Document of The World Bank FOR OFFICIAL USE ONLY V2V, Al>4 Report No. 5569-JO STAFF APPRAISAL REPORT HASHEMITE KINDOM OF JORDAN SECOND URBAN DEVELOPNENT PROJECT May 16, 1985 Urban and Regional Development Project Division Europe, Middle East and North Africa Region Ths document bas a resbied distribution xnd may be used by eipients ondy in tlE ;zrfemance of their official dvties. lts contets may not otherwise be discloed without World Bak authoriaion. CURRENCY EQUIVALENTS Currency Unit = Jordan Dinar (JD) JD 0.40 = US$1.00 JD 1.00 = US$2.50 JD 1.00 - 1,000 fils MEASURES AND EQUIVALENTS Kilometer (km) = 0.62 mile Square Kilometer (km2) = 0.386 square mile Hectare (ha) = 2.47 acres Centimeter (cm' = 0.3937 inches Meter (m) = 39.37 inches = 3.28 feet (ft) Square Meter (mZ) = 10.8 square feet (ft2) Cubic Meter Cm3) = 264 US gallons Liter (1) = 0.264 US gallons Liter per capita per day (lpcd) 0.264 US gallons per capita per day ABBREVIATIONS AMD ACRONYMS AM = Amman Municipality ATMDP = Amman Transport & Municipal Development Project CB = Central Bank CVDB = Cities and Villages Development Bank HB = Housing Bank IDB = Industrial Development Bank JEPCO = Jordan Electric Power Company JKC = Jordan Housing Corporation LIHRF = Low Income Housing Revolving Fund MMRAE = Ministry of Municipal and Rural Affairs and the Environment MOF = Ministry of Finance MOP = Ministry of Planning SSC = Social Security Corporation SSIHP = Small Scale Industry and Handicraft Program UDD = Urban Development Department UDPI = First Urban Development Project UDP2 = Second Urban Development Project USAID = United States Agency for International Development VTC = Vocational Training Corporation WAJ = Water Authority of Jordan This report reflects the findings of a mission to Jordan from December 1-17, 1984, comprising Messrs. F. Mitchell (economist), B. Assimakopoulos (engineer/ planner), J. Maweni (financial analyst) and Ms. A. Elwan (economist). FOR OFFICIL USE ONLY SECOND URBAN DEVELOPMENT PROJECT Table of Contents Pag LOAN AND PROJECT SUMRI ............................................. i I. IRODUCTrON ................................................... 1 A. The Setting ..............;......1 B. Institutional Framework. 1 C. Shelter .2 D. Sectoral Policy Actions. 3 E. Bank Group Role in the Sector .............................. , II. THE PROJECT 6 A. Objectives. 6 B. Main Features. 6 C. Detailed Description. 7 Upgrading Schems ................................ 7 Sites and Services ....................................... 7 Technical Assistance, Training and Studies ..... .......... 10 III. PROJECT COSTS AND FlNANCING 10 A. Costs ................................................... 10 B. Project Finances ................... 12 rv. PROJECT IMPLEMENTATION 15 A. Status of Project Preparation ........................... 15 B. Implementation Schedule ................................. 15 C. Procurement .......... ................................... 15 D. Disbursements ......... .................................. 17 E. Reports, Accounts and Audit ............................. 18 F. Monitoring and Evaluation ............................... 19 G. Supervision Requirements ................................ 19 V. PROJECT ORGANIZATION AND MANAGEMENT 19 A. Responsibilities for Project Implementation and Operation ............................................ 19 B. Organization and Management and Finances of Project-Related Agencies .19 Urban Development Department .19 Housing Bank .21 Low Income Housing Revolving Fund .23 Vocational Training Corporation .23 VI. COST RECOVERY. MARKETING, AND AFFORDABILITY 24 A. Cost Recovery .24 B. Market Considerations .24 C. Affordability .26 This docent has a resuicaed durlbtion and ray be used by rpients only in the perfoamof | thbr offici duties Its contfts may not otherie be dicosed without Wodd Bank authorizti Table of Contents (cont'd) Page VII. PROJECT JUSTIFICATION AND RISKS 27 A. General .................. ............................... 27 B. Economic Justification .................................. 28 C. Poverty Impacts ..................... .................... 29 D. Project Risks ...................... ..................... 30 VIII. ASSURANCES, AGREEMENTS, AND RECOMMENDATIONS .... .............. 30 Text Tables and Charts II-1 Summary Description of Project Sites ........................ 8 III-1 Project Cost Summary . ....................................... 11 III-2 Summary Project Finance Plan ................................ 13 III-3 Proposed UDP2 Finance Flows ................................. 14 IV-1 Procurement Arrangements .................................... 16 V-1 UDD Financial Flows in Relation to Property Sales (Base Case) ..... ................. 21 VI-1 Cost Recovery Mechanisms .................................... 2.5 VI-2 Analysis of Affordability of Plots on New Sites .... ......... 27 VII-I Economic Rate of Return ..................................... 29 ANNEXES 1. Detailed Description of Project Components .. 32 2. Project Cost Tables .................... .................... 52 3. Financial Analysis .......................................... 67 4. Estimated Schedule of Disbursements ..... .................... 77 5. Project Implementation Schedule ............. .. .............. 78 6. Organization and Staffing ................................... 79 a. A-mnan Municipality ................ .. ................ 79 b. UDD ......................... ........................ 80 c. Housing Bank (including finances) ........ .. ......... 81 d. Project Execution Responsibilities ........ .. ........ 87 7. Schedules for Technical Assistance, Studies and Preparation of Operational Manuals ...................... 88 8. Terms of Reference for Studies and Technical Assistance ..... 90 a. UDD Advisory Services 1985-1988 ......... .. .......... 90 b. Study for a Third Urban Development Project ....... .. 99 c. Study of Amman Quarries Redevelopment ............... 101 d. Study on Amnan Squatter Area Upgrading Program ...... 104 e. Study on Enhancing Women's Productivity ............. 106 9. Procurement Rules Requiring Clarification ................. .. 109 10. Analysis of Affordability ...... ...................11.......... i 11. Economic Evaluation ................... ....... 117 12. Contents of Project File ...... .............................. 127 MAPS I. Map 1: (IBRD 16512R) Amman-Balqua Region II. Map 2: (IBRD 18802) Location of Project Sites HASHEMITE KINGDOM OF JORDAN SECOND URBAN DEVELOPMENT PROJECT LOAN AND PROJECT SUMMARY Borrower: The Hashemite Kingdom of Jordan. Beneficiaries: The Urban Development Department (UDD) of the Amman Municipality and the Housing Bank (BB). Amount: US$28 million equivalent. Terms: 15 years, including 3 years of grace at the standard variable interest rate. Onlending Terms: The Borrower would onlend $12.5 million of the proposed loan to the BB for items whose costs are recoverable from property sales. The maturity and grace period for the onlent funds would be the same as under the Bank loan (15 and 3 years, respectively); the interest rate would be fixed at the rate in effect at the time of loan signing. The remainder would be made available to the UDD as -a grant for social facilities whose costs are non-recoverable from project beneficiaries. The Government would bear the foreign exchange and interest rate risks. Project Description: The project is part of the Government's long-term program to provide shelter for poorer urban dwellers. It aims at improving the living conditions of low-income people in the Amman region by providing shelter at affordable prices without subsidy to ensure the project's replicability; encouraging sound growth patterns through stimulating urban development in appropriate locations and at lower infrastructure cost than under traditional practice; and strengthening institutional capacities in Jordan to undertake low-income shelter and urbanization projects. The project includes the following major components: (a) upgrading two low-income squatter settlements that house about 4,200 people; (b) servicing land in four sites for about 3,400 plots with initial occupancy by about 24,000 people; and (c) providing technical assistance to the UDD for project design, p-oject planning and supervision, studies -nd advice on management and financial issues. The project would benefit a substantial portion of the population of Greater Amman, a quarter of whom fall below the poverty threshold, and provide for shelter at lower economic costs than existing alternatives. The principal project risk concerns uncertain marketability of plots in times of econom!ic slowdown. The project, however, includes features to minimize the risk. Estimated Cost- ": Local Foreign Total US$ million Upgrading 3.7 2.0 5.7 Sites and Services 39.2 20.6 59.8 Project Management 2.7 1.2 3.9 Studies 0.3 0.8 1.1 Base Costs 45.9 24.6 70.5 Physical Contingencies 2.7 2.5 5.2 Price Contingencies 7.0 5.8 12.8 TOTAL 55.6 32.9 88.5 Financing Plan: Housing Bank ) J 22.3 LIHRF Contribution (UDP1 surpluses) ) 37.4 ) 3.1 1.2 Beneficiaries ) ) 17.0 Government 18.2 1.8 20.0 World Bank 0.0 28.0 28.0 TOTAL 55.6 32.9 88.5 Estimated Disbursements: Bank FY 1986 1987 1988 1989 1990 1991 Annual 0.5 4.8 11.3 9.5 1.6 0.3 Cumulative 0.5 5.3 16.6 26.1 27.7 28.0 Rate of Return: 14 percent. 1/ Includes custom duties and taxes (2.3 percent of total project costs). I. INTRODUCTION A. The Setting 1.01 Jordan-L' is a highly urbanized country. Following three decades of high population growth and massive immigration, about 70 percent of its 2.6 million population live in urban areas of 5,000 people or more. By the year 2000, Jordan's urban population is expected to increase by some 2 million. Unemployment is an increasing problem, since the labor force is rising at about 6% per annum while domestic and external demands for Jordanian labor are weakening. Given its scarcity of natural resources, limited arable land and water and small domestic market, Jordan's future economic growth and employment must depend upon export-based manufactures and services. In an era of expected slower economic growth, the development and management of efficient and cost-effective services and infrastructure in urban areas to support these activities, as well as to improve the welfare of a rapidly increasing urban population, are crucial challenges facing Jordan. 1.02 Jordan's population is highly concentrated. Seventy percent of its urban population lives within 30 kilometers of the capital, Amman. Amman's population of 750,000 accounts for almost 60% of the Amzwn region urban population (Map 1). This area produces most of the country's services and manufacturing industrial output. While the Government is taking active measures to stimulate growth in other areas, the Amman region is expected to accommodate most population growth for the remainder of this century and to continue its role as the main engine for Jordan's economic development. With the very rapid increase in the Amnan region's population, lack of low-cost housing and proliferation of slums have emerged as pressing problems. Up to 26 percent of households in the Amman urban region have incomes below the Bank-defined urban poverty threshold of JD 140 per month. The most rapid population growth in the Anman region is occurring outside Amman municipality, typically in new areas with low land costs, but with high costs of infrastructural services. Given limited budgets, many areas, especially those inhabited by the poor, are inadequately served. The prospect of low and uncertain economic growth implies a continuing need for the Government to be concerned with providing services for less fortunate citizens. B. Institutional Framework 1.03 Several government corporations or authorities provide services or coordinate local functions, including, most notably, the Cities and Villages Development Bank (CVDB), which lends to local governments, the Water Authority of Jordan (WAJ), which is responsible for water production and distribution and sewerage works, and the Jordan Electric Power Company (JEPCO), responsible for electricity distribution. In the field of housing, the government-owned Jordan Housing Corporation (JHC) develops housing for public sector employees and housing cooperatives. The Housing Bank (HB), a mixed public-private 1/ Data in the text that follows refer to the East Bank of Jordan. -2- sector institution which operates on a commercial basis, was established in 1974 to help mobilize private savings to finance housing construction and has grown into the main savings insitution in Jordan. Local governments have an essential role to play, especially in transport, roads, solid waste management, land use planning, health controls, provision of markets, a variety of licensing functions and, in some areas, investments in schools and health centers. Urban administration in Jordan comes under about 135 municipalities and 300 villages which report to the Ministry of Municipalities and Rural Affairs and the Environment (MMRAE). The Municipality of Amman (AM) has a unique political status: the Lord Mayor has ministerial rank, and its budget is approved by the Prime Minister rather than the MMRAE, and the Municipality (rather than MMRAE) is responsible for planning standards within the AM boundaries. 