirement Completed The outcome of the study has been Region and identify geological appropriate location for included in the draft Revised Plan for quarrying stone/stand, weathered rock and clay BMR - 2011, and environmental for bricks. protection guidelines issued. Master Plan for Storm Water Drainage for To prepare a master plan for Storm Water Completed Priority storm water drains and Bombay Drainage and of rehabilitation of old sewers maintenance equipment were identified and procured under BUDP. Environmental Design and Site Planning at Most of LISP sites in GB was on coastal Completed Site is being developed as per the Charkop IV wetlands. As the understanding of consultants layout and designs. environmental effects of landfill were learnt, layout planning was designed taking into account various environmental and ecological parameters like tidal impact zone, flora. Solid Water management in Bhiwandi To recommend improved solid waste collection Completed The council has not taken any follow-up and dispatch practices. action. - 23 - Table 7: Studies Included in the Project (cont'd) Name of Study Purpose as Agreed Status Impact of Study Study of Storm Water Drainage in Mira To prepare a master plan of storm water Completed Priority investment on storm water Bhyander drainage and a pilot scheme of small bore drainage supported by BMRDA from sewers for conveyance of septic tank effluents. BUDP: Revolving Fund Design of Water Distribution Network in To prepare water distribution network plan in Completed Part of works were financed from Kalyan conjunction with project of augmentation of BUDP. Balance works are being water supply of Kalyan and Dombivli. financed by BMRDA from BUDP: Revolving Fund. Audio-visual of Slums To prepare audio-visual presentation of slum Completed Audio-visual material used. upgrading program. Feasibility Study - Vasai Virar Water Supply To prepare preliminary designs and cost Completed BMRDA has decided to finance works estimates of headworks, treatment plant, master up to MBR as BOLT (build, Own, balancing reservoir and distribution network, Lease and Transfer). and recommend financing, institutional and tariff policy. Municipal Services Requirement for Navi To propose a development management Completed New Bombay municipal did not make Mumbai & Panvel Municipal Corporations system, organization structure and municipal use of systems recommended. Panvel finance systems for two municipal corporation has not yet been corporations, namely New Bombay for established. northern part and Panvel municipal corporation for the southern part of New Bombay Environment Management Strategy and Action To formulate environmental management Completed High priority in infrastructure project Plan strategy for BMR. and integrated arrangement required for environmental coordination have been recommended. Integrated Urban and Environmental Study of To identify on site emission reduction Completed Recommendation is under Chembur and Thank-Belapur measures, urban infrastructure improvements consideration. and formulate a disaster management plan . Solid Waste Management Disposal in Great To prepare a plan of action for collection Completed An investment program of Rs 200 has Bombay's bay transportation and disposal of solid waste emerged. Study of Storm Water Drainage in Pen To prepare a storm water drainage master plan. Completed Priority works financed by BMRDA from BUDP: Revolving Fund. - 24 - Table 8A: Project Costs Appraisal Estimate (LSS NI) Actual/latest Estimate (USS NI) Local Foreign Total Local Foreign Total costs costs costs costs Land Infrastructure 113.20 7.70 120.90 143.21 3.19 146.50 Servicing Program (LISP) Slum Upgradation Program 32.60 1.40 34.00 3.55 0.00 3.55 (SUP) Assistance to Local 14.70 3.70 18.40 26.53 14.23 40.76 Government (LOGFAS) Technical Assistance 1.30 0.20 1.50 5.67 0.00 5.67 Training and Equipment (TATE) Design and supervision 17.00 1.50 18.50 16.47 1.48 17.95 Total Base Cost 178.80 14.50 193.30 Physical contingencies 12.50 1.30 13.80 Price contingencies 45.90 3.70 49.60 Total 237.2 19.5 256.7 195.43 18.90 214.33 Table SB: Project Financing Appraisal Estimate (USS N) Actual/latest Estimate (USS M) Local Foreign Total Local Foreign Total costs costs costs costs IBRD/IDA 138.00 124.89 Government of Maharashtra 118.70 89.44 Total 237.2 19.5 256.70 214.33 - 25 - Table 9A: Economic Costs and Benefits A methodology similar to the one used in the SAR was used to estimate the main benefits of the LISP component for representative projects in Thane, Greater Bombay and New Bombay sub-regions. In assessing the net economic benefits in terms of the economic rate of return (ERR), three representative sites - Panchpakhadi (27.23 ha), charkop 1 (95 ha) and Kopar Khairane (117 ha) - out of the 22 developed in the three sub-regions have been taken. all three representative sites are the largest in each of the sub- regions. The methodology adopted for the ERR estimation is as follows: Costs: (a) The costs are derived from the financial costs excluding taxes (7.3 percent as assessed in the SAR). (b) All chargeable and non-chargeable costs have been included, as in the SAR. (c) No correction on the basis of shadow prices is done as all the construction materials are procured at market prices and not at administered prices. Benefits: (a) The market value of land is derived from the location-specific property prices at the time of the first advertisement of each site, as quoted in the 'Accommodation times', a local newspaper specializing on land, housing and infrastructure. (b) The market value of land, thus derived, is used to evaluate apartment plots in the LISP component. Low income plots have less attractive location, narrower frontages and limited potential for expanded construction. Hence, their market value is one-third to two-thirds the market value of apartment plots, as reflected in instances of informal resale by beneficiaries immediately after allotment. The present analysis assumes that their value is approximately one-half of the price of apartment plots. (c) The annual benefits resulting from the development of these plots is evaluated at 15 percent of the total market value of the developed land. (d) 25 percent of the plots are allocated in the first year, 25 percent in the second year, and 50 percent in the third year. The benefits are related to the market prices prevailing at the time of the first advertisements. If benefits are corrected for subsequent increases, there would be a substantial increase in the benefit stream. - 26 - Table 9B: MHADA-PANCHPAKHADI - Economic Analysis (coont'd) Year Economic Cost Net of Taxes Economic Benefits Net Benefits (Rs Lakhs) (Rs Lakhs) 0.073 1984 0.00 0.00 1985 50.05 50.05 -50.05 1986 13.03 13.03 -13.03 1987 3.33 3.09 -3.09 1988 155.06 148.12 57.36 -90.76 1989 59.98 55.66 114.72 59.05 1990 198.07 194.63 229.43 34.80 1991 150.55 144.06 229.43 85.37 1992 16.20 16.18 229.43 213.25 1993 4.50 4.29 229.43 225.14 1994 6.48 6.48 229.43 222.95 1995 2.22 2.22 229.43 227.21 1996 229.43 229.43 1997 229.43 229.43 1998 229.43 229.43 1999 229.43 229.43 2000 229.43 229.43 2001 229.43 229.43 2002 229.43 229.43 2003 229.43 229.43 2004 229.43 229.43 2005 229.43 229.43 2006 229.43 229.43 2007 229.43 229.43 2008 229.43 229.43 ERR: 42.67 Type Apt. Plots Commercial Plots Low Income Plots Total Value Area (Sq.Ms.) 58,081 2,947 70,096 Price (Rs/sq.m) 1,500 4,500 750 Total Value 871.22 132.62 525.72 1,529.56 (Rs.Lakhs) - 27 - Table 9C: CIDCO-KOPAR KHAIRANE - Economic Analysis (coont'd) Year Economic Cost Net of Taxes Economic Benefits Net Benefits (Rs Lakhs) (Rs Lakhs) 1987 85.98 79.70 -79.70 1988 811.60 761.41 -751.41 1989 994.08 921.51 -921.51 1990 992.75 920.66 511.13 -409.53 1991 455.82 423.19 1,022.26 599.08 1992 687.63 642.57 2,044.53 1,401.96 1993 341.65 317.08 2,044.53 1,727.45 1994 379.25 351.56 2,044.53 1,692.96 1995 0.00 0.00 2,044.53 2,044.53 1996 2,044.53 2,044.53 1997 2,044.53 2,044.53 1998 2,044.53 2,044.53 1999 2,044.53 2,044.53 2000 2,044.53 2,044.53 2001 2,044.53 2,044.53 2002 2,044.53 2,044.53 2003 2,044.53 2,044.53 2004 2,044.53 2,044.53 2005 2,044.53 2,044.53 2006 2,044.53 2,044.53 2007 2,044.53 2,044.53 2008 2,044.53 2,044.53 ERR 40.86% Type Apt. Plots Commercial Plots Low Income Plots Total Value Area (Sq.Ms.) 35,7100 14,4307 23,7316 Price (Rs/sq.m) 1,500 4500 750 Total Value 5,356.50 6,493.82 1,779.87 13,630.19 (Rs.Lakhs) -28- Table 10: Status of Legal Covenants Agreement Section Type Status Original Description Comments Date PA Schd. 2 2.01 4 C Throughout GOM's commitment to project objectives set forth in Schedule 2 Development Credit Agreement, and GOM to provide necessary counterpart funds. 