Resettlement Planning Document

Resettlement Framework Document Stage: Final Project Number: 42382 October 2008

People’s Republic of : Small Cities and Towns Development Demonstration Sector Project

The resettlement framework is a document of the borrower. The views expressed herein do not necessarily represent those of ADB’s Board of Directors, Management, or staff, and may be preliminary in nature.

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Liaoning Small Cities and Towns Development Demonstration Sector Project

Supplementary Appendix R

RESETTLEMENT FRAMEWORK

Liaoning Provincial PMO

25 September 2008

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TABLE OF CONTENTS

1. General Description of Project ...... 1 2. Project Impacts...... 1 3. Preparation and Approval Procedures for Resettlement Plan ...... 2 4. Objectives and Legal Framework...... 4 4.1 National Laws and Regulations ...... 4 4.2 Laws and Regulations of Liaoning Province...... 4 4.3 Relevant Policies of ADB...... 4 5. Resettlement Compensation Entitlements and Standards...... 4 5.1 Resettlement Compensation Qualifications...... 4 5.2 Resettlement Compensation Standards ...... 5 6. Rehabilitation Measures...... 6 7. Institutional Arrangements ...... 10 8. Public Consultation, Information Disclosure and Participation...... 11 9. Appeal Procedure...... 11 10. Monitoring and Evaluation...... 12 10.1 Internal Monitoring and Examination ...... 12 10.2 External Monitoring...... 13 11. Resettlement Cost and Budget ...... 14 11.1 Preparation Principles...... 14 11.2 Compensation Funds...... 14 11.3 Funds Arrangement...... 14 12. Resettlement Implementation ...... 14

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CURRENCY EQUIVALENTS (as of July 2008)

Currency Unit – Chinese Yuan CNY1.00 – $0.147 $1.00 – CNY6.8

ABBREVIATIONS

AAOV – annual average output value ADB – Asian Development Bank AP – affected person IA – implementing agency LPG – Liaoning Provincial Government LPMO – local project management office (subproject level) PAA – project affected area PPTA – project preparatory technical assistance PRC – People’s Republic of China PRO – project resettlement office RF – resettlement framework RP – resettlement plan

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A. General Description of Project

1. The challenges of providing employment, housing, and services to the growing urban population from urbanization in the People’s Republic of China (PRC) are massive. The 11th Five-Year Plan (11FYP) continues the tradition of promoting the development of small cities and towns, which have the potential to provide a higher standard of living to rural migrants without exacerbating the infrastructure capacity and other problems afflicting large cities. Small cities and towns in Liaoning Province have made substantial progress in recent years in facilitating economic growth. However, the government-wide priority on gross domestic product growth has privileged industrial development over service sector growth, which has limited the impact of investment on job creation.

2. The rapid development and the race to urbanize and industrialize have left many cities and towns with very significant pollution problems and correspondingly poor living conditions. Public service providers are unable to manage sustainable operations. There is also a need to reduce unemployment. While many cities and towns have made significant investments in different types of urban infrastructure, few have developed an integrated approach to urban development.

3. At present, infrastructure provision in most small cities and towns in Liaoning Province is low and outdated, and cannot satisfy the development needs. Concern is increasing over the effects of population growth on the inadequacy of public services in the cities and towns. Liaoning Provincial Government (LPG) is promoting development of the small cities and towns in a more coordinated and cost-effective manner by bringing about more sustainable investments in physical and environmental protection infrastructure to improve the quality of life.

4. To fulfill their potential with respect to increasing economic efficiency and enabling a more harmonious form of development, small cities and towns need better infrastructure and municipal services to attract investment, to provide a decent urban environment to their residents, and to extend the benefits of growth to all residents.

5. The Project aims to help promote balanced and environmentally sustainable urbanization, narrow the urban-rural gap, and improve production, employment, and living conditions in small cities and towns in Liaoning Province. The proposed subprojects focus on supporting sustainable urban development and consist of a number of sector interventions primarily targeted to support job creation, economic growth, environmental protection, improvement of infrastructure and municipal services, and industrial development. The main sectors are roads and associated services, water and wastewater, solid waste management, river improvement and area upgrading, and district heating.

6. LPG is planning to use an Asian Development Bank (ADB) loan to support investment in eight small cities and towns in the province. In view of the possibility that some of the subproject cities and towns may change during project implementation, the sector loan modality is considered more appropriate. LPG has developed subproject identification, selection and appraisal criteria and procedures so that the Project will facilitate achieving the objectives of the sector policies and plans.