1.04 There are several weaknesses in the provision of local services, including a multiplicity of institutions, overcentralization of authority within specific organizations, and personnel policies and levels of remuneration which make it difficult to attract and retain qualified staff. Local government management, planning, and finance are generally weak. Municipalities are unable to prepare and implement investment programs to meet the requirements of a rapidly increasing urban population. Better planning and coordination of public investments in different sectors at the regional as veil as city level will become increasingly important in avoiding waste and encouraging efficient patterns of urban development. A general problem in providing services has been urban sprawl, and in Greater Amman population density has actually been decreasing for this reason. The result is overinvestment in infrastructure networks. Sprawl has arisen due to weak planning controls, low taxes on land, and subsidized provision of services, all of which reduce incentives to develop land in serviced areas. Given the vital economic role of the Amnan region, and the increasing scale and complexity of services, special attention is required to strengthening planning there. C. Shelter 1.05 Most housing in Jordan is provided by the private sector, and consists of one to three storey detached buildings. In the lower and middle income areas, there is usually provision for vertical or horizontal extension, and families tend to extend their houses as their family circumstances demand and their incomes permit. Around 11 percent of the urban population live in official refugee camps administered by the United Nations Relief and Works Administration (UNRWA). Some 7 percent live in low-income squatter settlements, many comprising overflows from nearby refugee camps, which are characterized by illegal tenures and serious deficiencies in infrastructural and social services. Squatting on government lands on the urban fringe of Amman, while a relatively new phenomenon not yet involving many people, has been increasing in recent years. A low degree of direct cost recovery from beneficiaries for infrastructure, together with limited resources available for infrastructure investments, implies that poorer neighborhoods tend to suffer more service deficiencies than richer ones. -3- 1.06 Substantial resources have been mobilized for housing investment, which, fuelled by workers remittances, has considerably exceeded plan targets and in 1976-1980 came to about 6 percent of GNP. The current Five-Year Plan (1981-85) allocates $825 million or 8.8 percent of public sector investment for public housing, as well as significant amounts for other urban services such as water, sewerage, and electricity. The crux of the shelter problem is not a shortage of housing overall, but its high cost, which forces poorer families to live in overcrowded conditions. Occupancy in the squatter areas is estimated at over four persons per room, compared with a national average of about 2.6. One reason is that land and building costs have risen faster than incomes in the last decade. Second, although the Jordan landlord and tenant legislation gives freedom to landlords in setting rents on new buildings, it contains no provision for rent increases, and tenants have complete security of tenure, with the result that some landlords prefer to keep apartments vacant for long periods rather than lease them. The main cause, however, of the problem for low-income people is excessively costly building and planning standards including, most notably, minimum plot sizes of 300m2 (which are unaffordable to poorer persons). The cheapest private sector accommodations for sale with financing require monthly mortgage payments of upwards of JD 100 (US$250) per month (unaffordable to families in the lower two-thirds of the Amman region income distribution). 1.07 The Government's basic response in the past to the high housing construction cost problem has been to establish heavily subsidized housing funds (those for the military, police and teachers provide zero interest rate loans) and to encourage construction and sale of housing by the Jordan Housing Corporation (JEC) with rates of interest to beneficiaries of about 8Zk'. The 1Q81-1985 Development Plan stressed the expansion of housing for lower- and middle-income groups and proposed that the JHC produce approximately one quarter of new housing, an increase in its output from 1,500 to 4,000 units per year. This strategy has not met the demand for low-income shelter since the cheapest JHC housing is in the form of apartments of over 80.2, and monthly payments range between JD 74 and JD 110 (US$185 and $275), requiring a monthly income of at least JD 250 (US$625), making JEC housing unaffordable to families in the lower half of the Amman income distribution. The Government is now, with UDPl, innovating an alternative approach that involves less initial accommodation on individual plots of land but with room for progressive construction by households, cross-subsidization between sales at market prices, and sales to target group beneficiaries, and provision of the full range of social and infrastructural facilities required for sound urban development. D. Sectoral Policy Actions 1.08 The Bank's Urban Sector Review (No. 3965-JO, dated June 22, 1983) identified a number of key policy issues requiring priority attention. These included: (i) reviewing the organization and staffing of institutions concerned with urban management; (ii) strengthening Amman Municipality's organization, staffing and finances; (iii) establishing effective Amman region 1/ This is the compound interest equivalent of simple 5 percent interest over 20 years as charged by JHC. -4- planning machinery; (iv) incorporating spatial planning considerations into Ministry of Planning (MOP) procedures; (v) encouraging more cost-effective and economic development patterns by, inter alia, increasing land taxes and improving control over the public domain; (vi) developing a country-wide housing policy and allocating institutional responsibility for its monitoring and implementation; and (vii) developing appropriate mechanisms to provide shelter (infrastructure and housing) to lower-income groups who are underserved by existing practice. 1.09 The Government is cognizant of these issues and has been moving effectively to address them. The Municipality of Amman is in the process of improving management of its engineering services, investment programming, and financial planning. Planning for the Greater Amman Metropolitan Region is receiving attention by a working party chaired by the Lord Mayor of Amman, which, with the assistance of consultants, is studying the institutional changes required to establish effective planning machinery and is preparing master plans and investment plans for the region for the 1986-1990 Five Year Plan. The incorporation of spatial planning considerations has been addressed on a national level through the recent establishment in MOP of a regional planning section. A major enumeration of social and economic facilities in all parts of Jordan is now underway with technical assistance from USAID, and the next Five Year Plan is expected to incorporate a much stronger regional component. Regarding rent controls, rental ceilings on properties occupied before 1975 were allowed to increase in 1983 up to estimated 1975 levels for fiscal reasons. Since rents on new properties have stabilized in the last few years, rent controls are a less significant factor in inefficient allocation of the housing stock than previously. 1.10 To facilitate developing a housing policy, funds for carrying out a housing strategy study were included under UDPl. The government subsequently decided to use grant funds for this study and experts financed by USAID and UN Habitat will supplement an in-house MOP team. Assurances were secured at negotiations that the study would be completed by December 31, 1986, at which time Government would discuss its findings with the Bank. The Government has also taken some steps to encourage more economic development patterns by revaluing land for taxation purposes. Through UDP1 and the proposed project, the Government is experimenting with more cost-effective low-income shelter. E. Bank Group Role in the Sector 1.11 Bank Group assistance has been responsive to the problems created by rapid urbanization. Extensive economic and sector work has been carried out, as well as project financing related to urban development in Jordan. Recent studies include the above cited Urban Sector Review, the Water Sector Report (Report No. 4699, June 1984), and a regional development study. Based on discussions of these reports, the Bank's strategy in the sector includes assistance to improve main urban service levels (water, sewerage, solid -5- waste management, urban transportation); increasing the supply of serviced land; improving physical and development planning in Anman and other urban centers where most future development will occur; and strengthening the capacity of local governments to plan, implement, and manage the functions for which they are responsible. 1.12 In support of the above strategy, a "three-track" lending approach is currently being followed, i.e. (i) water and sewerage projects; (ii) shelter projects and (iii) municipal projects. Seven water and sewerage projects have been undertaken in urban areas. The Cities and Villages Development Bank (CVDB) loan ($10 million, Loan No. 1826-JO, 1980) has the objective of building up the capacity of local governments to provide services for their populations. A second loan to CVDB is being appraised. The Amman Transport and Municipal Development Project ($30 million, Loan No. 2334-JO, 1983) aims to help Amman Municipality ameliorate traffic problems, upgrade the capacity of the relevant municipal departments to plan and execute works (including maintenance and operation functions), upgrade solid waste management, and to commence systematic investment programming. l.13 The first Bank-financed Urban Development Project (UDPl, US$21 million, Loan No. 1893-JO, 1980) is addressing the need for cost-effective, low-cost housing in the Amman region. The project is upgrading four slum areas with about 1,400 families, and servicing about 2,800 new residential plots in the Amman region. About 2,130 of the plots are to be sold to families in the lower 402 of the income distribution, who are unserved by other official housing programs and who constitute the target group for the project. UDPI extends beyond narrowly defined shelter to provide both sites and services and upgrading areas with appropriate educational, health, and community facilities. The project is being executed by the Urban Development Department (UDD), which was set up in Amman Municipality expressly for this purpose; funds for all shelter components pass through the HB, which also has responsibility for all mortgage and building loans to individual project beneficiaries. The project includes vocational and commercial training for the urban poor by the Vocational Training Corporation, with special emphasis on increasing female participation in the labor force. A scheme to promote employment opportunities through loans by the Industrial Development Bank to small-scale and handicraft enterprises in the project areas will start when sites are occupied. 1.14 UDP1 was delayed for more than a year for redesign following a Government decision to increase plot size by 50 percent and minimum road widths by 200 percent over appraised standards. This required reducing the number of plots from 5,000 to 2,800, and extending the target group from families below the 33rd percentile, as initially agreed, to families below the 40th percentile. Following this change, however, implementation of UDP1 has proceeded efficiently and on schedule. The upgrading component of UDPI is now almost completed. There have been over 12,000 applications for plots in new sites, and occupation of plots is now taking place and should be complete by mid-1986. Project delays and the appreciation of the US dollar have caused slower disbursements than anticipated at appraisal. UDP1 is, however, -6- expected to achieve its main goals of upgrading low-income settlements, giving their inhabitants tenure, providing affordable shelter to many lower-income groups without subsidy, and improving the standard of public services in poorer neighborhoods. 1.15 The proposed Second Urban Development project would build upon the experience and skills developed under UDPI in designing, implementing and marketing a new type of shelter project. It would incorporate several modifications in design standards to reflect lessons learned in the first project, including larger areas in community centers, a greater variety of plot sizes to respond to demands, and less construction of hour,ing superstructures by UDD in the light of the strong demand by muny beneficiaries for serviced land on which to build their own houses. FutuLe operations might address shelter problems outside the Amman region, and also possibly shift to an approach in which funds would be provided for investment in subprojects meeting previously agreed criteria, with less emphasis ou Bank appraisal of individual components. II. THE PROJECT A. Objectives 2.01 The project objectives would be to: (a) improve shelter for low-income people in the Amman region without Government subsidy; (b) encourage sound spatial patterns by stimulating urban growth in appropriate locations at lower infrastructure costs than under traditional practice; and (c) strengthen institutional capacities in Jordan to undertake low-income shelter and urbanization projects. B. Main Features 2.02 The project would: a. upgrade conditions in two settlements with about 610 families (4,200 people) through regularization of land tenure, provision of water and sewerage, paved streets and footpaths, community centers and schools, social buildings (clinics, community and women's training centers), and development of infill commercial and residential plots; b. service land in four sites for about 3,420 plots and initial occupancy by about 3,570 families (24,000 people), of which about 2,755 families would be in the 10th to 40th income percentiles. The new sites would include plots for commercial development and workshops for small enterprises, and the full range of social and community facilities. -7-- c. provide training and advisory services to assist the Urban Development Department CUDD) to implement the project and to carry out studies relevant to future operations. C. Detailed Description Upgrading Schemes 2.03 This project would upgrade the low-income squatter settlements on government land at Emir Hassan (a population of 1,700 on 2.8 ha) and Jebel Emir Ali (a population of 2,500 on 18.5 ha). See Map 2 for location of the sites. These sites were selected because (a) they suffer major deficiencies in several public services, (b) they require significant investments in the type of coordinated and cost-effective solutions which the UDD can provide, (c) other programs are not underway in those sites, and (d) there is agreement on the best future use for them. The project would improve road access, internal roads, footpaths, water and sewerage, and construct community and vocational training centers at each site. At Jebel Emir Ali, the project would also provide electricity (the site is now partly served by private generators) and a health clinic. The Emir Hassan site is in the fully developed, built-up area of ifarka, and has a population density of about 615 persons per hectrre. With installation of services and grant of tenure to residents, there may be some further upward extension of existing buildings, and the ultimate population density may rise to over 700 persons per hectare- Densities are much lower at Jebel Emir Ali (135Iha) and about 141 infill plots will be developed there for commercial use and for sale for residential use to members of the 10th to 40th percentile target group. The standard of existing houses is adequate. The project would, however, include loans to existing residents to expand their houses, and to purchasers of infill plots at Jebel Emir Ali for new house construction. The costs of land and infrastructure would be recovered in the prices charged to existing and new residents. Further details are given in Table II-I and Annex 1. Sites and Services 2.04 The project would service four new sites, two at Ruseifa, one each at Naqab and Um Nowarah (Map 2), with infrastructure, social facilities and some housing to accommodate an initial population of about 24,000 and an ultimate population, after eight to twelve years, of about 45,600. 