2 9 C Throughout Selection of sites for the land and infrastructure servicing program and the slum upgrading program and their plans, layouts, designs and standards shall be satisfactory to IDA. 3 12 NC 09/30/90 GOM will aim to implement about Impossible 10 percent of the slum upgrading under existing with households located on privately laws. owned land. 4 9 C Throughout The scope and timeframe in respect Some of a program of municipal services improvements and improvements in the made without development control and building formal regulations shall be implemented agreement with only after the recommendations of IDA. the consultants for the program have been jointlN reviewed and agreed upon among GOI, GOM and IDA. 5 3 C 09/30/87 BMRDA will establish a revolving IDA relaxed revised fund to be credited with 45 percent revolving fund, 03/89 of the principal amounts to be repaid eligibility to by the implementing agencies to include GOM in repayment of amounts on- municipal lent to them by GOM to implement infrastructure. the project, the funds shall be treated as a non-refundable loan and shall be used for financing similar program in future (para. 3.09) 6 5 NC 1986-87 MHADA shall (i) limit new IDA's influence investments in housing schemes over MHADA's (excluding repairs, reconstruction non-IDA funded and slum improvements) outside the operations was project to Rs 10 crore per year during weak. the peak period of the implementation of the project and use layouts, standards and superstructure in any new schemes outside the project based substantially on the building and development control regulations prescribed for land infrastructure servicing schemes under the project. - 29 - Table 10: Status of Legal Covenants (cont'd) Agreement Section Type Status Original Description Comments Date PA Sched. 2 6 5 NC 1986-87 (a) minimize the average cost per Ditto. household for land development and housing construction, and (b) maximize the percentage of households with incomes at or below the absolute Bombay poverty level in the range of 55% to 75% of all beneficiary households. 7 2 CP Throughout MHADA and CIDCO will aim to CIDCO's achieve the following performance collections were targets by fiscal year 1987/88: (a) not always design, supervision of construction satisfactory. and management costs, including support services, not to exceed 12% of annual construction costs, (b) accounts receivable hire purchase and rental properties not to exceed an average of 3 months billing, and (c) estate management costs not exceed 4% of rental and installments receivable. 8 2 C Throughout GOM will aim, in respect to LISP Revenues were (i) to recover fully all chargeable much higher costs, and target beneficiary than anticipated. selection criteria and terms and conditions of sales and leases for residential, commercial, small industry and other plots, and for home improvement loans shall be an agreement among GOI, GOM and IDA, and (ii) on lending terms to beneficiaries for serviced plots and housing loans shall include inter alia that interest shall be charged at no less than 12% per annum GOM will aim in respect of SUP. 11 9 CP Throughout BMRDA shall: (i) prepare and Materials review furnish to IDA not later than requirement was December 31 each year, an annual unrealistic. report of the progress of the Affordable Low Income Sheiter Program for that year, together with proposals for actions required to be taken to meet the targets for the program for the following year, and (ii) review every six months the availability of materials and financial requirements for ALIS program (para. 3.20) (para. 11 of Schedule 2 to Project Agreement). - 30 - Table 10: Status of Legal Covenants (cont'd) Agreement Section Type Status Original Description Comments Date PA Sched. 2 12 5 CP Throughout GOM shall cause the implementing Difficulties agencies to provide each year experienced in sufficient budgetary provisions for monitoring. adequate services maintenance in areas benefited by the Project PA Sched. 1 2.06 5 C Throughout GOM not to change subsidiary loan agreements with CIDCO & BMC. PA 2.08 5 C Throughout GOM to acquire and make available Delay in land land and rights for construction and acquisition operations of facilities under the major was a Project. major factor in slow pace of project implementation. PA 4.01 1 CD Throughout (i) project implementing agencies will have their accounts and financial statements for each fiscal year audited in accordance with appropriate auditing principles consistently applied, by independent auditors acceptable to IDA; and (ii) the accounts and audits will be furnished to IDA not later than nine months after the end of each agencies' financial year (para. 3.19), (section 4.01 of Project Agreement). Key: C = Full compliance NC= Not complied with CP= Partially complied with CD= Delayed compliance Table 11: Compliance with Operational Manual Statements There are no significant cases of lack of compliance with OMS. -31 - Table 12: Bank Resources - Staff Inputs Stage of Project Cycle Actual Staff Weeks US$ thousand Preappraisal through Board 164.7 254.7 Supervision 133.3 304.9 Completion 10.0 11.8 Total 308.0 571.4 Table 13: Bank Missions Stag of Project :Dae No. of Specialization Performance Problems Preparation Jun 82 7 FA, UP Mission Pre-appraisal Mar-83 5 FA, UP, FAD, ME, PHE Appraisal July-83 7 FA, UP, FAD, ME, PHE, SFA, ENG Appraisal through 2 PHE, SFA Board Supervision Feb-85 5 ME, PHE, SFA, ENG, I F, M Mission ME Aug-85 I ME I M Apr-86 3 ENGs 1 M Sep-86 1 EC 1 M Feb-87 3 ME, EC, ENG 1 M, P Jul-87 1 ME Oct-87 2 Jul-88 3 ENG, SFA 1 M, E Dec-88 1 ENG 2 M, E, P Apr-89 2 ENV, SFA 2 E, F Sep-89 1 SFA, R 2 M, P Apr-90 2 UP, ENV 2 P, E Jul-90 3 ENGs 3 P, M Dec-90 I EC 2 P, M Apr-91 2 EC, ME 2 P, M Oct-91 1 EC 2 F, P Aug-92 1 EC 2 P Dec-93 I EC 2 P Sep-94 2 EC, UP 2 P, E Completion Sep-94 2 EC, UP Staff Skills: ENG = Engineer ENV = Environmental Engineer SFA Senior Financial Analyst FAD = Financial Adviser EC = Economist UP = Urban Planner ME = Municipal Engineer PHE = Public Health Engineer Key: 1 = Minor problems F Financial E = Environmental 2 = Moderate problems M = managerial P = Procurement - 32 - Appendix A IMPLEMENTATION COMPLETION REPORT INDIA BOMBAY URBAN DEVELOPMENT PROJECT (Credit 1544-IN) MISSION'S AIDE-MEMOIRE (MISSION OF SEPTEMBER 1994) 1. An IDA mission consisting of Mr. Evan Rotner and Ms. Kim Cuenco (SA21N) visited Bombay from September 21-15, 1994 to discuss with the Government of Maharashtra (GOM) the requirements for the completion of the Project's Implementation Completion Report (ICR) and other issues identified during the current and previous missions. The mission wishes to express its appreciation for the assistance and cooperation provided by the Government of Maharashtra and the project management agencies. 2. The mission's primary objective was to ensure that actions necessary to complete the ICR by the required date are undertaken and to follow-up on the suggestions made by the 2-11 December, 1993 mission to BMRDA on the ICR preparation. The report should be completed and distributed to the World Bank Board not later than six months after the closing date of September 30, 1994. 3. This aide-memoire summarizes the present status of ICR preparation and agreements on actions that need to be undertaken to complete the ICR before March 1995. Status of ICR Preparation 4. BMRDA has prepared a detailed draft outline of the project ICR, taking into consideration the suggestions made by the mission during its visit in December 1993. The mission reviewed this outline with BMRDA and suggested for the following: (a) Project Description + Include information on extension dates (b) Project Coordination + explain how the project was designed and run as a program loan and the effective technical role of BMRDA in managing the project as an appraisal intermediary; * note the limited effectiveness of the technical committee; + highlight the importance of successfully computerizing project management; and - 33 - + note changes and improvements in procurement procedures and bid documents during implementation and comment on impact - if any - on procurement efficiency. (c) Related Project Issues + discuss the negative impact of competing non-BUDP programs and sources of funds, particularly on the SUP component; * discuss reasons for the failure to implement urban renewal schemes in slum areas as an alternate to in-situ upgrading; and + on TA, note that the organizational and financial management studies had a good potential, which was a little utilized by the implementing agencies. (d) Replicability + note that sustainability and replicability of project results will require greater participation by private financial intermediaries; and + recast the BUP as an infrastructure financing project, possibly through an evolution of the existing BMRDA urban infrastructure fund. (e) Indicators for Project Implementation + consider using two tier indicators that allow more specifying in evaluating project performance; * include both financial and qualitative indicators for all components and individual agencies; + differentiate between the number of plots developed and households benefited (larger because of substantial number of apartment plots in