7. The proposed Project includes construction of a range of urban infrastructure projects in these small cities and towns in Liaoning Province, which will involve certain amount of land acquisition and resettlement. To ensure such impacts have been properly compensated and the income and livelihood of the affected persons (APs) have been restored, resettlement plans have been prepared for three core subprojects based on detailed impact survey and social economic survey as well as consultation with APs. For those subsequent subprojects, of which the designs have not been completed, the resettlement policy framework has been developed to

2 provide guidance and procedures under which similar resettlement plans will be provided to address potential land acquisition and resettlement impacts for the APs. For the whole project in Liaoning Province, Liaoning Province project management office (PMO) is the project executing agency, and for individual subprojects, the local city or county PMOs are the project implementing agencies (IAs).

B. Project Impacts

8. Under the Project, land acquisition and demolition of buildings is mainly related to the construction and rehabilitation of a range of infrastructure facilities in the small cities and towns. The affected areas for land acquisition and resettlement are defined according to the recommended engineering works as per the subproject feasibility studies under the Liaoning Small Cities and Towns Development Demonstration Sector Project, using 1/2000 topographical maps for each city/county.

9. According to initial investigation and surveys, land acquisition and demolition for the eight subprojects will acquire a total of 68 ha (1,023 mu) of land, including about 45 ha (679 mu) of farmland (66%). A total of 27,089 square meters (m2) of buildings will be demolished, including 16,253 m2 of residential structures (60%) and 10,741 m2 of non-residential structures (40%). About 240 households with 1,029 persons will be relocated. During project construction, 95 ha or 1,427 mu of land will be temporarily occupied, including 19% of farmland. Existing infrastructure facilities, such as communication lines, wells, and tombs will either be disrupted or partially realigned around the new works. Preliminary details of the number of affected households and various resettlement impacts for all eight subprojects, as at August 2008, are provided in Annex SA-R.1.

10. During the project design and feasibility study, efforts have been made to avoid or minimize potential land acquisition and resettlement impacts. Taking the three core subprojects as an example, project sites have been chosen by avoiding or minimizing any demolition of houses or acquisition of basic farmland. For relevant urban road construction, most of the alignments have been selected to minimize land acquisition and house demolition. Similar efforts will be made during the design and resettlement plan (RP) preparation for subsequent subprojects. During project construction stage, efforts like timing the land occupation during off farm season and minimizing construction during night time will ensure negative impacts will be reduced to a minimum.

C. Objective and Principles

11. According to the principles of the Involuntary Resettlement Policy of the ADB, resettlement and land acquisition should be avoided or minimized wherever possible, but where such impacts cannot be avoided, each subproject that involves land acquisition and involuntary resettlement will have to comply with the principles of this resettlement framework (RF). Once specific land acquisition and resettlement impacts are confirmed, a short or full RP must be developed based on the policies and procedures set forth in this RF.

12. The objective of this RF is to ensure that all the APs (permanent and temporary) whose business or employment places or farmland are acquired, or whose houses are demolished, or whose production operations are affected, or whose crops, trees and property are affected, whether in part or in full, will be given compensation for their losses at replacement costs and/or all necessary assistance so that they may improve or at least keep or re-attain their original production facilities or capacity and their living standards.

13. For the preparation of this RF, the Involuntary Resettlement Policy of the ADB and PRC national regulations have been adopted. Therefore, the following general principles are 3 applicable to achieve these objectives.

(i) The RP should follow the basic principles of various national laws and local regulations for land acquisition and demolition together with the ADB’s Policy on Involuntary Resettlement (1995). (ii) The RP should be based on a socio-economic survey and a detailed impact survey. (iii) The project design should be optimized in order to protect farmland and minimize the area affected by the land acquisition and demolition. (iv) All compensation and the resettlement of involuntary relocatees are part of the project costs, and sufficient funds should be provided to the APs so that they are not disadvantaged by the Project. (v) The plan should ensure that, after resettlement, the living conditions, productivity and income level of all the APs will be restored to at least the level they had before resettlement. (vi) Compensation for houses and other assets should be based on replacement value, and no depreciation or any other kind of discount should be applied. (vii) All the people and the buildings that are adversely affected by the Project should be compensated. (viii) Vulnerable groups should be provided with special attention and assistance, such as helping them to move to a new area, or assisting them in economic rehabilitation. (ix) In order to ensure that living standards and income levels will not decrease, all laborers affected by land acquisition should be provided with new employment or economic packages. Emphasis will be given to providing replacement farmland, supplemented with non-farm activities. If feasible, the affected farmers could choose self-employment. (x) There should be full disclosure of the resettlement framework and resettlement plans, including updates, to the APs prior to land acquisition or dispossession of their assets. (xi) The relocatees should be encouraged to participate in the development and implementation of the RP. The policies and standards for compensation should be published before any resettlement is started. (xii) Complaints and appeals by the APs should be considered seriously; and any problems and difficulties encountered by the APs during resettlement implementation should be resolved in a timely manner. (xiii) Resettlement organizations should be strengthened at all levels, through staff training, and by improving the coordination among all relevant institutions for more effective resettlement implementation. (xiv) The project IAs should be responsible for the internal monitoring and evaluation of the resettlement activities; progress reports will be submitted to ADB quarterly. (xv) An independent monitoring agency should carry out external monitoring and evaluation; monitoring and evaluation reports will be submitted to ADB semi- annually. (xvi) During RP implementation, any important changes, such as change to entitlements or compensation standards, or changes to the location or scale of land acquisition and building demolition, or a change in scope of works for the subproject, should be reported to ADB prior to any land acquisition or civil works taken. Where necessary, the RP should be updated and submitted to ADB for approval.