2.05 The sites were selected following a major effort to identify areas suitably located with respect to present and future employment opportunities and existing or planned trunk infrastructures, and which had topography suitable for shelter development. All sites are near existing or programmed trunk roads, water and sewer lines, and the project includes provision for connections to them (and, in the case of Ruseifa, for communal septic tanks, should there be any delay in installation of trunk sewers). Access to jobs has been an important criterion of site selection. The Ruseifa site is on the Amman-Zarqa axis near a variety of light industries, and offers convenient access to the rapidly growing high income residential areas of West Amman via the Yajouze Road, which is also the area with the most ra2idly expanding spontaneous illegal settlements in the Anuza' region. Naqab is near Marka and next to the Amman-Zarqa motorway; Um Nowarah is within five km of the rapidly -8- Table II-1: SUMMARY DESCRIPTION OF PROJECT SITES Jebel Emir Emir Ruseifa Ruseifa Um Hassan Ali 2A 2B Na ab Nowara A. Land Area (gross) HA 2.8 18.5 15.5 22.1 22.4 49.9 of which: government land 2.6 18.5 15.5 22.1 0 0 B. Land use (percent) Circulation, open space and unuseable 21 35 33 29 26 25 Residential 68 55 65 36 49 57 Co,mercial 9 10 2 9 2 5 Comnnaity Use 2 1 - 26 23 13 Total 100 101 100 100 100 100 C. Residential plots (# plots): Existing 146 349 0 0 0 0 Proposed 146 414 621. 500 680 1621-' D. Population (# people): Existing 1,720 2,500 0 0 0 0 At project completion 1,800 3,500 4,400 3,500 4,750 11,300 Ultimate 2,000 9,100 8,300 6,600 9,000 21,700 E. No. Families at Project Completion 320 455 655 520 710 1,685 F. Cost Per Familyz (JD per family) Tand 475 630 363 649 2,579 2,418 Site Preparation & Infrastructure 483 1,528 964 1,557 1,016 1,203 Housing: UDD-built 0 0 1,584 1,532 998 1,071 Building loans 338 1,490 540 556 732 722 Schools 0 0 633 3,374 1,358 1,027 Other Social Facilities 149 300 278 92 445 197 Design, Supervision & Management 119 327 443 858 645 588 Total 1,564 4,275 4,805 8,618 7,773 7,226 US$ 3,910 10.688 12,013 21,545 19,433 18,065 1/ Excludes plots on about 2 ha to be sold for subdivision by developers. 2/ Baseline costs per family on site at project completion. -9- growing light industrial and repair activities on the Inner Ring Road in southeast Amman and the developing Amman-Sabab corridor. Public transport (via shared taxis and a public bus company) works fairly efficiently in Amman. Once initial households are in residence, the sites should be well served. The Amman area is very hilly but all sites have slopes of 20% or Less. An attempt was made to identify government-owned sites, but only the Ruseifa sites were acceptable; other publicly owned parcels were too remote from employment opportunities or trunk infrastructures to be viable. Hence two sites (comprising 73.7 ha out of a total of 109.9 ha) are on private land. Site sizes were implied by (a) the objective of accommodating around one half of the growth of families in the 10th to 40th percentiles in UDP sites, (b) the need to disperse sites in the region, and (c) indivisibilities implied by the population required to justify new schools. 2.06 The sites would be furnished with a full complement of social services. Ten new schools and expansions of two schools constructed under UDPI at Ruseifa at the primary, preparatory and secondary levels for boys and girls would be constructed according to design standards developed under Bank education projects in Jordan. Four women's training centers would be established, and as in UDPI, administered by the Vocational Training Corporation (VTC). Health clinics would be built on each new site except Ruseifa (which would be served by the UDPI Ruseifa site clinic and a hospital being constructed on a neighboring plot). This provision reflects the new standards recently agreed in connection with the proposed Jordan Primary Health Care Project. Community centers to be used for day-care programs, literacy courses, seminars, discussion groups, etc., would be built at each site. Their design has been modified based on the experience gained under UDP1. Emergency service centers would be provided to meet the need for safety and security on the UDP2 and nearby UDPI sites. They would consist of garage space for two fire-fightiog vehicles, two ambulances, and one four-wheel drive vehicle and accommodation above the garage for fire and ambulance personnel. 2.07 About 601 of the land destined for private ownership would be sold below cost to persons in the target group. The subsidy would be covered by surpluses from the sale at market prices of about 341 of the land for residential purposes, and about 61 for commercial purposes. Major features of the property sales component include: (a) development of a wide range of plot sizes for target group beneficiaries (from 112.5 m2 to 200 mz) compared with the uniform UDP1 150 m2 plot size, and the minimum 300 mz allowed under existing regulations in other parts of the Anman region; (b) sale of the larger beneficiary plots (200 m2) to two or more families; (c) UDD would construct housing on up to 45S of beneficiary plots (compared with 77S in UDPl), and greater reliance would be placed on informal sector construction commissioned by beneficiary households (with expected cost savings on the order of 30% compared with construction by large contractors); and -10- (d) inclusion in each UDD built house of a kitchen and bathroom, as well as one or two rooms. This feature reflects experience of UDP1 in which core houses without bathroom or kitchen were less attractive than either serviced lots, or lots with two-room core houses. 2.08 To encourage larger private-sector developers, parts of the areas (including 2 ha in Um Nowarah) would be sold at market prices to developers who then would be responsible for further subdivision, construction, and sale of houses and/or apartments to households. There also would be small shopping centers in Nowarah and Ruseifa that could be developed by private operators for sale or rental to commercial and small industrial firms. 2.09 There are considerable variations in land use and facility provision on the different sites related to the circumstances of each site (see Part F of Table II-1). Further details on the components of the new sites, provision of plots and design standards, are given in Annex I. Technical Assistance, Training and Studies 2.10 The project includes provision of 90 mm of technical assistance for advice on inhouse design (about 34 mm), project planning and management (24 mm), and economic and financial issues (32 mm); 60 mm for design of community facilities, 225 mm for supervision of works, and 135 mm for studies. Further details on technical assistance are given at Annex 1 and Annex 8(A). In addition to on-the-job training to be provided by UDD's advisors, the project includes a provision of JD 36,000 for training in Jordan and abroad. 2.11 The project would include four studies: (a) feasibility and design studies for a third UDP would be carried out by consultants with in-house support, (b) surveys and feasibility studies for redevelopment of the 100-150 ha of worked-out quarries (which currently constitute a barrier to development on the southern and eastern edges of Amman Municipality) would be carried out by consultants; (c) a feasibility study for a program of land tenure regularizatiion and upgrading the remaining squatter areas in Amnan would be prepared by the UDD, with the assistance of its in-house advisors; and (d) a study of means to increase employment opportunities for women living on UDP sites would be carried out by UDD. In each case, the relevant agencies would discuss the results of the study with the World Bank. Terms of reference for the studies are set out in Annex 8. III. PROJECT COSTS AND FINANCING A. Costs 3.01 Total project cost, including contingencies, is estimated at JD 35.4 million (US$88.5 million). Summary cost estimates are shown in Table III-1. Details are provided in Annex 2. Baseline costs are based on advanced preliminary engineering designs and checked against unit prices from tenders recently received for projects of a similar nature and adjusted to reflect anticipated prices in April 1985. - 11 - Table 111-1: PROJECT COST SUDKARY For. Base (JD million) (USP million) Exch. Cost Local Foreign Total Local Foreign Total 2 UPGRADING Prince Emir Hasman .33 .14 .47 .83 .35 1.18 29 2 Jebel Emir Ali 1.17 .67 1.84 2.92 1.67 4.59 36 6 Subtotal 1.50 .81 2.31 3.75 2.02 5.77 35 8 SITES APO SERVICES Ruseifa A 1.70 1.27 2.97 4.26 3.17 7.43 43 10 Naqab 3.57 1.64 5.21 8.93 4.10 13.03 31 18 Nowarab 8.06 3.44 11.50 20.14 8.59 28.73 30 41 Ruseifa B 2.35 1.88 4.23 5.87 4.71 10.58 45 15 Subtotal 15.68 8.23 23.91 39.20 20.57 59.77 34 85 PROJECT MA1NAGRIET Diaagement Expenses .94 .11 1.05 2.37 .26 2.63 10 4 Technical Assistance .09 .28 .37 .23 .69 .92 75 1 Training .01 .03 .04 .02 .07 .09 75 4/ Equipment .02 .07 .09 .05 .18 .23 80 a/ Subtotal 1.06 .49 1.55 2.67 1.20 3.87 31 5 STUDIES .11 .33 .44 .27 .82 1.09 75 2 Total BASELINE COSTS 18.35 9.86 28.21 45.89 24.61 70.50 35 100 Physical Contingencies 1.06 1.00 2.06 2.66 2.51 5.17 49 7 Price Contingencies 2.83 2.31 5.14 7.08 5.76 12.84 45 18 TOTAL PROJECT COSTS U L ZU ' . U I a a/ Under 0.5S 3.02 Foreign exchange costs of civil works were estimated on the basis of cost analyses of specific components as follows: site preparation - 35%, roads - 541. water - 67%. sewerage - 43%, drainage - 40%, electricity - 75%, footpaths - 40%, and buildings - 451, for an average for all civil works of 47%. Foreign costs of equipment and furnishings vere based on experience under UDP1 and amounted to 901 for equipment for social buildings (mostly -12- imported), 601 for furnishings (largely locally produced), and 801 for equipment for project management (to be purchased mainly through local shopping), for an average of 801. Professional services for design and supervision are estimated to have foreign content-of 53Z and 331, respectively, and to average 361, and the foreign cost of technical assistance advice was estimated at 751. These percentages were based on recent man-month rates for local and foreign consultants. There would be about 210 expatriate man-months and 300 man-months of local consultants included in professional services and technical assistance. Foreign cost of training is estimated at 751. Project management operating costs were estimated to have a foreign cost of 101 (comprising indirect foreign costs of fuel, utilities, and building depreciation). Overall foreign exchange cost amounts to JD 13.2 million (US$32.9 million) or to 37S of total project cost. 3.03 Physical contingencies average 7% on total baseline costs. Price contingencies on the foreign component have been calculated on the basis of forecasts of international inflation at 51 for 1985, 7.51 for 1986, and 81 for 1987 to 1990. Price contingencies on domestic costs have been calculated at 5 in 1985, 61 in 1986, and 72 per anntm in later years. Price contingencies represent about 17S of baseline costs plus physical contingencies, and total contingencies amount to about 201 of total project costs. Indirect taxes come to about 2.3X of total costs. 3.04 The costs for upgrading and sites and services include JD 0.82 (US$2.1) million for design and supervision by consultants. Costs of technical assistance, advisory and consultant services for project management, training and studies under the project amount to JD 0.81 (US$2.0) million. Management expenses of JD 1.1 (US $2.6) million cover the costs of salaries and other operating costs of the Urban Development Department attributed to this project. B. Project Finances 3.05 Investment costs have been divided into three parts for purposes of financing: (a) public sector costs of community facilities (schools, health centers, etc.) and policy studies, (b) land, infrastructures and housing which costs would be recovered from sales of property, and (c) building loans which would be extended to target-group beneficiaries by the Housing Bank (RB). Tables III-2 and III-3 summarize the proposed financing arrangements, which are further described below. 3.06 Investments in the first two categories would be made by the UDD, using Goiw'rnment grants for the items in part (a), of which the local part and technical assistance and training (JD 7.8 or US$19.5 million) would come from the budget, and the remainder would be covered by the World Bank loan (JD 6.2 or US$15.5 million). JD 0.2 (US$.5) million of the domestic contribution would be in the form of Government land for public purposes. The Government would receive about JD 0.9 million (US$2.25 million) from sale of property for resale to private owners, so the net cash Government contribution for public- sector components would be JD 7.6 million (US$19.0 millioa). The Government would finance any overruns on public-sector components. - 13 - Table III-2: SUMMARY PROJECT FINANCING PLAN (JD millions, US$ millions in parentheses) (a) (b) (c) Public Costs Financial Source Sector Recovered in Building Total Costs Land Prices Loans Costs Cash Sales and Downpayments - - 6.8 (17.00) - - 6.8 (17.00) UDP1 Profits - - 0.5 (1.25) - - .5 (1.25) Housing Bank - - 5.0 (12.50) 3.9 (9.75) 8.9 (22.25) World Bank 6.2 (15.50) 5.0 (12.50) - - 11.2 (28.00) Government 7.8 (19.50) 0.2 (0.5) - - 8.0 (20.00) TOTAL 14.00 (35.0) 17.5 (43.75) 3.9 (9.75) 35.4'- (88.5) N.B. Foreign Exchange Cost 6.7 (16.7) 5.2 (13.0) 1.3 (3.2) 13.2 (32.9) -l Total financial outflows during the implementation period would come to JD 39.5 (US$98.75) million, including investment cost of JD 35.4 (US$88.5) million, shown in the table above, interest during construction on the World Bank loan of JD 2.2 (US$5.5) million, and repayment of the World Bank loan of JD 1.9 (US$4.75) million. The latter two items would be recovered from proceeds of cash sales and beneficiaries down payments in the amount of JD 1.9 (US$4.75) million and with respect to social facilities, by Government grants of JD 2.2 (US$5.5) million. 