BUDP); * include performance indicators for assessing the LOGFAS component performance; * include plot demand indicators (number of applications vis-A-vis quantity of sites available) and tables of details by scheme, plot type to indicate marketability; and + for Annexure, include a detailed PERT chart for a typical scheme and - say - one or two of the larger schemes like Charkop I and/or Koprekhairane, showing from the feasibility study stage to occupation and settlement forecast and actual activity times. - 34 - (f) Other Suggestions + list technological initiatives introduced by the project, e.g. use of precast wall plinths, cut doors, etc. Pre-cast drains at Koprekhairane and include under performance indicators; * include section on performance of contractors; + highlight the main finding that the project was highly financially viable (appraised funding vs actual funding/cost; recovery/profitability) with substantial social benefits; + record and explain that the implementing agencies (MHADA and CIDCO) have failed to pick up on the model, contrary to SAR expectations and forecasts; + include a section comparing the SAR forecast with actual project and other supplier's (private and public) contribution to the affordable supply of serviced plots/housing (the supply and demand balance was modeled in the SAR); + review and comment on maintenance of project assets by responsible agencies: MHADA, CIDCO and BMC; and + comment on the relationship between SAR expectations compared to the performance of exceptional site planning and engineering features (semi-private open space for low income clusters of small plots, dispersion of low income clusters among middle and higher income clusters; construction, marketing, staffing and services provided (or not) in community facilities provided by the project, performance-based roads, drains, water supply and sanitation engineering standards etc.). 5. It was agreed that BMRDA would submit a completed draft to the Bank by end- December 1994. In the interim, it would forward to the Bank draft sections as they emerge. Implementation Action Program (IAP) 6. As part of the ICR, an IAP will be prepared by the Borrower describing the implementation and financing of all remaining activities beyond the closing date of the Project in accordance with the Project Agreement. It should contain appropriate technical, financial and institutional arrangements to ensure effective project implementation and O&M including: (a) a schedule of all actions required to complete the project beyond the Credit Closing Date, in the sense that benefits/beneficiaries are in place; (b) a financing plan identifying the funding sources for unfinished investments to be funded using non-Bank funds; (c) an implementation plan for the operation and maintenance of completed investments; and (d) requirements for periodic monitoring and reporting (to GOM and IDA) by all implementing agencies on O&M activities and implementation of unfinished activities. In particular, remaining sites and services schemes should be completed, allocated and occupied in accordance with the project agreement, with home improvement loans extended to eligible beneficiaries. -35- Use of Project-Generated Surplus Funds by CIDCO and MHADA 7. MHADA and CIDCO have generated substantial surpluses from project implementation. These funds should not flow into general agency revenues, but ploughed back into the project to finance BUDP-type schemes within the credit period. The mission requests that BMRDA/MHADA/CIDCO prepare and submit to IDA a plan for utilizing the surpluses for BUDP-type schemes. Other Issues 8. Un-Occupied Apartments Plots - Charkop. The mission had noticed on an earlier site visit that a number of apartment plots in Charkop have been vacant for several years. The mission had said at that time that "these were allotted earlier with IDA's agreement on a one- time basis outside the normal auction process to public sector agencies at average cost price. One of the public sector agencies is Indian Air. The failure of Indian Air and other public agencies, if any, to construct, abuses a special arrangement to the detriment of both the development and environmental value of the area near the plots and project financial returns". The mission was disappointed to find that its recommendation has been ignored and the MHADA appears not to have informed Indian Air and other public agencies, if any, that if they do not commence construction within 3 months their leases would be terminated in accordance with provisions in the lease agreements and the plots would be auctioned to the public at large. The mission requests and expects that BMRDA/MHADA submit to IDA within 2 weeks, copies of lease termination notices for these and any such other plots in BUDP schemes - with lists of the same. 9. Maintenance-Sites and Services Schemes and Provision of Services. The mission understands that Charkop sites and services scheme infrastructure assets have been turned over to the BMC for maintenance and operations. We observed many instances in which the infrastructure is not being maintained or services provided - damaged roads and drains, uncollected garbage, etc. MHADA (and CIDCO) should survey all completed schemes, inventory the maintenance and service requirements; and establish schedules and action program for setting them right as part of the ICR/IAP. The mission requests that the survey and action program be sent to IDA by November 1994. 10. Community Development Services (CDS) Continuing Need for. The mission visited one Cooperative Society Cluster (Sunrise) in the Gorai scheme which it visited in December 1993. At that time the Society was just inaugurating obtaining its lease agreement and occupation certificate. Since then, the Society has completed house construction up to about the roof level. However, construction had obviously stopped for several months. Our inquiries revealed that some of the society members may not have been able to come up with their share of the house construction costs. This is not surprising. Since costs are now estimated at about Rs. 32,000/unit and the BUDP house construction loan is about Rs. 15,000, some households with incomes of about Rs. 1,200-1,800/mo (for the A, B and C low income plots) must find it difficult to raise the cash to cover construction costs. - 36 - 11. MHADA's community development wing should continue to be active on site to identify ways and means for assisting Societies to resolve difficulties like the financial one above and other ones connected with service and maintenance problems. Merely because MHADA (and/or CIDCO) has completed construction and handed over plots and infrastructure to beneficiaries does not mean that their responsibility for a site had ended. Achieving complete housing construction and full occupation of sites remains as a responsibility. The mission requests that IDA be informed by November 1994 what arrangements MHADA/CIDCO are making to continue to provide CDS during the ongoing period of scheme house construction and occupation and community service start up. Specific provisions for CDS should be included in the ICR/IAP. Use of Credit Balance Available in the Special Account 12. During the mission BMRDA asked whether or not there was about SDR 2,340,069.30 remaining in the BUDP Special Account with DEA, which should be disbursed against outstanding eligible BUDP claims. The mission has requested IDA to clarify the situation and will inform BMRDA of the outcome as soon as information is available. - 37 - , Mumbai Metropolitan Region A707n1MIX B "* E.Bndra - Kurla Complex. Development Tlthority Bandra (E), Mumbai - 400 051. E-MAIL: mmnrda@iasbm01.vsnLet-if Tel. No. 642 9751 (8 Lines) EL:mmrdegasm01sNnt in FAX NO. : 92-022-640 03 06 TELEX . 