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World Bank Document Documentof The World Bank Public Disclosure Authorized ReportNo: 17924VE PROJECT APPRAISAL DOCUMENT Public Disclosure Authorized ON A PROPOSED LOAN IN THE AMOUNT OF US$60.7 MILLION TO VENEZUELA FOR A Public Disclosure Authorized CARACAS SLUM-UPGRADING PROJECT September 28, 1998 Infrastructure,Finance and Private SectorDepartment Public Disclosure Authorized Colombia,Ecuador and VenezuelaCountry Management Unit Latin America and the CaribbeanRegional Office CURRENCY EQUIVALENTS (Exchange Rate Effective May 29,1998) Currency Unit = Bolivares (Bs$) Bs$1.0 US$537.5 US$1.0 = Bs$0.0018 FISCAL YEAR Jan 1-Dec. 31 ABBREVIATIONS AND ACRONYMS ASOVIV: Housing Association Barrio: Informal Neighborhood Settlement CBO: Community Based Organization CONAVI: National Housing Council FUNDACOMUN: Folndation for Community Development and Municipal Promotion FVP: Foundation for Popular Housing INAVI: National Housing Institute LCG: Local Co-Management Group M\AC: Metropolitan Area of Caracas MACBIA: Metropolitan Area of Caracas Barrio Improvement Agency MINDUR: Urban Development Ministry NGO: Non-Governmental Organization NIP: Neighborhood Improvement Plans PMU: Project Management Unit RAP: Resettlement Action Plan UDU: Urban Development Unit UPF: Physical Planning Unit Vice President: Shahid Javed Burki Country Director: Andres Solimano Sector Manager/Director: Danny Leipziger Task Team Leader/Task Manager: M. Vitor Serra Venezuela Caracas Slum-Upgrading Project CONTENTS A. Project Development Objective . 2 1. Project development objective and key performance indicators . 2 B. Strategic Context . 3 1. Sector-related CAS goal supported by the project . 3 2. Main sector issues and Government strategy . 5 3. Sector issues to be addressed by the project and strategic choices . 6 C. Project Description Summary . 9 1. Project components . 9 2. Key policy and institutional reforms supported by the project . 10 3. Benefits and target population . 10 4. Institutional and implementation arrangements . 11 D. Project Rationale . 17 1. Project alternatives considered and reasons for rejection . 17 2. Major related projects financed by the Bank and/or other development agencies 19 3. Lessons learned and reflected in proposed project design . 19 4. Indications of borrower commitment and ownership . 21 5. Value added of Bank support in this project . 21 E. Summary Project Analyses . 21 1. Economic . 21 2. Financial . 22 3. Technical . 22 4. Institutional . 22 5. Social . 23 6. Environmental assessment . 23 7. Participatory approach . 24 F. Sustainability and Risks . 24 1. Sustainability . 24 2. Critical risks. 25 3. Possible controversial aspects . 26 G. Main Loan Conditions . 27 1. Effectiveness conditions . 27 2. Other . 28 H. Readiness for Implementation . 28 L Compliance with Bank Policies . 28 Annexes Annex 1. Project Design Summary . .30 Annex 2. Project Description . .38 Annex 3. Estimated Project Costs and Timetable . 45 Annex 4. Cost-Benefit Analysis Summary. 53 Annex 5. Social Assessment . 73 Annex 6. Social Assistance Outreach . 77 Annex 7. Resettlement Program . 81 Annex 8. Land Titling Program . .. 88 Annex 9. Environmental Action Plan . 96 Annex 10. Housing Improvement Program . 100 Annex 11. Financial Summary . 108 Annex 12. Procurement and Disbursement Arrangements . 109 Annex 13. Project Processing Budget and Schedule. 114 Annex 14. Documents in Project File . 115 Annex 15. Statement of Loans and Credits . 116 Annex 16. Country at a Glance . 118 Venezuela Caracas Slum-UpgradingProject Project Appraisal Document Latin America and the Caribbean Regional Office Colombia, Ecuador and Venezuela Date: September 28, 1998 Task Team Leader/Task Manager: M. Vitor Serra Country Manager/Director: Andr6s Solimano, Director Sector Manager/Director: Danny Leipziger Project ID: VE-PA- Sector: Urban Management Program Objective Category: Poverty Reduction 40174 Lending Instrument: Specific Investment Loan Program of Targeted Intervention: [ ] Yes [X] No Project Financing Data [X] Loan [] Credit [] Other [Specify] For Loans/Credits/Others: Amount (US$m/SDRm): US$60.7 Million Proposed terms: [ Multicurrency [X] Single currency, specify US$ Grace period (years): 5 [] StandardVariable [X] LIBOR Based Years to maturity: 17 Commitment fee: .75% Front End Fee 1.0% Service charge: NA% Financing plan (US$m): Source Local Foreign Total Government (FUNDACOMUN) 28.1 21.9 50. Hidrocapital (Caracas Water Company) 10.6 9.4 20. INAVI (National Housing Agency) 6.2 0.0 6. IVI (Sucre State Housing Agency) 6.0 6. Municipalities 10.0 0 10. IBRD (including front-end fee) 29.8 30.9 60. Total 90.7 62.2 152. Borrower: Republic of Venezuela Guarantor: NA Responsible agency: Fundacion para el Desarrollo de la Comunidady Fomento Municipal (FUNDACOMUN) Estimated