3.07 With reference to items in part (b), the UDD would be funded by (i) cash sales, (ii) loans from the Housing Bank (HB), and (iii) profits from UDPI. The Government would on-lend to BB that part of the Bank loan for items whose costs are to be recovered from property sales, with the Government absorbing all exchange and interest-rate risk. The Government also would ensure finance from its own or donor sources for the technical assistance services included in part (b) (about JD 0.25 million). These costs would be recovered from beneficiaries. It would be decided later whether the Government would be reimbursed for them, or whether the amounts recovered would be held in the Low Income Housing Revolving Fund (LIHRF, see para 5.11). HB would finance overruns on items whose costs are recoverable from property sales. Execution of a loan agreement between the Government, the Municipality and HB, -14- Table II1-3: PROPOSED UDP2 FINANCE FLOWS (JD Million) UDD (A) GRANT ELEMENTS 4 1 S.5 -1 - Studies (1 .0) tWorld Bank 20 0 e GT8|0_ - Public Sector Components, _ 28.0 . . .fi0120, of which 0 .5 195 e.g.,schools,communitLj I is, l.a.3 iaend, 1 9.5 c3 h rand health centres, etc. Social 12.5 Security (B) BSTSTO BE RECOVERED Corortionl THROUGH SALESOF < 3.3 , 3.3 INllOUSlltG BANKl: | 25.0 PROPERTY, i.e. plots, - on- plot buildings Centra Ban 4.275 ( 43-75) Bank 4.75 9' 754.Z5 17.0 * (C) BUILDING LOANS rs& a (9.75) a~~ Surpl ume Beneficiaries: e_________5 _ --_-_- on UDP1 CashSoles& Property Downpayments NO " T ES J Sales i ) Amounts inside rounded boxes ( J represent funds origin- 1.25 17.0 ated by that source. Amounts on arrows - o represent flows. Amounts in thevy square boxes are costs of components. 2) Table does not show financing of interest during construction. 3) Gover nment fi nnce of technical assistence is i ncl uded i n recoverable cost. with terms and conditions satisfactory to the Bank, would be a condition for loan effectiveness. Further details on finances, including terms, are given in paras. 5.06 to 5.12 below, and in Annex 3. 3.08 The Bank loan to the Government of JD 11.2 (US$28.0) million would cover all foreign costs of civil works, equipment and consultancy services for design and supervision, and indirect foreign costs of project management. The Government would finance advisory and training services (foreign cost estimated at US$1.8 million including contingencies) from its own or bilateral sources. Bank finance for building loans is not included since these loans will be disbursed late in the project, largely following the 3-year grace period on Bank loans to Jordan. Coverage by the Bank loan would be 85 percent of total project foreign exchange costs. -15- IV. PROJECT IMPLEMENTATION A. Status of Proiect Preparation 4.01 Feasibility studies and preliminary engineering designs at 1:2500 scale for 80% of all infrastructure works were contained in the feasibility study, and sketch plans for the remainder were available at appraisal. Preparation of final designs for these works would be carried out in-house by UDD staff and the technical assistance advisors to be engaged under the project. Consultants would prepare designs for social buildings. The MMRAE has already approved the plans for the first new site (Ruseifa 2A) and the AM has approved plans for Emir Hassan, so that no delays are expected due to lack of agreement on standards. Final designs and bidding documents for all first-year works would be ready by mid-1985. Acquisition procedures for all lands have commenced. Acquisition of the privately-owned land should not cause implementation delays, since the initial construction would be on Government land, and UDD has developed experience during UDPI in acquiring private land. B. Implementation Schedule 4.02 Project implementation would take about 5 years, and the expected completion date, including the maintenance and guarantee period, would be December 31, 1990. Completion of property sales would occur in 1990. Further details on the implementation schedule are given in Annex 5. C. Procurement 4.03 Local competitive bidding procedures are generally consistent with the need for economy and efficiency in the execution of the project. Annex 9 lists several local bidding practices on which clarifications were secured at negotiations, at which time it was confirmed that these points would be taken into account and that all procurement would be carried out in accordance with Bank procurement guidelines. 4.04 Procurement arrangements are suimuarized in Table IV-l. 4.05 Works: Civil works bidding packages of US$2.5 million or more would be procured through ICB, and all bidding packages for civil works estimated to cost US$2.0 million or more would be subject to the Bank's prior review of procurement documentation. Four civil works contracts for the development of the sites ard services schemes aggregating US$28.7 million would he procured by ICB. Civil works contracts for community buildings (schools, emergency -16- Table IV-l: PROCUREMENT ARRANGEMENTS (US $ Million) Number of Procurement Method Total Contracts ICB LCB Other Cost Land N/A -- 18.6 18.6 (-) (-) Works Sites and Services Schemes Site Development 4 28.7 - - 28.7 Community Buildings 6 13.5 0.7 0.5 14.7 Upgrading Schemes Site Development 2 - 2.6 - 2.6 Community Buildings 2 - 0.5 - 0.5 Subtotal: Works 14 42.2 3.8 0.5 46.5 (21.1) (1.9) (0.2) (23.2) Building Loans N/A - - 9.8 9.8 (-) (-) Goods Furniture 8 1.3 0.2 0.1 1.6 Equipment 13 2.8 0.3 0.4 3.5 Subtotal: Goods 21 4.1 0.5 0.5 5.1 (3.1) (0.4) (0.3) (3.8) Services Professional Services, TA, Training and Policy Studies 10 - - 5.0 5.0 (1.0) (1.0) UDD Operating Expense N/A - -- 3.5 3.5 (-) (-) TOTAL 45 46.3 4.3 37.9 88.5 (24.2) (2.3) (1.5) (28.0) Note: Figures in parentheses are the respective figures financed by the Bank. N/A = Not Applicable. -17- centers, health clinics, conmmnity centers and womens' training centers) in the sites and services schemes would be grouped whenever possible into contracts valued at US$2.5 million or more and would be procured through. ICB. The contract for the extension of the schools included in the Ruseifa A component would be negotiated with the contractor who is currently completing the schools in Ruseifa under UDP1. This extension is estimated to cost US$0.5 million. Due to their size and nature, the upgrading schemes' contracts would be unlikely to interest foreign bidders, and the four contracts for the upgrading schemes (aggregating US$3.1 million) would be procured by LCB. The above arrangements would result in prior Bank review of about 10 contracts accounting for about 90% of the total estimated value of civil work contracts for the project. The remaining contracts would be subject to post-review by the Bank after contract award. 4.06 Goods including equipment, vehicles, tools, machinery, furniture and fixtures for community buildings would be grouped into seven bidding packages valued at US $150,000 or more and would be procured through ICB. A margin of preference equal to 15% of the c.i.f. bid price of imported goods or actual custom duties and import taxes, whichever is lesser, would be allowed for domestic manufacturers. Contracts for miscellaneous tools and furniture and equipment valued at less than US$150,000 (and aggregating no more than US$650,000) would be procured through LCB, or for items of less than US$50,000 by obtaining price quotations from at least three suppliers. 4.07 Professional services and technical assistance would be procured from firms and individuals with qualifications and terms of reference satisfactory to the Bank according to the implementation schedule in Annex 7. Services for design and supervision to be financed with proceeds of the loan would be procured according to Bank guidelines. 4.08 Land costing approximately JD 6.3 (US$15.8) million would be acquired by UDD from private owners through direct negotiation or expropriation for Emir Hassan, Naqab and Um Nowara. The remaining land (45% of the total) is in Government ownership and would be transferred to UDD at an estimated cost of JD 1.1 (US$2.8) million. Value of land for social purposes comes to JD 1.4 (US$3.5) million. D. Disbursements 4.09 Based on the implementation schedule of Annex 5, disbursements would be made over 6 years, which is consistent with experience of previous Bank loans in Jordan. There would be provision for US$100,000 retroactive finance for expenditures made between April 30, 1985, and the date of loan signature on the extension of the schools at Ruseifa. The loan closing date would be June 30, 1991. 4.10 The proposed loan would be disbursed on the following basis: (i) 50% of total expenditures for civil works contracts; -18- (ii) 1002 of foreign expenditures, 100l of local expenditures (ex-factory) and 702 of other local expenditures for furniture, tools and equipment; and (iii) 100Z of foreign expenditures for professional services. 4.11 An agreement was reached at negotiations to establish a special account in foreign currency with respect to items on which the Bank would disburse to avoid future funding difficulties. The special account would be in an amount of US$0.6 million (about three-months' expected disbursements in the early project years), and would be replenished on the basis of regular withdrawal applications. Applications for replenishments would be supported by documentation on expenditures from the account acceptable to the Bank, which would include statements of expenditure for contracts with a value of US$10,000 or less. E. Reports, Accounts and Audit 4.12 The UDD has maintained adequate project accounts of UDP1 expenditures. Accounting formats for project receipts in a form that facilitates analysis of performance are being utilized. The UDD would prepare quarterly progress reports and project accounts, including the special account (para 4.11), for submission to the Bank not later than one month after the end of each quarter. The form and content of these reports would be broadly similar to the reports under UDP1, and would incorporate information regarding status of the LIBRF, special funds, and project-related activities of HB. Costs of items financed on a grant basis would be separately identified from costs which would be recovered through property sales. The HB would prepare quarterly reports showing the status of all its operations relating to UDP1 and the proposed project, with special emphasis on the status of mortgage and building loans, disbursements and repayments by site for incorporation in UDD reports. 4.13 Annual reports, including financial statements for the project, examined by auditors acceptable to the Bank, would be submitted to the Bank not later than six months after the end of the financial year. The financial statements, In addition to showing the financial results and status of the UDD, LIHRF and HB's UDD operations as a whole, would provide sufficient details to enable separate identification of the financial affairs of UDP1 and the proposed project. The auditors would examine reimbursement claim forms as well as withdrawals made from the special account against statements of expeuditure. Auditors' reports would be accompanied by a management letter which would review the adequacy and operation of the accounting and financial systems. The HB would also submit to the Bank within six months of the end of its financial year-end financial statements examined by auditors acceptable to the Bank. -19- F. Monitoring and Evaluation 4.14 Basic monitoring and evaluation would be carried out through the quarterly reports to be prepared by the Government. UDD has recently appointed a monitoring officer whose main task is to improve content and timeliness of reports to the Director and, as a by-product, external reports. The need to review the outcomes of UDPl and this project in the preparation of further shelter projects would provide a strong incentive for monitoring project results and drawing lessons for future operations. At project completion, special surveys would be carried out of families and businesses resident in each site developed under both projects to evaluate the extent to which the progressive development anticipated under these projects has actually occurred. The Government also would prepare and submit to the Bank a Project Completion Report summarizing the experiences gained during implementation and the extent to which project objectives were achieved. G. Supervision Requirements 4.15 Bank supervision of the project would require up to 75 man-weeks over the 5-year period of implementation. Supervision efforts by Bank staff and consultants would be concentrated in the first 3 years to facilitate a good start and timely execution of project components. Supervision teams would variously include an engineer/planner, an economist and a financial analyst. Fifteen man-weeks are estimated in FY86, FY87, and FY88, 10 man-weeks in each of the subsequent 2 fiscal years, and 10 man-weeks for preparation of the project completion report during FY90. V. PROJECT ORGANIZATION AND MAMAGEMENT A. Responsibilities for Project Implementation and Operation 5.01 The roles and responsibilities of project agencies would be similar to the arrangements for UDP 1. These arrangements evolved in the course of project execution, as experience was gained with different aspects of implementation. Annex 6D set:s out responsibilities for project execution in detail. B. Organization, Management and Finances of Project-Related Agencies Urban Development Department 5.02 The UDD would be responsible for design and execution of all project facilities, marketing and beneficiary selection, and coordination of the various agencies responsible for providing services to the sites. The organization of UDD has evolved during UDPI, and now comprises five divisions, respectively, concerned with Community Development, Engineering, Estate Management, Finance and Administration (Annex 6B). UDD staff now number 109 persons, and this is anticipated to increase to 135 during project execution. With the exception of the Director-General, all staff are on contract terms. This provides a useful element of flexibility for an operation that in many important respects is commercial. -20- 5.03 The public-sector pay scales that UDD can afford are not competitive for attracting and retaining adequate numbers of experienced staff with relevant skills on a permanent basis. Agreement was secured at negotiations that the UDD would be adequately staffed at all times in terms of numbers and personnel qualifications. Technical assistance also will play an important part. UDD made effective use of its technical assistance under UDP1, initially for direct operational support but increasingly for advising and training staff. As a result of these efforts, the UDD qualitatively is able to handle most technical design and supervision tasks in-house, although the scale of operations requires that outside consultants continue to be retained for designing community buildings and for supervision work, and that UDD have some senior advisors to help with management of in-house design work. The UDD also has developed substantial competency in the social survey and community development aspects of its work; however, more remains to be done in the areas of internal coordination, property marketing, and financial management. In the medium term, technical assistance would be essential for ensuring adequate UDD performance in these areas, hence engagement of the technical assistance to provide management advisory services to the UDD (TORs at Annex 8A) would be a condition for loan effectiveness. 