011 - 78069 BMDA, IN P/BUDP/ICR/ 3 T May 23, 1997 To, Mr. Jean-Francois Bauer Chief, Energy and Infrastructure Operations Division, Country Department II, South Asia Region, The World Bank, 1818 H Street N.W., Washington D.C. 20433, U.S.A. Sub: BUDP - 1544 IN - Comments on ICR and Borrower's Contribution Dear Mr. Bauer, Thanks for your letter dated May 8, 1997 sending us a copy of the BUDP-ICR. As you are aware, we had a significant contribution to the drafting of earlier version of ICR, which was sent to Mr. Robert Panfil on March 9, 1995. Our formal 'Borrower's Contribution' to ICR was therefore rather brief. Now that the ICR has undergone considerable change, we take this opportunity to present our contribution highlighting the conclusions that significantly differ from those of the revised ICR now sent. The general performance of the project has been adjudged to be "marginally satisfactory". (This category of assessment is not observed in the World Bank Operations Manual on Good Practices GP 13.55 of May 1994). Perhaps this conclusion has been arrived at by giving equal weightage to the sectoral policy objectives and achievements within the project framework. Assigning such equal weightage to both these aspects of the project is highly unrealistic as achievements of policy objectives was obviously beyond the control of the project implementing agencies or the Bank Supervision staff. Reforms in rent control legislations and urban land ceiling have not been achieved despite a number of high level Government of India commissions and committees recognising the need for such reforms. Thus the project needs to be assessed with reference to the physical and financial targets of the project and the policy changes that could be brought about having a direct bearing on the project achievements. With this perspective, we believe that the project could be rated as "satisfactory", and some of the components like LISP and LOGFAS could even be considered as "highly satisfactory". Some of the factual inaccuracies noticed from the revised ICR are also given as separate annexure to this letter With regards, Yours sincerely, (V.K. Phatak) Chief, Planning Division. - 38 - APPENDIX B-ANNEX I BORROWER'S CONTRIBUTION TO TH E I\11LEMENTATION COMPLET1\ON REk?RT ON 2 C- 'A U'?3/JN DEVE~LO MENT OJC (Credit No. 1544 IN) INDIA Mr a Rio I\viuinb,)i Metreiixlitan Region Deve]opi-nent Authorit), - 39 -2 INDIA BOMBAY URBAN DEVELOPMENT PROJECT (Credit 1544-IN) BORROWER'S CONTRIBUTION TO THE IMPLEMENTATION COMPLETION REPORT 1.0 ObJectives 1.1. The objectives of Bombay Urban Development Project (BUDP) as stated in the SAR were; (i) to make a large increase in the public supply of affordable land, infrastructure and shelter particularly for low income families and small business; (ii) to substantially improve local government financial and administrative capacity to deliver and maintain services, particularly the infrastructure created under BUDP; ' (iii) to strengthen Government's institutional capacity to plan, coordinate, implement, and evaluate BUDP Projects, programs, and policies and replicate the achievement.; (iv) through more efficient and equitable land use planning and pricing policies and more appropriate performance oriented design standards, development control and building regulations to aim at improved public sector cost recovery and major reduction in the public and private costs of shelter investments; and (v) to direct a larger proportion of private investment in land servicing and shelter construction in low cost units for low income families.1 1.2. These objectives were translated into physical and investment targets to be 1 Staff Appraisal Report No. 4794 - IN, India, Bombay Urban Development Project Urban and Water Supply Division, South Asia Projects Department, World Bank. Washington D.C., 1985 (para 2.08, pp 13). - 40 - 3 supported by IDA Credit of SDR 137.7 million as given in Table 1. Table 1 Rs. in Crorcs COMPONENTS/AGENCIES SAR TARGETS Physical Financial 1 Land Infrastructure Servicing Program (LISP') Provision of 85,000 serviced sites including cormtnunity 85,000 196.25 facilities, core houses and house expansion loans: MHADA Greater Bombay: Serviced Sites 40,000 81.22 Thane / Kalyan: $crviced Sites 25,000 59.58 BMC Greater Bombay: Offsite Infrastructure and Community Facilities 21.54 CIDCO New Bombay: Serviced Sites and - 20,000 33.91 Infrastructure 2 Slum Upgrading Program (SUP) Upgrading 100,000 slum households in Greater Bombay 100,000 53.37 including provision of tenure, improved infrastructure services, home improvement loans, community facilities MHADA: Greater Bombay - On Public Land 79,000 35.07 -On Private Land 10,000 5.01 BMC: - On MCG Land 20,000 13.29' 3 Local Government Finance Administration and Services (LOGFAS) 30.78 Equipment and Civil Works for Improving the maintenance of roads, drains and collection and disposal of rcfuse in municipal corporations BMC 17.70 TMC * 6.25 KMC & CIDCO (NBMC) 6.83 4 Technical Assistance Training and Equipment (TATE) 1.93 For improving the capacity of the project implementing and coordinating agencies BUDP TOTAL 282.33 1.3. The objectives of the project remained valid and unchanged, during implementation, except that the relative emphasis changed in favor of municipal services and infrastructure as shown in Table 2 below; Table 2 Rs. in Crores COMPONENTS SAR TARGETS REVISED TARGETS Physical Financia % of Tot. Physical Financial % of Tot. 1 LISP 85,000 196.25 69.51% 88,000 257.10 47.23% 1 a New Infrastructure works 109.20 20.06% 2 SUP 100,000 53.37 18.90% 60,000 21.60 3.97% 3 LOGFAS 30.78 10.90% 146.43 26.90% 4 TATE 1.93 0.68% 10.03 1.84% BUDP TOTAL 282.33 100.00% 544.36 100.00% For details please refer Annexure 1. 1.4. The policy related project objectives had two distinct aspects ; one related to - 41 - 4 Sectoral Policies and the other related to Project implementation. The Sectoral Policy objectives, using project as vehicle, attempted to bring about legislative reforms particularly in Rent Control Act, Property Tax and Urban Land (Ceiling and Regulation) Act. Some of these had national ramifications. The policy objectives related to Project implementation had a more direct bearing on the project such as reforms in the Development Control and Building Regulations, Private Sector Participation in Land Development, Institutional. Reforms and Capacity Building and Grant of Tenurial Rights to Slum Households' cooperatives. The Planning Commission Task Force (1983), National Commission on Urbanization (1988) and National Housing Policies (1988 - 1992) have all recognized the importance of legislative reforms in Rent Control and Urban Land Ceiling. However given the political implications of such reform process, not much progress has been achieved in this regard. Expecting a single project to bring about significant legislative reforms was therefore rather unrealistic. At te time of Project Appraisal and Negotiations, concern for environmental impact was not very pronouncqd. The project therefore did not have explicit objectives related to environment. However the project later supported such objectives through technical assistance to the World Bank supported Metropolitan Environment Improvement Programme. 2. Programme Approach Of The Project: 2.1 The project was conceived more as a program based on prototype projects and not as a conventional fully designed project. Certain deviations in the costs were therefore inevitable. Estimation of physical quantities, base unit costs and price contingencies were largely adequate. In fact, initially there were cost underruns particularly in land reclamation. However, credit allocation was based on constant exchange rate. Significant rupee depreciation therefore meant constant increase in investment in rupee terms that could be supported by availabld credit. The project closed with a rupee expenditure of Rs. 435.81 crores (US $ million 214.33)as against Rs. 282.33 crores (US $ 256.70 million) estimated in SAR, but with corresponding credit utilization of SDR 93 million (US $ 124.889 million) instead of SDR 137.7 million (US $ 138 million) estimated in SAR. The scope of LISP linked off site infrastructure and LOGFAS was considerably increased particularly by restructuring the project in 1991 (Annexure 1). The project was implemented through 1327 contracts out of which 1248 smaller contracts awarded through Local Competitive Bidding (LCB) procedure. Performance of contractors was generally satisfactory though in most cases there was some time overrun. - 42 - 5 POSSIBLE INVESTMENT UNDER CREDIT Investment 1 6(X) .- - - - Expenditure 5(X) Investment 2 400 Lh C-3(X) ~ 200 - dP 1(X) - - a ' 0 i 03 CC C N\ F N 0 N a, C\ Date Note: Investment 1 indicates the expenditure that could be supported by the residual credit. Expenditure indicates the actual cumulative expenditure. & Investment 2 indicates total expenditure that could have been supported by the total credit. 2.2 SAR estimated a six and half year completion period commencing from the retroactively financed works starting in January 1981 to September 1990. 1 lowever substantial progress in LISP was achieved only by extended credit closing date tf September, 1994 though some works wcre completed by May, 1995. The SAt disbursement profile expected full utilization of SDR 137.7 million by September 1990. However, actual disbursement by that time was only SDR 40.00 million. After restructuring and enhanced disbursement rates, credit disbursements improved and by June 1994 entire credit of SDR 93 million (after two successive credit cancellation of SDR 37.00 million in December 1993 and SDR 7.20 million in June 1993) was fully disbursed before the extended closing date of September, 1994. 