disbursements (Bank FYIUS$M): 1999 2000 2001 2002 2003 Annual 4.9 13.8 20.4 12.0 9.6 Cumulative 4.9 18.7 39.1 51.1 60.7 Project implementationperiod: 5 Years Expected effectiveness date: 1/1/99 Expected closing date: 6/30/04 OSD PADForm: July30,1997 Page 2 of 122 A: Project Development Objective 1. Project development objective The objective of the Project is to improve the quality of life of the inhabitants of a selected number of barrios' (representing 15 percent of total barrio population) in the Metropolitan Area of Caracas (MAC), through the development and implementationof a community driven, sustainable and replicable infrastructure improvement program. The Project follows the general directives defined by the Plan Seclorial de Incorporacion a la Estructura Urbana de las Zonas de Barrios del Area Metropolitana de Caracas y la Regi6n Capital (Plan Sectorial). This plan, approved by the Ministerio de Desarrollo Urbano (MINDUR), in 1994, outlines a comprehensive approach for improving the living conditions of the totality of the barrios of the MAC.2 Thus, the Project also proposes to establish a model for the implementation of the Plan Sectorial. 2. Key performance indicators (see Annex 1): The performance indicators will be used to assess the progress of Project execution, and to flag any potential problems which may require a re-tooling of the Project. These indicators are presented below: Year 1 e During the first year of Project implementation, design and install the impact evaluation system which will include, inter alia, a system to monitor housing and land markets in the barrios; a tool for assessing changes in quality of life; and an automated financial and physical output indicators systern; e During the first year of Project implementation, constitute at least 12 Community Participation Committees in the Project's targeted area; * By the end of the first year of Project Implementation, submit to the Bank up to 12 Neighborhood Improvement Plans for approval; * Conclude by the end of the first year of Project implementaition,technical assistance plans oriented towards the municipalities and the creation of the micro-credit program; and * By the end of the first year of Project implementation, the special UPF ordinances will be presented to the Municipal Councils of Libertador and Sucre, for approval of the UPF Master Plans of Petare Norte and La Vega. Year 2 * By the second year, execution of the Neighborhood Improvement Plans will commence. General * Elaborate, and present to the Bank, an Annual Civil Works Execution Plan, with accompanying Community Outreach Plan, by the end of September of the preceding year of the execution of that Plan which will be used to measure the progress of Project exeuction from that point on; lAlthough barrioin Spanishmeans generically "neighborhood"; in Venezuelait is usedsolely to denoteinformal settlement. 2 Full implementationof this plan would take 20 years and would require, accordingto preliminaryMINDUR estimates, total investmentson the orderof US$1.5billion. OSDPAD Form: July 30, 1997 Page3 of 122 * Execute the Project in accordance with the following projected Disbursement Plan: Year 1 Year 2 Year 3 Year 4 Year 5 % Disbursed 7 23 34 20 16 % Accumulated 7 30 64 84 100 The implementing agency, Fundaci6n para el Desarrollo de la Comunidad y Fomento Municipal (FUNDACOM1UN),in order to determine the impact of the project, vis-a-vis its development objectives, will also establish several quantifiable variables simple to measure and interpret. These variables will be used: (i) to assess impact of the Project outcomes; and (ii) as a basis for the development of methodologies for future projects. The variables to be measured include: * Change in property values and land market activities in the targeted barrios and in a control group. * Comparison in perceived quality of life against baseline Social Assessment Survey. * Changes in economic differentiation, solidarity and centrality in the target barrios at year 0, 3 and 5. * Quality impacts of the direct physical investments. * Change in the capacity to target and coordinate investment in the MAC. B: Strategic Context 1. Sector-related Country Assistance Strategv (CAS) uoal supported by the project (see Annex 1): CAS document number: 16471-VE. Date of latest CAS discussion: May 6, 1997 The Project supports the overarching CAS objective to: "...reduce poverty through sustainable economic growth with stability and increased efficiency in the provision of basic services." In addition, the Project supports the specific CAS objectives of: (i) improving basic infrastructure services; (ii) improving income and social conditions of the most vulnerable poor, and (iii) improving the efficiency and effectiveness of the public sector. 2. Main
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