5.04 UDD has taken advantage of training opportunities for required skills (e.g., in community development, use of micro-computers, local government finance, etc.). High staff turnover can be expected to continue, however, and systematic training will be essential for maintaining UDD's capacity to perform its functions. While a modest provision for overseas training has been included in the project, UDD also will make use of local institutions and in-house training. A draft training program including plans to make more use of local institutions was discussed at negotiations. To ensure continuity in operating practice, and as an aid in staff training, the UDD would prepare operational manuals covering all aspects of its operations on an agreed schedule (Annex 7). 5.05 The UDD was established as a quasi-autonomous department of Amman Municipality, specifically to implement UDPl. Its finances flow directly from the Ministry of Planning and the Housing Bank, outside regular municipal channels. The success of the UDD has been due in no small measure to this financial autonomy, combined with the competence of UDD staff and the support by successive Lord Mayors of Amman. The UDD's status may need to -hange, however, if it were to undertake suelter projects outside the Amman region, as is now being suggested by Government. This issue will be explored by the Housing Strategy Study (para 1.10). The Government confirmed at negotiations that it would keep the Bank informed of its current views on UDD's status. 5.06 Table V-1 shows forecasts of UDD's finarces with respect to costs of and receipts from property sales under the project. The surplus from the project to UDD would total 7.4. of costs. Detailed annual cash flow forecasts for the period, when all loan repayments under the project are complete, are shown in Annex 3, Tables 4 (for grant elements) and 5 (for property sales components). - 21 - Table V-1: UDD FINANCIAL FLOWS IN RELATION TO PROPERTY SALES (BASE CASE) (JD '000) 1985/6 198617 198718 198819 1989/90 Total Property Sales 0 783 6387 7420 6291 20881 Costs Investment 1 4618 3734 4657 3135 1404 17548 Interest during Coast. 196 524 599 384 190 1893 Subtotal expenditures 4814 4258 5256 3519 1594 19441 Surplus (deficit) (4814) (3475) 1131 3901 4697 1440 Financial Flows: UDPI Surpluses from LHRF2- 250 250 - - 500 KB Loans (repayments) 4814 3225 (1381) (3901) (2757) - Surplus available for LIHRF - - - - 1940 1940 LIHRF Balance on a/c of UDP2 (250) (500) (500) 1440 1440 I' Including costs of all technical assistance allocated to property sales. L' Low Income Housing Revolving Fund. Housin& Bank 5.07 In addition to extending construction finance to UDD, the Housing Bank would be responsible for making mortgage and building loans to beneficiaries. The Housing Bank has demonstrated that it has the organizational capability to carry out these tasks. Although the HB has been successful in raising additional funds from depositors, its profitability has been mediocre, not least because of poorly performing equity investments and the need to lend to JHC at low rates. The decline in economic growth in the Middle East, and lower growth in Jordan's GNP, may also be expected to moderate the increases in HBs deposits (especially from expatriate Jordanians) and in demand for loans. Nevertheless, the EB in the past has shown itself to be resourceful in meeting challenges, and this should continue. (Further details on the HEB's general organization and finances are given in Annex 6C.) 5.08 The financial arrangements for the project have been designed witth a view to making housing affordable to the low income target groups while making maximum use of regular HB procedures (to ensure economy of operation) and -22- ensuring that HB can expect a return on its resources employed (to motivate continued participation by HB in shelter provision for the low-income population).-L' HB would make construction loans to the UDD at the 8.5% interest rate it charges for individual loans.-. HEB would also provide mortgage loans and building loans to target group beneficiaries in the new sites and to owners of plots in the upgrading areas for a period of up to 18 years at an interest rate of 8.5%. 5.09 The HB would use funds from five sources to finance its participation in the project: (a) its own resources, (b) the Social Security Corporation (SSC), (c) deposits of the LIHRF heLd at HB, (d) the proceeds of the proposed loan, and (e) the Central Bank (CB). The cost of EB's own resources is estimated at 7.1%.3' The SSC loan of JD 1.3 (US$3.3) million would bear interest at 8.5%. The SSC contribution was estimated as the amount required if the HB's own funds contribution were to be kept to JD 10 (US$25) million, as desired by HBE and if all property sales were delayed one year and UDP1 generated no profits for reinvestment in the proposed project. Interest on LIERR deposits has been assumed at 6% for the forecasts. The proposed Baak loan is assumed to carry interest of 9.3%, and to be repayable in 15 years, including 3 years of grace.-' The Central Rank refinancing would be used to ensure HEB's spread and has been assumed to amount to 25% of the HB's own resources reinvested in the project and to carry an interest rate of 4.5%. On the base case, these financial arrangements imply that the maximum amount of its own funds the HB would invest in the project would be JD 5.7 (Us$14.2) million in 1987/88, or about 1.2% of its total assets at that time. Shortfalls in receipts or in reinvestible profits from UDP1 would require a larger HB allocation. The detailed analysis in Annex 3 demonstrates that the HB would recover all cos,s of its participation in the project including the costs of administering mortgage and building loans (estimated at 5% of repayments), and make a surplus from the project. 1/ The main departure from regular HB procedures in the proposed project is that RB would lend up _ 90% of the purchase price of upgraded or new sites, including land, whereas the loan percentage for individual loans is normally kept below 75% of costs, excluding land. 2/ This rate is charged on loans of under JD 7,000 to families who will occupy their houses and whose houses are 100 m7 or less. Other rates charged range from 4.5% on loans to the Jordan Housing Corporation to 11-13% (including commission) to comercial borrowers or to individuals for large housing loans. 31 HB pays 5% to individual savings depositors plus a lottery of about 0.25% equivalent, and higher rates (up to 8.75%) on domestic deposits by commercial lenders. Additional costs include the cost of the lottery for savers, the cost of non-interest bearing required deposit reserves, and the costs of securing and administering deposits (see Annex 3 for more details). HB pays 4.5% on Central Bank funds on-lent to JEC. 4/ The maximum amount of outstanding HB liabilities to the Bank from UDPl and the proposed project is estimated at JD 5.7 million in 1987, which would amount to about 1.3% of total HB assets at that time. -23- 5.10 Assurances were recei-7ed during negotiations that the RB and the Government annually would review the appropriateness of project interest rates in the light of the general level of interest rates in Jordan, the demand for loans, and the cost of HB's funds, and discuss those reviews and any actions proposed arising from them with the Bank. It was also agreed that project interest rates would allow a reasonable spread to BB of about 1.3% (over the cost of funds, including interest and deposit administration). The amount of the spread would fluctuate somewhat as the mix of funds employed varied over time. Low Income Housing Revolving Fund (LIHRF) 5.11 The Low Income Housing Revolving Fund (LIHRF) was foreseen at the time of UDPI ac a mechanism to ensure that profits generated from land sales under UDP1 would be reinvested in low-income shelter projects. Because of the delays associated with the redesign of UDP1, the operating rules of the LIERF had not been finalized by the time of the appraisal of this project. Following appraisal, however, the Government established a management committee for the LIHRF comprising the Director-General of the UDD, and representatives of the MOP, MOF, and HB. At negotiations, the Government presented a draft statement of objectives and operational guidelines. The basic objectives of the LIERF are (a) to hold surpluses from Urban Development Projects, and (b) to finance defaults by HB borrowers under Urban Development Projects. The LIHRF would be managed by the UDD according to budgets and policies approved by the management committee. The committee also would be responsible for determining when there is a surplus for transfer from UDD to the LIHRF. Adoption of the LIHRF objectives and guidelines satisfactory to the Bank would be a condition for project effectiveness. 5.12 One major LIHRF revenue source would be the default premium of 5% of repayments by beneficiaries of HB mortgage and building loans. LIERF would be responsible for defraying actual defaults up to the amount of this fund. From the beneficiary point of view, the default premium would add another 0.74% to the HB interest rate, making the effective rate 9.24%. This is above the rates charged to the beneficiaries of Government housing programs (para 1.07), and of Social Security Corporation (SSC) individual mortgage loans (6%). With Jordanian inflation in 1984 at 4.5%, and forecast at 5% per annum in 1985, 6% in 1986 and 7% in following years, this interest rate is expected to remain positive in real terms. The 5% default provision is conservative. HB's arrears record is excellent (fewer than 0.1% of loans in arrears in 1983). Since the HRB is using identical arrangements regarding guarantors, verification of borrowers income, etc., in the UDP projects, as in its regular lending activities, repayment performance should be similar. The exception concerns bite upgrading, where there is less opportunity for RB to reject beneficiaries. As of December 1984, however, only four borrowers out of the 177 families making payments on completed UDPI upgraded sites were in arrears. Vocational Training Corporation 5.13 The Vocational Training Corporation (VTC) provides short courses for skill upgradinig and initial training in semi-skilled occupations for new employees, as well as longer-term apprenticeship training combining three days of on-the-job training per week with three days of instruction. Apprentice- ship training has been provided for more than six years, and the VTC now has about 6,000 trainees, of which about 1,500 are enrolled in short courses, -24- and 4,500 are in apprenticeships. The design of training programs for UDP1 is proving to be flexible and responsive to the needs of industry and of UDD beneficiaries, and successful performance is therefore expected in this project. VI. COST RECOVERY, MARKETING, ADD AFFORDABILITY A. Cost Recovery 6.01 Table VI-i shows those items whose costs would be recovered from property sales, and those recovered through normal taxation or tariff arrangements. Agreement on these arrangements was confirmed at negotiations. These are similar to the arrangements under UDPl. Recovery through property sales is discussed below (paras 6.03 and 6.04). The arrangements for recovery of watez, sewerage, and electricity costs through normal tariffs have been found to be satisfactory under Bank operations dealing with those sectors. Assurances were secured at negotiations that UDD and buyers of plots would not be subject to any fees or charges intended to recover costs that already have been included in plot prices. B. Market Considerations 6.02 Project success hinges heavily upon realizing adequate surpluses from sales of residential and commercial properties at market prices to cross-subsidize shelter for the low-income target group. Hence, the state of the Anmman property market, and UDD's skill in marketing its property, will strongly influence project success. The importance of marketing is underlined by the size of the UDD program. Over the 1985-1990 period, when all new accommodation from UDPl and UDP2 will come on stream, new UDP sites are forecast to accommodate over one-half of the increase in target group families in the Amman region, and about 17X of the total regional population increase. By 1990, about 4X of the total Amman region population will be living in sites upgraded or developed under UDP1 or this project. (Annex 10, Table 5.) 