3. Achievements of Objectives 3.1. Objcctivc (i) was translated into two components viz. LISP - Land Infrastructure Servicing Program and SUP - Slum Upgrading Program. The physical and financial progress of these components is given in Table 3. LISP target has been 'substantially' achieved in 9 years instead of 5 as expected in SAR. SUP target however has been achieved only to the extent of 22% of SAR target despite four year extension of project period. - 43 - 6 Table 3 Rs. in crores COMPONENTS SAR TARGETS REV!SED ACI'UAL ACTUAL AS % OF TARCETS REV.TARCETS 'hy. Fin. Phy. Fin. Phy. Fin. I'hy. Fin. 1+1 LISP 85,0() 196.25 88,00(0 366.30 87,743 297.72 99.71% 81.28% 2 SUl, 100,000) 53.37 60,000 21.60 22,204 7.46 37.01% 34.54% BUDP TOTAL 249.62 - 387.90 305.18 78.67% 3.2. Objective (ii) was partly translated into LOGFAS - Local Government Finance and Administrative Systems and partly supported by TATE - TeclAnical Assistance, Training and Equipment. Table 4 provides financial progress of LOGFAS and TATE as compared to SAR targets. As seen from this table the objective has been substantially achieved by supporting the investment necessary ifor efficient delivery of municipal services. Table 4 Rs. in crores f COMPONENTS FINANCIAL TARGETS ACTUAL S % OF SAK REVISED ACqUAL REV.TAIRGETS 3 LOGFAS 30.78 146.43 118.14 80.68% 4 TATE 1.93 10.03 12.49 124.53% BUDP TOTAL 32.71 156.46 130.63 83.49% 3.3. Objective (iv) being directly related to LISP was first achieved by obtaining GOM sanction for modified landuse and design standards fo,r LISP. Similar standards were later incorporated in the Development Control Regulations2 (1991) of the revised Development Plan of Bombay, thus 'substantially' achieving the objective. 3.4. Objective (ii) and (iii) were supported by a large number of studies and consultant services. Through this technical assistance and direct involvement in the project, institutional reforms and capacity building has been 'substantially' developed, notably in the following: (a) Formulating and evaluating land development projects mainly for low income beneficiaries with affordability and cost recovery considerations by using computer based models in MMRDA, MHADA and CIDCO. (b) Using computerized lottery for drawing lots for beneficiary selection, commercial accounting for monitoring collection of receivable etc. in MHADA. (c) Using network based computerized Project Management Systerns and computerized tracking of procurement, expenditure and credit utilization in MMRDA. 2Development Control Regulations for Greater Bombay 1991, Urban Development Department, Govcrnm Maharashtra. - 44 - 7 (d) 11Developing Geographic Informnation Sv1,tCm (GIS) for use in regional land use planning, transportation, other infrastructure planning and environimental inanagennent in MMRZDA, (e) Using comnputer based layout design preparation in MHAIDA and CIDCO, and (f) M1\RDA thr6ugh its BUDP-Revolving Fund acting as a municipal finance agency and making effective use of computerized Finance and Operating Plan (FOP) mo,dels for loan appraisals. BMRDA thus acquired a potential to become financial interm-ediary to finance m-unicipal infrastructure. On the other hand, (g) Organization and Management Studies carried out under TATE compuncnt for M11ADA, TMC, KMC and NMMC have had very litle impact. 3.5. Nine training programs including participation in international semninars and stud), tours were supported covering areas of Metropolitan Planning and Administration, Solid Waste Manag-emnent, Community Development, Urban Management, Municipal Finance Managemnent and Land Policy. This helped improve capacity for metropolitan planning and mnanagement. 3.6. Objective (v) was basically linked to legal arnd sectoral reforms at National and State level. Reforms in urban land ceilingy, rent coiltrol and property tax therefore could not be substantially achieved. Howvever, some reforms were carried out in Rent Control Act and Urban Land Ceiling Act as given in Annexure 11. MMRDA attempted to implement a pilot scheme of 'Guided Land Development' to achieve objective related to promoting private participation in land development on LISP pattern, w,ithin the existing legal framnework and with financial support from the project. This schemre relied upon the exemrption from compulsory acquisition as the incentive. How.ever as the compulsory acquisition itself could not be pursued , the schem-re of promoting private land development could not also succeed. Changes in land use planning, building codes etc. to reduce the costs of shelter investment and help cost recovery, have been 'substantially' achieved. Financial objectives referred to affordable pricing for low income beneficiaries, full cost recovery, , interest rates to be charged and internal cash generation for project funding. These have been 'substantially' achieved. Substantial technical capacity has been developed in BMRDA, MHADA and CiDCO to formulate, plan and implement projects. Similar capacities could not be developed amnong other implementing agencies. Howev er capacity to coordinate large multi-agency program is still weak in BMRDA and GOM. The achievement could be treated aIS 'partial'. Physical objectives relate to LISP, SUP and LOGFAS components. The achievement in each of these can be rated as substantial, Partial and substantial respectively with overall rating being 'substantial' thiough delayed. 3.7. Lack of access to serviced land and municipal services causes deprivation of urban poor. The project objective wvas therefore to n-ainly reach the poor through its - 45 - 8 LISP component. The SAR had a site planning objective of ensuring 45 to 55% of plots for low income families below the poverty line and 10 to 20% plots for income groups immediately above the poverty line. A comparative profile of LISP beneficiary and income distribution based on a 'Household Survey carried out for BMR'3 in 1989 shows that this objective has been largely achieved both in terms of number of sites developed and the beneficiary proportion (See graph below). In case of SUP too, the large proportion of beneficiaries were below the poverty line as confirmed in the base line surveys carried out by BMRDA. However in this case the total scale of project implementation was only 25% of the SAR estimates. BMR and LISP Income Profiles - 1981 100 90 ~LIST' Incomne Profile 90 80 -- - -- --- 70 Povcrty Line -->- S 60 50 / BMR Inconc Profile 40 - - ~ 0 I 71111 10 0t 0 500 1000 1500 20(X 2500 3000 3500 4000 45(X) Monthly Household Income (Rs.) 3.8. The reasons for delays are analyzed as follows: a) Though the implementation schedule was 'right' in terms of desired sectoral impacts with the delays that have occurred it appears to be unrealistic. b) Many delays are mainly on account of weak and uncommitted co- ordination at governmental level which failed to resolve issues in a timely manner. Substantial land was allotted to MHADA only on account of conditions of extension. Coordination mechanism got energized only during the IDA supervision missions and for responding to the conditions of extension. 3 Multipurpose Household Survey of BMR, BMRDA and ORG, 1990. - 46 - 9 c) Ban on quarrying and restrictions on reclaiming coastal wetland were the only technical problems faced by the project. d) Inordinate delay in deciding the policy of granting tenure to slums located on land reserved for public purposes in the 'Development Plan'. e) Enlarging the scope of project included two aerated lagoons at Versova and Malad which were unfinished works of an earlier Bank assisted Bombay II Water Supply and Sewerage Project (Credit No. 842 IN). No significant progress could be achieved on these projects in BUDP. These works were under consideration for inclusion in the Bank financed proposed 'Bombay Sewerage Disposal Project'. f) Amongst the implementing agencies, BMCthad major problems of selection of contractors and generally inefficient procurement practices. g) Even where civil works on LISP sites were complete, delays were caused in estate management stages of advertisement, scrutiny, selection and final allotment to the beneficiaries. 4. Project Sustainability: 4.1. The project is likely to be sustainable, only if Government develops and sustains commitment to project objectives and approaches. Furthermore the project would not be sustainable if it has to rely on government land. For that purpose land policy innovations promoting land assembly through privatd sector and servicing will be of crucial importance. Providing basic trunk infrastructure like water, sanitation, roads and power should receive higher priority. The follow-up project if any, has to support infrastructure and land policy initiatives. However, as of now there appears to be no inclination on the part of the Bank to support such project. However, MMRDA initiated Bombay Urban Infrastructure Project (BUIP). The Bank in response to the BUIP has indicated its to support to a financial intermediary. 4.2. To help project sustainability, the BUDP had conceived of a BUDP Revolving Fund to be constituted in MMRDA. This Fund has been constituted as agreed and is in operation since 1989. Till March 1997, the Fund has approved loan of Rs. 32.41 crores and disbursed Rs. 25.87 crores for improvement of municipal infrastructure in BMR. This should help project sustainability by way of financial support. 