6.03 The Amman property market, which is heavily influenced by the flow of workers' remittances, has been dampened by the decline in oil prices and investments in the Middle East. In these difficult circumstances, favorable prospects for property sales under the project are predicated on the offer of a unique product affordable to large market segments unserved by existing private or public programs. Almost 80Z of the new sites would be affordable to families below the 40th percentile, whereas ownership is not affordable under other legal schemes to families in the lower half of the income distribution (paras 1.06 and 1.07). This is possible because the UDP schemes enable people to buy smaller plots than is possible elsewhere, and because they provide less than half as many square meters of housing initially as the other schemes. UDP sites are also attractive since they provide access to a larger range of infrastructural and social services than most other new areas accessible to low-income people (para 7.03). These advantages underly the large interest in UDPI resident'ial plots (12,000 applicants within two months for 2,130 plots for members of the target group; all "market price" plots in the first phase of Marka sold at prices above the levels required for cost -25- recovery). Demand for commercial plots in UDPI has also been high. Forecast prices for commercial plots in the pro?osed project, at 3D25-27.5m2, are significantly lower than the JD 30-35m applicable in other low-income areas. Table VI-1: COST RECOVERY MECHANISMS Cost Item Means of Recovery from Beneficiaries (1) Land (2) Surveys and site preparation Property sales/General taxes, (allocation for each site (3) On-site infrastructure according to distribution of (a) Water supply, sewerage, and water land use between property and sewerage connections sales and social facilities). (b) Roads: (i) under 10 m. width (ii'l 10 m. width or more 50% from property sales and 50% general taxes {c) Street lighting and electricity Property sales/User charges (d) Telephone User charges (4) Off-site infrastructure (a) Water supply, (b) Electricity, User charges (c) Sewerage, (d) Roads User charges, sewerage tax General taxes (5) On-plot construction Property sales (6) owner construction Loan repayment to HB, Beneficiaries' equity (7) Community center, schools, bealth General Taxes clinics, training centers, policy studies (8) Design and supervision fees Property sales/general taxes (in proportion to allocation of costs of civil works among the different investment items). (9) Project management Property salestgeneral taxes (in proportion to allocation of above costs between property sales vs. general taxes). (10) Interest during construction IDC charged by HB to be recovered from property sales. -26- 6.04 Marketing to date has received less attention by UDD management than physical design and implementation activities. This partly has been due to the large market interest, and partly to reluctance for a public organization to adopt an active and flexible marketing approach, in contrast to the more staid administrative approach felt appropriate for allocating public property. A strong marketing effort will be required to ensure that the project achieves its financial and cost-recovery objectives once initial demand backlogs are cleared. Understanding was secured at negotiations that UDD would be given maximum flexibility in marketing techniques, including using property auctions and estate agents, as appropriate, consistent with its overall objective of providing shelter for low-income groups without subsidy. To ensure cost recovery and rapid development of UDP sites, UDD promptly would seek to dispose of developed land. As an additional mechanism to keep costs and standards in line with affordable prices, UDD would make a complete financial and affordability analysis of each site on the basis of the latest information on market demand and incomes after final engineering cost estimates became available and before issuing tenders. This reanalysis would be submitted for Bank review together with draft tender documents. C. Affordability 6.05 The target group for new sites would comprise families of Jordanian nationals in the 10th to 40th percentiles of the income distribution. The Government also wishes to confine the target group to families that have been resident in the Amman region for the previous 5 years so as not to give undue encouragement to migration to the capital region. For purposes of assessing the affordability of plots, it has been assumed that target group families would be willing and able to pay up to 33% of their monthly incomes on shelter costs (including utilities and mortgage payments) plus a cash down payment of 1OZ of the plot cost. This criterion is more onerous than the criterion used under UDPI (housing expenses under 25% of income, 52 down payment). It has been adopted because (a) about 48 percent of applicants for UDP1 plots have monthly rental payments and utilities charges of over 30X of their incomes, (b) people are generally willing to pay more for ownership than tenancy (partly because inflation can be expected to erode the share of income going to housing over time), and (c) many applicants for UDPL plots have offered larger than the minimnm required down payments. 6.06 Plot sizes and houses on cross-subsidized plots have been designed so as to ensure that plot supply ranked by cost is more or less proportional to the numbers of families in each percentile of the target group.-L (see Table VI-2). Agreement was confirmed at negotiations that this criterion on 11 More specifically, all units targetted to beneficiaries would be affordable to families at the 40th percentile, at least five-sixths of units would be affordable to families at the 35th percentile, two-thirds to families at the 30th, one-half to families at the 25th, one-third to families at the 20th, and at least one-sixth to families at the 15th, and some units would be affordable to families at the 10th percentile. -27- Table VI-2: ANALYSIS OF AFFORDABILITY OF PLOTS1' ON NEW SITES Minimum Percentage Families of Supply to be Income Cumulative Affordable to Percentile No. Plots No. Families S Families Z this Percentile up to 10th 263 263 9.5 9.5 and 15th 228 228 8.3 17.8 16.7 in- 20th 900 920 33.4 51.2 33.3 clud- 25th 230 265 9.6 60.8 50.0 ing: 30th 351 351 12.8 73.6 66.7 35th 183 277 10.0 83.6 83.3 40th 451 451 16.4 100 100.0 Total 2607 2755 100 100 1/ Plots in receipt of cross-subsidy for sale to members of the target group. the definition of affordability in para 6.05, would be observed when final plans are made, and that plots in receipt of cross-subsidy would be allocated to families in these percentiles. If, however, beneficiaries in the target group request UDD to build housing that would be unnffordable according to the above criteria, UDD could fulfill such requests if the concerned beneficiaries first advanced cash payments equal to the regular down payment plus the cost of the additional prov-sion. This is desirable to introduce an element of flexibility in UDD marketing operations, and also to encourage marketing activities well before construction is complete to minimize interest costs. By the same token, beneficiary families could purchase plots that would be "unaffordable' by the above criterion if they increased their down payments so that monthly payments were affordable. Understanding on these points were confirmed at negotiations. Further details on affordability calculations and income criteria are set out in Annex 10. 6.07 In the case of upgrading sites, the monthly mortgage payment to recover average cost of land and services per plot would come to 15-20S of median monthly family income, depending on the site. Since there is substantial multiple-family occupancy, in Emir Hassan in particular, the payments required per family for acquisition of tenure and installation of services would be less than this in most cases. Final prices would be determined on the basis of final designs, taking into account the sizes of individual plots, the numbers of families residing on them, and opportunities for cross-subsidy. VII. PROJECT JUSTIFICATION AND RISKS A. General 7.01 The project would assist the Government of Jordan to provide affordable shelter, without subsidy, to low-income groups who have been poorly served by other programs, if at all. As such, the project would increase the -28- welfare of a substantial p.oportion of the population, and would do this at lower economic cost than exicting alternatives. The project would encourage large amounts of private investment. The value of equity finance used by householders to construct their own houses, and investments in commercial properties, none of which would pass through the accounts of project agencies, is estimated at JD 35 million (1984 prices) within the first three years of occupancy by householders, and at JD 45 million within 8-12 years. B. Economic Justification 7.02 Two types of economic analysis have been performed: first, the cost of the urbanization pattern represented by UDP-type projects has been assessed, as compared with the cost of more conventional approaches; second, economic benefits, costs and the resulting economic rates of return of the project have been estimated. 7.03 In the absence of UDP-type projects, the principal shelter alternative for handling increases in households in the target group would be to rent or buy apartments in D-zone areas, i.e, areas zoned for development of apartments on plots of over 300m%, typically with fewer services initially installed than in UDP sites. Because UDP-type projects are expected to reach their ultimate population densities in 8-12 years, instead of 20 or more years for D-zone areas, because of more efficient layouts, and because families secure pubLic services from the beginning rather than having to invest in high cost private sanitation facilities or purchase water from water sellers iuitally, UDP-type projects entail much lower land costs, and similar or lower infrastructure costs (including cost of capital) per family per year. Hence, UDP-type projects promise savings in urbanization costs, to say nothing of the unquantifiable gains from more adequate social facilities. 7.04 The economic rate of return (ERR) for the project is estimated at 14X, with ERRs for the upgrading and the sites and services components estimated at 29% and 14%, respectively (Table VII-1). Benefits were estimated using imputed rental values for beneficiary housing, sales receipts for residential and commercial plots sold at market prices, and increase in market value of plots in upgraded areas. Costs included site development, on-site and off-site infrastructure, on-plot housing construction, and maintenance and operation of buildings and infrastructure (at 3% of capital costs). Taxes were excluded from costs and Government land was valued at market prices. No further adjustments were made to financial costs to arrive at estimates of economic costs. Although land and rental values are attributable in part to the proximity of social services,I' the costs of social services were excluded from the base estimate, since the comparative areas from which prices were estimated are typically less well served with social facilities than UDP sites. Inclusion of the costs of social facilities - but without adjusting for the large non-quantified benefits - would reduce the ERR to 82. A delay 1/ It should be noted, however, that increases in land and rental values due to the provision of social infrastructure give extremely conservative estimates of the true benefits of such facilities. -29- iabhiLt-ML.1: ECONOMIC RATE OF RETURN Prices & No Costs Including All imputed Housing Switching Cost of Dene its Rental Expansion Benefits Costs Values Base Social Deferred Values from up Up Percent _ _Faci_ C05 Iaclties One Year D 2E v Year 4 tOYM _EIX_I ncresDL 1A Upnrading: Emir Hassan Z0.7 l0.0 11.0 0.9 hI 30.3 11.8 13 Jebel Emir All 30.2 21.B 20.2 19.8 O 36.1 24.8 54 Sub-total 28.8 20.2 18.7 17.4 hf 35.2 22.9 44 Sites and Services: Ruselfs A 15.9 11.4 13.4 11.8 11.9 18.0 14.0 40 Naqab 14.7 7.4 12.5 10.9 ll.S 16.5 12.9 33 LU Nowarah 12.4 8.0 _10.7 9.1 4.5 14.0 10.9 18 Ruseifa 2B 16.6 4.4 13.8 12.2 13.5 18.8 13.1 43 Subtotal 13.9 7.8 11.9 10.3 8.6 15.7 12.3 28 GRAND TOTAL 14.4 8. 1 12.2 10.4 16.3 12.6 29 (a) Percentage by which costs would need to increase to equate discounted benef its and costs at a discount rate of IOZ (rentals from J0 25 to 20) (b) There was no explicit estimate of population build up since benefits were estimated as an Increase in land values, based on comparison with other areas. where the effects of future build up were presumably already discounted into prices. in benefits by one year would reduce the ERR to 12S. Returns from the upgrading components are more sensitive to benefit delays than sites and services, since the benefits are measured as an increase in value at one time rather than a rental over 30 years. Benefits and cost streams include rental values and costs of expAnsions in housing on the new sites. The importance of such progressive development is indicated by the decline in ERR on the new sites from 14% to 9X if there is no housing expansion build-up after year 4 (measured from the date of first occupancy on each site). ERRs are robust with respect to changes in costs, which would have to be raised by about 29X to reduce the ERR to 10. Detailed cost-benefit streams and assumptions underlying the rate-of-return calculations are given in Annex 11. C. Poverty Impacts 7.05 About one third of initial residents of new sites and about 60X of beneficiaries of upgrading sites fall within the 26% of the househe'.ds in the Amman urban region having monthly incomes below the bank defined urban poverty threshold (para 1.04 and Annex 11). It is estimated that about 4% of the poverty-group residents of the region would benefit directly from the project; over one-quarter of the estimated increase in poor families would live in the project areas. Over 801 of residents in the upgrading areas and in the new sites would have incomes that place them in the lower half of the income distribution. The project would have additional benefits for low-income people by stimulating lower rents than would occur without the project. -30- D. Project Risks 7.07 The principal risks facing this project are: a. Uncertain marketability of plots in a time of economic slowdown. To deal with this risk, heavy emphasis has been placed on ensuring affordable standards, on monitoring the performance of the UDD in undertaking a major real estate sales effort, on technical assistance in estate management, and on establishing a financing scheme with sufficient flexibility to accommodate possible delays in sales of commercial properties. b. The ability of the UDD, as a public sector organization, to continue to manage UDD's multi-faceted operations and to continue to innovate as UDD's rapid growth phase ends, remains uncertain. The greater emphasis placed on training in this project than in UDPI, and continued substantial use of technical assistance, are designed to reduce this risk. VIII. ASSURANCES, AGREEMENTS, AND RECOMMENDATIONS 8.01 Agreements were confirmed during negotiations on the following: (a) the National Housing Strategy Study would be completed by December 31, 1986, and Government to discuss housing policy with the Bank (para 1.10). (b) Government would discuss the results of special studies with the Bank (para 2.11 and Annex 7). (c) Government would finance any cost over-runs in public sector components (para 3.06). (d) establishment of the special accounts (para 4.11). (e) UDD would submit quarterly reports, UDD and HB would submit audited annual accounts on the project and the LIHRF, auditors would prepare management letters, and Government would prepare a PCR (para 4.12-4.14). (f) UDD would be adequately staffed (para 5.03). (g) Government would ensure that HB secured a reasonable spread on funds lent to the project, and Government and HB would review project related interest rates annually and discuss required and proposed actions with the Bank (para 5.10). (h) UDD and beneficiaries would not be double-charged for any infrastructural connections the costs of which are included in plot prices (para 6.01). -31- (i) prices would be set so as to recover all costs (para 6.01) and revised market and affordability analyses would be prepared on the basis of final engineering costs and submitted for Bank review with draft tender documents(para 6.04). (j) UDD would be granted maximum flexibility in marketing so as to achieve aims of serving target group and securing cost recovery, and would seek to sell property promptly (para 6.04). (k) beneficiary plots on new sites would be affordable to, and allocated to, persons in the 10th to 40th percentiles roughly in proportion to their numbers; affordability would be based on no more than one-third of income for mortgage and utilities charges and 102 down payments, with the exception that UDD could provide beneficiary plots that are unaffordable according to the basic criterion if the families concerned pay the additional costs as part of their down payment (para 6.06). 8.02 Conditions for Effectiveness (a) engagement of technical assistance for management advisory services (para 5.03). (b) formal adoption of objectives and operational guidelines (para 5.11). (c) execution of the subsidiary loan agreement between the Government, HB, and the Municipality including undertaking by HB to finance cost overruns on items whose costs are recovered in property sales (para 3.07). 8.03 Recommendation Subject to reaching agreement on the above points, the project is suitable for US $28.0 million Bank finance on standard terms (15 years with 3 jears of grace), of which US$0.1 million would be retroactive (para 4.09). - 32 - ANNEX 1 Page I of 20 JORDAN SECOND URBAN DEVELOPMENT PROJECT DETAILED DESCRIPTION OF PROJECT COMPONENTS 1.0 Proiect Sites 1.1 Jebel Emir Ali: The site of 18.5 ha lies on government-owned land some two kilometers to the east of Ruseifa within the m.nicipal boundaries and to the north of the Zarqa/Amman highway. The settlement is well located with respect to main roads, public transport and centers of employment. The site is on a slope which steepens severely on its lower side where it drains to a wadi. There are around 273 residential and 16 non-residential plots, occupied by 306 (population of 2,504) households. There is room for another 115 residential plots and 26 non-residential plots which will be developed and sold by the project. Building standards are reasonable, but the project would correct severe deficiencies in interral access roads and circulation, social services, water supplies, sewerage and electricity. 1.2 Emir Hassan: This government-owned site of 2.8 ha is reached from the eastern end of the main commercial street of Marka. The site is well located with respect to roads, public transport, social services and employment opportunities. There are some 305 households (population 1,720) living on 146 plots. On plot building standards are adequate, but water and electricity supplies are not available to all households, internal roads and footpaths are unpaved and badly eroded by rainwater and household effluent, and sewerage is lackinig. The project would install proper water supply, sewerage, electricity and roads and footpaths. 1.3 Ruseifa 2A and 2B: The site comprises about 38 ha of a large area of Government land and is located north of the Yajouz Road between the Municipalities of Zarqa and Ruseifa. It adjoins the UDPI Ruseifa site which forms the southern boundary of the site. To the north and east, a dirt road and vacant Government land forms the boundaries, while the Health Ministry will build a hospital to the west. The project area spreads over two ridges with 152-20% slopes to a major wadi running between the two sections of site. Water will be brought to the site from the main supply along Yajouz road and via a 0 150 mm main from the water storage reservoir on the UDPI Ruseifa site. Waste water from the site will eventually be disposed of by gravity into the Zarqa-Ruseifa interceptor along the major wadi. Since the completion date of the sewerage scheme is as yet uncertain, communal septic tanks are proposed initially with the effluent percolating into seepage ditches along the main wadi. Slopes are adequate to shed surface water away from the development during the rainy season and due to its topographical - 33 - ANNEX 1 Page 2 of 20 characteristics, the site would require no provision of storm water drainage. Electricity will be supplied from two an site 550 KVA substations to be linked with the high voltage supply on to the adjoining Health Ministry land. Access to the site will be via a 12 m width paved road through the western end of the UDPI site and in the future, from a 30 m right of way and 3/4 km long road to be constructed by the Government along the northwestern boundary of UDPI to connect all housing developments in the area to the Yajouz Road. 1.4 Nagab: The site is located at the junction of the Eastern Bypass with the Zarqa Highway about 1 km north of UDPI Marka site and west of the upper-Marka Jordan Housing Corporation (JHC) housing project. It is bounded on the north by the end of the "phosphate lake" and Schneller Refugee Camp, the JHC housing scheme to the east, and the Zarqa Highway to the southeast and existing developments to the southwest and west. The site generally slopes in a southwest to northeast direction to wadis northeast and east, with most of the site on slopes of about 12% gradient. The area is accessible from the Zarqa Highway via an existing road provided for a neighboring factory and surrounding subdivisions. Water will be brought to the site from the 0 200 mm main along the Zarqa Highway, costs for which have been included in the project. The site will eventually be connected to the new East Marka Interceptor (scheduled for completion 1987/1988) which will run along the wadi on the eastern part of the development. If it appears that the schedule will not be maintained, waste water from the site will be disposed of by means of four communal septic tanks. Gradients are adequate to shed surface water during the rainy season to the wadis northeast and east and into the phosphate lake. The area can also be serviced by electricity from the substations already constructed in adjoining subdivisions. 1.5 Nowarah: T'he site covers about 50 hectares of privately-owned land and is located in the southeastern sector of the Greater Amman Region, adjacent to the southeastern boundary of the UDPI Quweismeh site, approximately 5 km from Amman town center. Slopes reach up to 20% gradient at the two high points on the site, but gradually decrease to gentle slopes of 10% to the north and 5% in the eastern part. The site is accessible from the Yarmouk Road, via a 1.7 km length dirt track which passes under the viaduct of the Hejaz Railway. This track will be upgraded to form the main distributor road through the site (30 meter right of way graded with 12 meter wide initial base course and two seal coats) and to connect the proposed scheme with Yarmouk Road. A 0 200 mm pressure main will be needed to supply water from the existing 0 300 mm main of the Quweismeh Municipality water system located about 1.5 km from the edge of the site. Waste water from the site will be drained by gravity (0 300 mm, 1.5 km length outfall sewer) into the Amman-Wadi Um Er Rimiam interceptor along Yarmouk Road. Construction of this gravity sewer will also benefit the southeastern sector of the UDPI Quweismeh site by eliminating the need for a pumping station to serve this area. Electricity to all users and for street lighting will be provided by - 34 - ANNEX I Page 3 of 20 means of three 500 kva substations which will be linked by two 1.8 km long underground cable to the power supply source on Yarmouk Road. The slopes to the north and east are adequate to drain storm water from the site towards the main interceptor culvert along the Yarmouk Road. However, an open lined channel along the main distributor and a limited storm water drainage system within the residential areas are required to prevent possible flooding of the low lying areas due to the large runoff from the catchment area within and beyond the project boundaries. 2.0 Site Planning PrinciPles Annex 1, Table 1 sunmarizes the principal planning standards of this project, and compares them with the standards of UDPI and of current regulations applicable to other areas. The design of new sites is based on a hierarchy of roads serving residential neighbourhoods which are approximately 2.75 hectares. These have a central open space providing play area, parking and turning. The perimeter roads to the neighbourhoods are a minimum of 10 m reservation and the internal access roads are 8.Om wide. To provide a two way reticulation for services and pedestrian movement 2.5 m footpaths or steps connect the parallel roads at irregular intervals. A maximum of four of the lowest price plots are served by these footpaths in a few locations but generally the plots have road frontage. Parking is based on 0.1 spaces per household mostly on the road and is based on projections Of car ownership in the 1980 Amman Region Transportation Study Report. Market plots A, B and C will be located on main routes and the position adjusted within each neighbourhood to suit the route planning. 3.0 Design Brief - New Sites 3.1 Site Planning - All housing plots will have direct access to a surfaced footpath or road. - Housing plots not to exceed four in number on any one footpath. - Cul-de-sac/parking areas to serve areas within 1)0m radius. - Open space to be not less than 6m2 per plot and distributed evenly. - Playing fields to be provided on school sites (100.00 x 50.00m). - 35 - Page 4 of 20 Roads "A" Category 16m *"B'" Category 12m "C" Category 9/lOM '"D Category (cul-de-sac) 8m Footpaths 2.5m One parking space for each 2.5 households at saturation density on or off road. Average household size 7.0 persons. 3.2 Plot Development - Beneficiary Plots: the smaller plots will be 112.5mZ (type G): the number in this category should be approximately LOX and be for single household use. The max-imu size of beneficiary plots will be 200 m2 (type D) and may be used for 4 households. The number in this category should not exceed 5%. The remaining plots will be 131.25m2 (type F) - and 153.125mz - (type E) for one or two households. Market Plots: These will be of 153m7, 200.m, 300.2 and irregular size where site conditions require. Certain plots in suitable designated areas are for joint commercial & residential use. - Plot configuration: Generally frontage to depth not more than 1:1.5 except for locations determined by dimensional considerations. Frontage 7.5m minimum. - Ultimate Building Height: Not to exceed 3 storeys for 3002m plots and 2 storeys for remainder. 3.3 Built Provision 3.3.1 Obiectives The following set of c:eneral criteria have been established as guidelines for housing design: - Dwellings at their final stage of development must meet levels of basic shelter and essential services. - On-site provisions must be economically designed so as to be affordable by the prospective residents. - 36 - ANNEX 1 Page 5 of 20 Methods of construction used for on-plot provisions must be simple enough to enable residents to build all future extensions, with small local contractors and readily obtained materials. - House designs nrust permit eventual expansion of the building both horizontally and vertically. - Designs must respect traditional behavioral characteristics of local society and be marketable within the target groups. - The minimum accommodation should not be less thian I room + kitchen + bathroom. 3.3.2 Housing On the basis of the above criteria, dwellings shall consist of an expandable house design which will allow each house to be built in increments over time, and will enable the final provision to be: - 5 habitable rooms - 1 kitchen - 2 bathrooms - 1 courtyard. 3.3.3 On-Plot Development Options A range of six options will be offered to beneficiaries to be used according to their needs and financial resources. See Annex I, Tables 2 and 3 for details of plot types, by site. These are: Option I - UDD will build 1 room + kitchen + bathroom. Option II - UDD will build 2 rooms + kitchen + bathroom. Option III - HB will provide building loans to beneficiaries to build 1 room + kitchen + bathroom. Option IV - HB will provide building material loans to beneficiaries to build I room + kitchen + bathroom. - 37 - ANNEX 1 Page 6 of 20 Option V - HB will provide building Loans to beneficiaries to build 2 rooms + kitchen + bathroom. Option VI - HB will provide building material loans to beneficiaries to build 2 rooms + kitchen + bathroom. Option I: will _omprise - - A levelled plot with main water, sewerage & electricity connections. - A retaining wall to the sides facing the street. - One habitable room with the smallest internal dimension not less than 3.2m. - A kitchen (or kitchen recess) with a minimum internal width of 1.8m and coutaining a stainless steel sink and cold water supply. - A bathroom with a minimum internal width of 1.4m with a shower, w.c. with flushing action and a basin and cold water supply. - Construction will be of 20cm hollow concrete external walls fairfaced externally. - Internal walls will be of 10 cm concrete blocks. - Structural frame, foundations, floor & roof will be reinforced concrete capable of supporting two additional f'loors. - Internal finishes to be cement rendered walls & ceilings and screeded floors to receive tiles or finishes by the occupants. Walls and ceilings to be painted with two coats of emulsion. - External doors to be steel framed and panelled. Internal doors to be ply faced flush, both primed and painted. - Windows to be sliding, aluminium framed, not less than 10% of floor area of each room and 50X openable. - Electrical installation to be in concealed conduit in structure with one ceiling point and one socket per room. - Cold water installation to be in galvanized steel witLA provision for extension. A one cubic meter galvanized steel water tank to be provided on roof. - 38 - ANNEX 1 Page 7 of 20 Option II: As Option I but with two habitable rooms. Options III through VI: Will comprise a levelled plot with water, sewerage and electricity connections with availability of a building loan or building material loan sufficient for beneficiaries to construct either 1 room + kitchen + bathroom or 2 rooms + kitchen + bathroom. All residential and commercial plots to be sold at market prices will be ungraded with boundary marker posts and with plugged water and sewerage connections. 