5. Bank Performance 5.1. The project was identified during informal discussions between GOM and the Bank missions in 1979 - 1980. Bank carried out the Bombay City Study (1980) and Bombay Shelter Study - Urban Housing and Land (1980) through highly acclaimed academicians, Prof. Harry W. Richardson and Prof. William C. Wheaton respectively. These studies helped identify the priorities and policy issues in urban land and shelter sector. The studies generated considerable interest and debate amongst the Borrower agencies and helped develop consensus on approach to project preparation. - 47 - 10 5.2. The Project Preparation took place in June - July 1982. The project preparation was helped by competent mission comprising expert consultants in related fields. (Architecture-Physical Planning, Environmental Planning, Municipal Engineering, Solid Waste Management, Financial Analysis and Urban Economics). The missions worked with the local team to evolve the project design and did not engage any consultant for formal preparation. This helped in increased involvement and commitment to project particularly in BMRDA which was the co-ordinating agency. 5.3. The project preparation paid acdequate attention to technical, financial, economic and institutional aspects. However it could now be said with hindsight that it did not provide adequate attention to environmental considerations. Its emphasis on improved services to slums, solid waste management and other municipal services is however indicative of its commitment to 'brown agenda'. I 5.4. The Appraisal took place in June - July 1983 and was preceded by Pre - appraisal in March 1983. The appraisal rightly brought out the major issues which may affect the achievement of project objectives. These were; a) Sectoral policy issues like rent control and property tax reforms,'urban land ceiling act, b) Policies related to development of slums on private land, b) Adequacy of land available with implementing agencies, c) Strengthening of BMRDA as the coordinating agency, d) Strengthening municipal government in Thane, Kalyan and Navi Mumbai, e) Professional community development staff in 'TMC and MIIADA to ensure community participation in SUP, f) Restricting MHADA's non-DUDP annual program to less Rs. 10 crores to ensure priority and commitment to BUDP, and g) Specifying cost recovery objectives in terms of interest rate to be charged and recovery performance for collecting monthly dues. 5.5. Consensus could be developed amongst the implementing agencies and the Bank on all the issues except (a) and (b) above. Bank attempted to use project as a vehicle to bring about legislative charges whereas the administrators expressed their inability to give any assurances on legislative matters. This delayed the negotiations by nearly two years. Though GOI gave some indication of action on these issues, nothing substantial happened on that front. Attempting to use project for bringing out policy changes was perhaps naive. 5.6. Bank performance from Identification through Appraisal and Negotiations was generally highly satisfactory mainly for continuity of Task Manager and the mix of competent consul;[ants, and their rapport with local team which helped project evolution as a joint team effort. 5.7. The Project was declared effective in March 1985, though the Retroactively works commenced in January 1984. The Credit became effective in August 22, 1985. Bank performance in supervision of project implementation was also highly satisfactory mainly because of continuation of the same Task Manager who was on - 48 - 1 1 niny occasions lone member of the such missions. Nineteen supervision missions through their extensive field visits, discussions with operational staff of implementing agencies and project beneficiaries, discussions with heads of implementing agencies and secretaries of government departments, energized the coordination mechanism. Out of these thirteen were prior to September 1990 the original credit closing date and only six thereafter till September 1994. Penetrating analysis of status of project reflected in the Aide Memoir strengthened the coordination agency to follow-up on some tricky issues. Follow-up on advice was also persistent. In particular, the supervision mission ensured; a) adequate enforcement of project covenants, b) judicious review of feasibility studies of LISP projects covering layout, engineering , beneficiary income profile, affordable pricing and cost recovery aspects, c) coordinated construction of LISP projects bv improved contract packaging, (The initial practice was to award separate contracts for works like water supply, sewerage, roads, etc. The missions advised packaging of these contracts into a single contract for a particular area. This improved coordination of construction activities at site.); and improved bid documents that included 'price variation clause' and gradual conformity to the 'sample bidding document' recommended by the Bank, d) dynamic development of TATE component by incorporating additional consulting assistance as the need arose particularly in environment related activities such as planning of coastal wetlands, quarrying operations, Metropolitan Environment Improvement Program (MEIP) - studies related to Environmehtal Management Strategy, Solid Waste Management in Bombay, Environmental Management of industrially sensitive areas, engineering master plan and feasibility studies of storm water drainage -, water supply to New Bombay and Vasai-Virar, water distribution system in Kalyan and computerization and development of GIS capabilities in BMRDA, e) flexibility in modifying project contents keeping in view the project objectives, which led to inclusion of major off-site works not envisaged in SAR, expansion of LOGFAS component to cover schemes like electric crematoria; f) expedient use of conditions of extension of credit closing date to keep borrower's interest alive and stimulate early decisions on difficult issues like allotment of additional land to MHADA, allocation of - Patalganga water to Navi Mumbai and establishing Navi Mumbai Municipal Corporation which also helped physical and financial * progress in a large way. From Annexure III, three distinct phases of land availability can be observed from the chronology chart of the availability of land and submission of feasibility studies to IDA. The correlation between the Missions and procurement of land for the project can be clearly seen from the chart. 5.8. Despite such persistent (sometimes nagging) efforts, the Supervision Missions maintained cordial relations with borrowing agencies and staff and worked together to achieve project objectives in best possible manner. The project - 49 - 12 implementation did not involve any significant deviation from the Bank policies and procedures. 6. Borrower Performance 6.1. The technical input of MMRDA's planning unit in identifying, preparing and appraising the projects were 'highly satisfactory'. Government [oo by appointing interdepartmental coordination committee demonstrated its will to pursue project objectives. BMRDA and other implementing agencies worked with Bank missions without any external consultant assistance on proj(ct preparation. Affordable Low Income Shelter Program (ALIS)P adequately covered sectoral, economic, technical, financial issued. Explicit consideration of environmental factors was, however, not a part of the state of art then. 6.2. Unlike during preparation, borrower performance during implementation' can be rated only as 'satisfactory'. BMRDA as a coordinaton agency was strong in identifying problems based on its MIS but was weak in ensuring their solutions. 3MRDA issued a 'Reporting Procedure Manual in 1985, covering information required on sectoral dimensions, agencies performance outside BUIDP, procurement, marketing and allotment of plots, financial covenants etc. However it could not enforce this manual except for getting project specific expenditure data necessary for disbursement applications, and recovery of monthly dues. BMRDA maintained highly satisfactory record of procurement which formed basis for review of physical and financial progress by Bank supervision missions. BMRDA in consultation with implementing agencies prepared yearly work program and translated it into monthly expenditure targets. Its monthly progress reports compared the progress with these targets and brought out important issues to the attention of heads of implementing agencies and government. But it did not have powers to enforce any decisions. Like the Task Manager of Bank, Chief, Planning Division of BMRDA who was the main coordinating officer continued from identification to completion of the project. However frequent changes of Metropolitan Commission, BMRDA and other heads of implementing agencies adversely affected the progress of the project and commitment to objectives. BMRDA also made concerted efforts to develop 'Guided Land Development' as an alternative to compulsory land acquisition. MHADA's performance on LISP was 'highly satisfactory' but on SUP only moderately 'satisfactory'. CIDCO's performance in LISP varied from satisfactory to deficient particularly en marketing of plots. BMC's performance on SUP was deficient, it virtually stopped implementation in 1991 after the announcement of 2.5 FSI scheme of slum redevelopment. Its performance on procurement was though procedurally satisfactory involved considerable delays in pre-award and post award stages. EMC used 120 to 150 days as the bid validity period instead of normal 90 days. TMC and KMC's performance in implementing LOGFAS was generally satisfactory. 