3.4 Roads and Footpaths 3.4.1 District Distribution Road - Type A: - Reservation 16.00m (3.00/10.00/3.00) - Design for full range of traffic use. - Traffic speed 60 kph. - Main surface water disposer receiving water from access roads, footpaths, and plots. - Initial design with surfaced carriageway, curbing and sidewalks (capable of future upgrading to concrete footway). - Construction: see 3.5.4 below. - Street lighting. Maximum spacing 50m. - Vertical clearance 4.5m minimum. - Maximum gradient: 13X. 3.4.2 Primary Access Road - Type B: - Reservation 12.00m (1.50/9.00/1.50). - Design for full range of traffic use. - Traffic speed 40 kph. - Surface water disposer receiving water from access roads, footpaths and plots. - 39 - ANE I Page 8 of 20 Initial design with surfaced carriageway, curbing and sidewalks (capable of future upgrading to concrete footway). Construction: see 3.5.4 below. Street lighting maximum spacing 50m. Vertical clearance 4.5m. Maximum gradient: 142. 3.4.3 Residential Access Road - Type C: - Reservation lOm (1.50/7.0/1.50), 9m (2.0/7.5). - Design for full range of traffic use. - Traffic speed 30 kph. - Surface water disposer receiving water from access roads, footpaths and plots. - Initial design with surfaced carriageway, curbing and sidewalks (capable of future upgrading to concrete footway). - Construction: see 3.5.4 below. - Street lighting maximum spacing 50m. - Vertical clearance 4.5m. - Maximum gradient: 20X. 3.4.4 Local Access Road and Cul-de-Sac - Type D - Reservation 8.0m (6.5/1.5) - Design for shared use, pedestrian priority, emergency vehicle, service vehicle, light vehicles and cars. - 12cm concrete speed bumps at entrance of public places and spaced at 75m internally. - Traffic speed 30kph. - Surface water disposer, receiving water from footpaths and in some instances from plots. - 40 - ANNEX 1 Page 9 of 20 Surfaced, with curbing and unpaved 1.-Om margin on one side. Turning area in cul-de-sac 6m radius with 14m x 12m parking area where appolicable. vertical clearance 4.5m. - maximum gradient 20%. 3.4.5 Steps and Footpaths - Type E and F: - Reservation 2.50m. - Design for pedestrians but allowance for motor cycles, bicycles, contractors plant and hand carts. - Surface water disposer receiving water from plots. - Stepped for above 20% gradient. 3.5 Engineering Design Criteria 3.5.1 Sanitary Sewer Systems A gravity sewerage system will be provided for all sites with individual house connections to ensure the collection and disposal of all waste water. Sewers will be laid under roads and footpaths to facilitate maintenance, and gradients will be such as to prevent depositing of solids in sever pipes. - Pipe diameters will be a minimum of 200mm for sewers, and 150m for house connections. - Pipes will be laid at a minimum core 90cm although this cover will have to be increased under roads to 120cm. - Slopes will be sufficient to provide 0.7m/s velocity in the sewer when flowing full. A minimum of 2% slope will be provided for house connections and 0.6 - 1% slope for lateral sewers of 200mm diameter. - The system will be designed for a maximum velocity of 3.0m/s with special provisions for energy dissipation at manholes or for the protection of pipes against erosion. - Effluent volumes will be based on the assumption that 80% of the net water consumption will discharge into the sewers. - 41 - ANNEX 1 Page 10 of 20 - The system will generally be designed for the following peak flow factors: (where possible the capacity shall be such to meet 3.00 x the average daily flow) Peak hourly flow = 2.00 x the average hourly flow Peak daily flow = 1.50 x the average daily flow - Manholes will be located at all changes in grade or alignment and at a maximum spacing of lOOm. Manholes for deep sewers over 150cm and for sewers 300mm diameter will be of 90cm diameter precast reinforced concrete. These barrel sectioned units will be set on cast in place concrete foundations. Manholes for shallow sewers less than 150cm deep will be of 60cm diameter cast in place concrete or precast rings. Covers and frames will be of medium duty gray cast iron for street and footpath installations. Cast iron manhole steps will only be provided for manholes over 1.20m deep. - Communal septic tanks and seepage ditches will be installed where a municipal sewer connection is not possible, or as a temporary measure where sewers are awaited. Infiltration of the effluent to the soil will be permitted, or in areas where this proves impossible, trucks would have to transfer the sewage to a suitable municipal disposal poirt. 3.5.2 Water Supply Systems A water distribution system using a range of ductile iron and galvanized pipes between'dia 200mm and dia 25mm will be designed for each new scheme. House connections will be piped via individual meters to storage tanks and connection for hydrants will be located at appropriate points on each site as a safety measure. - Design Period - the principal system components will be designed to satisfy the needs of the area served for 20 years into the future. - Pressure Range - the distribution system will furnish the necessary flow of water to all points in the system at the pressure necessary to satisfy requirements for each customer with a minimum of lOm and a maximum of 70m head at the highest point. If this is impossible, a different pressure zone will be made with pressure reducing valves. - 42 - ANNEX 1 Page 11 of 20 Water pipes will be laid at a minimum vertical separation of 50cm from sewer pipes, or on opposite sides of the road right of way. The system will be designed for the following peak factors: Peak hourly demand = 1.25 x average hourly demand Peak daily demand = 1.50 x average daily demand A one m3 roof water tank will be provided for units to be built by UDD. Water consumption is assessed at 100 lcd (This includes 202 for system losses putting the net consumption at 80 lcd). The distribution network will be arranged in loops. Intersectior.. between feeder mains and branch mains will be valved to minimize the effect of system failures. -The minimum diameter of main line pipes will be 50m, and that for house services will be 18 mm. Ductile iron pipes will be used for all main feeders with l00mm diameter and above while galvanized pipes will be used for all distribution mains and house services. 3.5.3 Superstructure Designs - The ACI design code will be used. - Reinforcement will be ordinary mild steel fy = 280 N/mm2 fs = 50% fy or 140 N/rm2 - Concrete will have the following performance: C28 will be 17.5 N.mm2 after 2 days. - Hollow core concrete blocks will be used except where bearing capacity requires solid. - Partition walls will be 10cm concrete blocks. - Roof slabs will be reinforced concrete of appropriate thickness and capable of being used as a floor slab when buildings expand to 2 or 3 storeys. - 43 - ANNEX 1 Page 12 of 20 - Sound reduction of party walls is to be not less than 48db (mass 400 kgmz). 3.5.4 Roads and Footpaths Roads type A and B construction will be full-width base course finished with asphalt paving between curbs. Sidewalks to have compacted base course suitable for subsequent surfacing. Roads Type C and D construction will be full-width base course between curbs with seal coat and chipping over area of carriage way for upgrading by Municipalities to asphalt surface after two years. Sidewalks have compacted base course suitable for subsequent surfacing. All rights of way are to accommnodate underground sewers, water mains, telephone services and over-head electrical distribution. Roadway Depth of Road Type Course Construction Structure Roads A, B, C, D Base Graded A & B 200m Aggregate C & D 150m Top Asphalt for A & B Seal coats for C & D Sidewalks Base Compacted Base course lOOmm Top Steps 2.5m Base Graded Aggregate lOomi T6p Concrete (Class B) 50 - 70 -m 4. Provision of Social Buildings 4.1 The social buildings to be provided under the project, and square meters in each, are listed in Annex I, Table 4. 4.2 The provision of schools, which constitute the majority of social facilities, has been estimated on the basis of standards established by the Ministry of Education. The most important standard has been that sufficient schools will be constructed to allow single shift operation for the initial population of each site, leaving the option for double shifting or school expansion as population builds up. - 44 - ANMEX 1 Page 13 of 20 4.3 RUSEIFA 2A A. - Number of families (initial provision): 621 - Average family size: 6.8 - Population on site: 4,223 - Number of school age children (25% of population): 1,056 B. - Distribution of students by sex/education level/classroom units: Boys Girls Primary Preparatory Secondary Primary Preparatory Secondary Number of students 322 133 89 307 123 82 Number of classrooms 8 4 3 8 3 3 C. - Required number of schools by sex/education level/number of classrooms: - Boys: One Primary + Preparatory + Secondary School of 15 classrooms with total area of 3830 mi. - Girls: One Primary + Preparatory + Secondary School of 14 classrooms with total area of 3,750 m2. Due to site characteristics, no new schools will be built on the Ruseifa 2A site. Instead, UDP1 Ruseifa schools will be enlarged to Primary + Preparatory + Secondary level to meet initial provision requirements (the UDPI Ruseifa boys school will be extended by 1,441 mz and the girls school by 1,410 mZ), to accommodate the initial build up on a double shifting basis. The costs of this are included under Ruseifa ZA. The remaining school rooms required will be constructed in the Ruseifa 2B site (see para 4.6 below). 4.4 NAQAiB A. - Number of families (initial provision): 680 - Average family size: 6.8 - Population on site: 4,624 - Number of School age children: 1,156 B. - Distribution of students by sex/education levellclassroom units: - 45 - Page 14 of 20 Boys Girls Primary Preparatory Secondary Primary Preparatory Secondary Number of students 359 145 97 332 133 90 Number of classroom 9 4 3 8 4 3 C. - Required Number of schools by sex/education level/number of classrooms. - Boys: One Primary + Preparatory + Secondary School of 16 classrooms with total area of 3890 m2. _ rGirls: One Primary + Preparatory + Secondary School of 15 classrooms with total area of 3,830 mz. 4.5 UM NOWARAH A. - Number of families (initial provision): 1,621 - Average family size: 6.8 - Population on site: 11,023 - Number of school age children: 2,756 B. - Distribution of students by sex/education level/classroom units: Boys Girls Primary Preparatory Secondarr Primary Preparatory Secondary Number of students 860 344 229 794 317 212 Number of classroom 21 10 7 20 9 6 C. - Required number of schools by sex/education level/number of classrooms. - Boys: One Primary School of 21 classrooms with total area of 3,350 m . One Preparatory + Secondary School of 17 classrooms with total area of 3,910 mi. - Girls: One Primary School of 20 classrooms with total area of 3,260 m2. One Preparatory + Secondary School of 15 classrooms with total area of 3,820 m2. - 46 - ANNEX 1 Page 15 of 20 4.6 RUSEIFA 2B A. - Number of families (initial provision): 500 - Initial number of families Ruseifa 2A (to move to single shift - see para 4.3) 621 - Assume 1/3 of plots on Ruseifa 1 + 2A will have by this time double occupancy = 501 Total 1,622 Average family size: 6.8 Population on sites: 11,030 Number of school age children: 2,757 B. - Distribution of students by sex/education level/classrooms units: Boys Girls Primary Preparatory Secondary Primary Preparatory Secondary Number of students 860 345 229 794 317 212 Number of classroom 21 10 7 20 9 6 C. - Required number of schools by sex/education level/number of classrooms. - Boys: One Primary School of 21 classrooms with total area of 3,350 m2. One Preparatory + Secondary School of 17 classrooms with total area of 3,910 m2. - Girls: One Primary School of 20 classrooms with total area of 3,260 m2. One Preparatory + Secondary School of 15 classrooms with total area of 3,820 m2. 5. Technical Assistance and Studies 5.1 Table 5 sets out the estimated manmonth inputs for technical assistance and consultancies. - 47 - ANNEX 1 Page 16 of 20 Table 1: COMPARISON OF STANDARDS UNDER EXISTING REGULATIONS, UDP1 AND UDP2 COMPONENT CURRENT REGULATION UDP1 UDP2 Minimum plot size 150m2 (popular housing 150m2 112.5m2 zone) but smallest area in master plans and, hence, allowed in practice, is 300m2 Minimum Frontage lOm 10m 7.5m Building Cover 52X (zone D) 552 max 60% max Road Reservations Type A 20m 20m 16m Type B 16m 16m 12. Type C 12m 12m 9/10m Type D gm 8m 8m (cul-de- sac) 9m (access) Steps 4.0m 6.0m 2.5m Road Section Curbs & footpaths Curbs & Shared use all roads footpaths and speed all roads bumps for 7.5m roads Open space - 8.2 per 6.2 per household household Parking One space One space per 2.5 per 2.5hh plots - 48 - AM I Page 17 of 20 KaM...Z: ain - U_~~ Um mUWI3 P51E MsAMMAS of Ps1a by Sist$(333wm am ter Sul_Mini) Plt anS Pllt _ e0lgmfI S r:A EA A *e Lao. a u2.6 23a.M *3 I" now Al I 1.1 a 7 U." 312.M 3* i -N ml 23 15.1a2.u 23:.n3 a5 113 It l- * 3.n a 37.5 32.125 3* 6 k a,1. T n 17 193.11111 z V n2-1 8 .n s 17.16 mIU , lU a" 2-ma GO 3.15 a 17.30 11n.12 in36 12 u *.n al*.30 11:u 3 n , 14 40 *.7u31s.30 312.12 40 72 K Fl-IL N 1~~~.76 a 37.14 113.1 112052i FR e I6 L 1a7.56 152 1.2 la 73
Группа Всемирного банка · Staff Appraisal Report
Jordan - Second Urban Development Project
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