6.3. The project did not have any specific macro economic policies, but in terms of sectoral policies it intended to bring about reforms in rent control, property tax, urban land ceiling, development control and building regulations and non-BUDP programs of MHADA and CIDCO. Except for development control and building 4 The State Government constitutcd a Working Group in 1981, to follow up the discussions with the identifici Mission, which prepared the report on Affordablu Low Income Shelter Programme. - 50 - 13 control regulations no significant impact was achieved in other areas. In fact, in case of SUP programs quite contrary to 13UDP principles and approaches became more popular. Regarding financial objectives internal cash generation, pricing at affordable levels for low income beneficiaries, full cost recovery, interest rate to be charged and recovery of monthly dues were highly satisfactorily achieved. Achievement of institutional development objectives remained deficient. Recommendations of Organization and Management studies carried out for MHADA, TMC, KMC and NBMC remained largely unimplemented. BMRDA's role and function still continues to be a matter of debate. Physical objectives were substantially achieved in LISP and LOGFAS but not in SUP. Social objectives particularly benefiting the poor were also substantially achieved. Overall implementation in physical and financial terms though delayed was highly satisfactory, but in respect of policy and institutional developm-ent deficient. 6.4. There were fourteen important covenants in the Project Agreement. Out of which seven have been fully complied, three have been partially complied, one covenant has been complied with delay. Three covenants related to implementation of slum upgradation on private lands and limiting MHADA's new investment on non BUDP schemes have not been complied with. Therefore the compliance with covenants was highly satisfactory with respect to procurement, progress reports, accounts and audits and pricing and cost recovery. It was 'satisfactory' in respect of use of technical assistance and 'deficient' in case of sector policies and institutional development. Overall, it could be rated as 'satisfactory'. 7. Assessment of Outcome 7.1 The overall outcome of the BUDP is satisfactory, in the context of priority being given to the physical objective of improving supply of public land to low income beneficiaries which has been substantially achieved. The Economic Rate of Return has surpassed SAR estimates and FRR shows achievement of financial objectives. Although sustainability is likely only if major reforms in land policies and provision of adequate municipal infrastructure in peripheral areas is achieved. It is indicative of changed priority over the years and not irrelevance of project objectives. Sumrnary of assessments in given in Annexure IV. 8. Future Operations 8.1. The project was being implemented through 1327 contracts (including training), out of these 1007 contracts have been completed. MHADA and CIDCO have generated cash surpluses of Rs. 93.79 crores and Rs. 28.33 crores respectively. This will be adequate to complete their on going works. in addition substantial revenue is expected by sale of balance plots. For BMC the expenditure involved is rather small as compared to its annual budget. TMC has completed all its works. KMC has already applied for financial assistance from 13UDP: Revolving Fund established in BMRDA. Given the fund available, it would be possible to finance completion of the project. Assets created in the project are in the nature of municipal infrastructure. Adequate instiLutional provisions have been ensured for their use and maintenance. No major problem is envisaged in this regard. 8.2. The programmatic objectives of the project are linked with overall sector - 51 - 1 4 performi-ance. if shelter supply remains inadiequate even for middle income group, it is quite likely that plots m-eant for loN-w income beneficiaries in the project will get transferred to higher in come groups. The evaluation in future will have to be of the sector as a whole and not of project alone. BMNRDA is attempting to develop a reg,ional information system to provide basis for such periodic evaluation. The emphasis in follow up action by the Bank will have to be on supporting infrastructure investment, land policy instrument' that ensure access to serviced land for the poor and institutional developme-int to finance, plan and co-ordinate development. BIARDA could be considered as an intermediary in this regard. 9. Keyv Lessons Learnt 9.1. A project based investmnent programn cannot be used as an Qffective vehlicle to bring about legal and institutional reforms, however important they may be for the desirable sectoral impacts. Once the loan becomes effective, thne borrower's attention (and to Somec extent of theo l3,)n1k) gets confinled to using the available funds and not on the seckoral r2forins. 9.2. In case of urban sector, to implement program-s of improvemIent in quality of life through multi-sectoral projects involving rriqhiple agencies,, an integrated urban development approach is necessary. However, for such programs to be implem-ented efficiently, planning and cooraination is of crucial signiificance. In this regard an externial coordinatingc agency, w,hich is not directly implementing the project, is important for impartial monitoring and evaluation. But most implementing agencies are autonomous and have their own procedure to make decisions. If an external agency does not have an effective say. in evaluating the decisions of the implementing agencies, coordination may turn out to be ineffective. Certain 'emrpowvering' of coordinating agency is, therefore, essential. 9.3. Frequent changes of personalitieF- in key positions, particularly belonging to the Indian Administrative Service, is of com-inon problem in implementing long term programs. This is also true of key engineering positions in BMC and MHADA. Certain amount of continuity of key personnel is, therefore, important in deVeloping Comm11itme)nt to project objectives and approaches. 9.4. The work culture prevailing in most public sector institutions is alien to modern mnethods of project mnanagemIent. Efforts are necessary to change this work culture. Imposing project management consultants could only be a short term expedient solutions. 9.5. In the Metropolitan Shelter Sector, increasing the supply of service land through provision of trunk infrastructure and supporting land policy instruments which promote private land development for all incomne groups is of fundamental importance. Direct investment by public agencies in land development could only be a part of the overall strategy, having demonstration impacts. 9.6. Most of these lessons are relevant for urban and infrastructure projects in India. 52 - Annexure 1 Rs. in Crores COMPONENTS/ AGENCIES SAR TARGETS REV. TARGETS ACT./Scp.94 ._Phy. Fin. P1hy. Fin. Phy. Fin. 1 Land Infrastructure Servicing Program (LISP) Provision of 85,000 serviced sites including community 85,000 196.25 88,000 366.30 87,743 297.72 facilities, core houses and house expansion loans: MHADA Greater Bombay: Serviced Sites 40,000 81.22 55,200 136.82 55,297 114.86 Thane / Kalyan: Serviced Sites 25,000 59.58 3,800 9.78 4,709 9.57 BMC Greater Bombay: Offsite Infrastructure and Community Facilities 21.54 28.90 25.65 Rehabilitation of Water Mains 29.20 11.03 Priority Storm Water Drainage WYorks - 20.00 17.59 * Waste Water Treatment (Aerated Lagoons) 20.00 8.66 * Water Supply to Eastern Suburbs 20.00 6.92 CIDCO New Bombay: Serviced Sites and 20,000 33.91 2 ,000 81.60 27,737 79.31 Infrastructure * Master Balancing Reservoir at Shil and 12.00 12.49 Trasmission Mains f * Drawl of 30 mid water from Patalganga 8.00 11.64 2 Slum Upgrading Program (SUP) Upgrading 100,000 slum households in Greater Bombay 100,000 53.37 35,000 21.60 22,204 7.46 including provision of tenure, improved infrastructure services, home improvement loans, community facilities MHADA Greater Bombay - On Public Land 70,000 35.07 27,500 19.82 21,604 6.13 - On Private Land 10,000 5.01 0 0.00 0 0.00 BMC: - On MCGB Land 20,000 13.29 7,500, 1.78 600 1.33 3 Local Government Finance Administration and Services (LOGFAS) 30.78 146.43 118.14 Equipment and Civil Works for Improving the maintenence of roads, drains and collection and disposal of refuse in municipal corporations DMC 17.70 34.48 25.07 TMC 6.25 13.79 21.68 KMC & CIDCO (NBMC) 6.83 13.16 18.88 KMC ++ Augmentation of Water Supply 35.00 33.05 CIDCO-(NBMC) ++ Equipments 20.00 15.36 Municipal Councils in BMR Improving and Developing Municipal 30.00 4.10 Services 4 Technical Assistance Training and Equipment (TATE) 1.93 2.03 9.39 For improving the capacity of the project implementing and coordinating agencies +++ Metropolitan Environment Improvement 8.00 3.10 Programme BUDP TOTAL 282.33 544.36 435.81 Note: * Items included in December 1988. ** Items included after the Restructuring became effective from January 1991. ++ As part of original project. +++ Included as part of TATE. - 53 - Annexure 11 After the Negotiations of the Project some amendments and reforms have been introduced in the Urban Land Ceiling Act and the Rent Control Act and are given below; 1. Provisions of Section 20 & 21 of Urban (Land Ceiling and Regulation) Act, 1976: Section 21 of the Act entitles land holders to prepare schemes and develop their surplus land for weaker section housing and thereby obtain exemption from the provisions of the Act. Such exemption can nQt be refused on the ground that the land is required for public purpose since such exemption is also in the public interest. The pattern of development prescribed under Section 21 allowed development of residential tenements with a plinth arca upto 40 sq.m and upto 80 sq.m to'be constructed in equal numbers. Iowever such development could not reach the most disadvantaged and hence the State Government prescribed guidelines for devqlopment of weaker section housing under Section 20 of the ULC Act. A scheme was prepared under Section 20 in 1983, which envisaged construction of tenements of 25, 40 and 80 sq.m. plinth area on the surplus land and required landholders to surrender proportion of tenements (and also land for bigger lands) based on size of land holding. This was struck down by tlhe High Court which did not view it to be in the public interest since; 1. more than 50% land was released for the land holders; and 2. there were no price restrictions on sale of tenements. In 1986, the State Government formulated revised guideAnes for weaker section housing which were subsequently amended in 1988. These are as follows: 1. For Surplus Land below 4,000 sq.m. The land holder should build tenements of upto 40 sq.m. area on the entire net buildable land and sell 30% of such tenements to the State Government or Government nominees at predetermined rates. 70% of the tenements can be sold by the land holder/developer in the open market at a predetermined rate and according to the allotment procedures to be laid down by the State Government (these will be similar to MHADA's policy of allotment). In both the cases the predetermined rates would be roughly equal to five times the land cost (as per the ULC Act rates) plus actual cost of construction and 15% profit on total expenditure. 2. For Surplus Land above 4,000 sq.m.: The surplus area excluding Development Plan reservations shall be divided into two equal componen' as given below; - 54 - The other alternative offered to the land holders is to surrender 65% of the land at ULC prices to MHADA and using the remaining 35% land for construction of apartments having an area of 40 to 80 sq.m. 2. Rent Control Reforms: In 1986, The Government of Maharashtra introduced some reforms in the Rent Act but they mainly deal with the new properties. These changes allow for a five-year moratorium on rent restriction and thereafter limit the rents to net return of 15% per annum on cost of land and building at the time,of first letting. The system of short term Table- Scheme for Surplus land above 4000 Sq.TV. under ULC Component A: All plots admeasuring 25 Sq.M. each Type of Plot % Tenements Approximate Cost I(Rs.) Sites & Services 5 (minimum) 6000-8000 plots+Core 10 (Minimum) 12000-14000 House I Room 85 (Maximum) Below 25000 Tenements Govt. shall have the pre-emption in case of all plots in this component Component B: The land owner shall construct the tenements asper the following guidelines Tenement Size % of Tenements Right of pre-emption Upto 25 Sq.M. 30 60% at cost price 25-50 Sq.M. 20 10% at prescribed 50-80 Sq.M. 30 rate by Govt. * The total area of pre-empted plots shall not exceed 12.5% of the FSI on this component leasing was also revived, which was banned in 1973. Ownership Transfers of Rent Controlled Buildings - 55- With a view to expand the scope of the runewval programme of the Rent Control Act affected buildings with active participation of tenants the Government of Maharashtra amended the Act to cnable the tenants' co-operativcs to purchase the buildings by paying 100 times the monthly rent as compensation to the owners. This provision is inadequate as far as return to original owners is concerned; but some of the tenants cannot afford to pay even this meager compensation to the owners. This scheme has remained locked up in prolonged litigation till 1992 when High Court finally upheld the amendments to MHADA Act but the matter is now in the Supreme Court. National Housing Policy The National Housing Policy formulated in 1988 also proposed to amend the provisions of ULC and Rent Control Act. Besides these changes, the Policy's, major objective was to motivate and help all people - particularly houseless and inadequately housed, to secure for themselves affordable shelter throug4 access to land, materials, technology and finance by creating an enabling environment. The thrust of the Final Policy adopted by the Government in 1992 recommended the 'facilitator' role of public agencies. The Model Rent Act An amendment to the Delhi Rent Control Act was prepared for the Union Territory of Delhi with the objectives of introducing reasonable -flexibility in rent structures and encouraging house construction activity. Based on this Act, the Government of India prepared 'The Model Rent Control Bill' which aims at reducing controls on the rental housing market and promoting investments in new house construction for rental housing. Following the Model Acte the Government of Maharashtra has prepared a bill which also aims at unifying, consolidating and amending laws prevailing in different parts of the State of Maharashtra. The salient features of the bill are as follows: 1. 40 years exemption fron provisions relating to standard rent and permitted increases provided for buildings newly constructed or reconstructed on or after 1st October 1987 and for premises not let or given on license for a continuous period of one year. 2. After the expiry of 40 years, the standard rent to be fixed for premises first let after 1st October, 1987 on the basis of 15% net return to the landlord on his investment in land and building plus all the out going in respect of the premises. Provisions for lixation of standard rent for other premises remain unchanged. However application for fixation of standard rent has to be made within a period of one year from the date of demand of excessive rent or permitted increases by the landlord or within a period of one year from commencement of this Act. 3. Exemptions provided for premises let to foreign missions, international agencies, multinational companies and public limited companies having a paid up share capital of more than Rs. 1 crore. 4. Existing protection afforded to tenants to continue. - 56 - 5. Rent increase by the landlord allowed at a flat rate of 5% per annum for various uses after commencement of this Act. The bill was proposed to be converted into an enforceable Act after it is passed by the State Legislature and approved by the Governor. However, due to change in the Government, the bill was not processed. - 57 - Annexure II Phases of Land Availability and Chronology of Submission of Feasibility Studies 690.00 Cr * Malvani 590.(0)0 K;ilamnboll ,*Kharghar 490.(X) -Charkop Il w .5 ~~ ~ Kand vali..hcu . .' .* .... Gorakshan 390.00 ..tPnkhidi Corai 11 Mulund`I Charkop 11 Majiwade 1 290.00 - .khairnne 190.00 ALroli Choarkop I . rai I 90 (X) 1 1 May-83 Oct-84 Fcb-86 Jul-87 Nov-88 Mar-90 Aug-91 Dec-92 Month / Year - 55 - Sumnninry of Assessments Annexure IV A. Achievnnt of Objcctives Substantial Partial Negligiblc Not applicable Macro Policics Sector Policics Financial objectives Instittuional development Physical objectives Poverty reduction Gender issues •lE Other social objectivcs Public sector management Private sector development Other (specify) B. Project sustainability Likelv Unlikely Uncertain - 59 - Summary of Assessmients (Contd). Highlv C. Bank performance satisfactory Satisfctorv Deficient Identification Preparation assistancC Appraisal Supervision D. lorrower performancc satisfactorv Satjsfactory Deficient Preparat i on Implementation Covenant compliance Operation (if applicable) Highly Highly 1.. Assessment of oulcome satisfaokry i ory Uiisfactory unsatisfalctory IMAGING