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D. Objectives and Legal Framework

1. National Laws and Regulations

(i) Land Administration Law of the People’s Republic of China (established in June 1986, put in force on 1 January 1987 and amended three times, separately in 1988, 1998 and 2004); (ii) Implementation Regulations for the Land Administration Law of the PRC (The 256th State Council Decree of the PRC, issued on 27 December 1998, starting implementation since 1 January 1999); (iii) State Council Decision on Deepening Reform of Land Administration (The 28th Decree of State Council on 21 October 2004); (iv) Guiding Opinions on Refining Compensation and Rehabilitation System for Land Acquisition (No. 238 Decree of Ministry of Land Resources on 3 November 2004); (v) Urban Houses Demolition Administration Regulations of the PRC (The 305th State Council Decree of the PRC, issued on 13 June 2001, starting implementation since 1 November 2001); (vi) Provisional Regulations on Cultivated Land Acquisition Tax of the PRC (The GF [1987] No. 27 issued by the State Council: A Notice about Issuing by the State Council); (vii) Interim Regulations of the PRC Concerning the Assignment and Transfer of the Right to the Use of the State-owned Land in Urban Areas (No. 55 issued by State Council on 19 May 1990 and put in force at the same time); (viii) Management Rules of Land Transfer during Reform among State-owned Enterprises (The GF No. 8 issued by National Land Management Bureau on 17 February 1998 and put in force on 1 March 1998); (ix) Regulations for Confirming Owning and Using Right of Land (The GF No. 26 issued by National Land Management Bureau, and enacted on 11 March 1995); (x) Management Methods of Land Charging (The GF No. 26 issued by Ministry of Finance and Ministry of Land and Resource on 4 August 1999, and put in force on 1 January 1999).

2. Laws and Regulations of Liaoning Province

(i) Methods of Liaoning Province for Implementing the Land Administration Law of the PRC (1 April 2002), (ii) Liaoning Provincial Government Decree on Handling the Land Compensation and Rehabilitation and Protection of Interests for Land Loss Farmers (14 August 2004), (iii) Liaoning Provincial Government Decree on Handling Compensation and Rehabilitation for Farmers Losing Housing Plots (No. 128, 2007), (iv) Liaoning Provincial Government Decree on Issuing Notice of Ministry of Labour and Social Security and Ministry of Land Resources on Handling Social Security for Land Loss Farmers (No. 149, 2007), (v) Local Municipal and County Regulations on Building Demolition and Relocation.

3. Resettlement Compensation Entitlements and Standards

a. Resettlement Compensation Qualifications

14. The policies on compensation entitlement are aimed at compensating the APs for the property loss caused by the Project (and subprojects), and providing a basis for rehabilitation and improvement of the livelihood of APs in a timely manner. Adequate compensation or 5 assistance should be provided to all owners or users of buildings and land in the project land acquisition and demolition area. The principles to be adopted for compensation and entitlements should follow the national laws and provincial regulations on land acquisition and resettlement, as well as policies of ADB, as follows:

(i) The APs who lose the cultivated land due to subproject construction will have the right to either obtain replacement land through land readjustment within or near the original villages, or equivalent cash compensation. For cash compensation, the affected households will receive 100% of the resettlement subsidy and at least 70% of land compensation. For the affected villages, the received land compensation will be utilized to improve farming production by building irrigation facilities, modifying cropping patterns, developing secondary and tertiary activities, and helping the APs to find jobs. The loss of young crops, income loss, infrastructure facility damage and farmland reclamation made necessary by temporary land occupation shall be compensated accordingly. Lack of legal residence will not become any barriers for the APs to receive their entitled compensations and assistance. (ii) Resettlement housing or cash compensation at replacement value should be provided to people who lose their houses and auxiliary structures because of the subproject construction. The choice of a replacement housing location should be appropriate for the production, livelihood and living standards of the APs. Structures and other property adversely affected by the Project shall be compensated at the replacement value. A moving allowance and transfer assistance will be provided to the APs; the amount of such assistance will be determined in advance according to the prevailing standards at the subproject locations. Lack of legal residence will not become any barriers for the APs to receive their entitled compensations and assistance. (iii) The subproject IAs will provide people who lose their production and business operations with alternative and acceptable production sites. Adequate compensation should be paid for the relocation or loss of equipment that has to be moved or decommissioned. Compensation should be provided for lost wages and lost production during the transition period. Compensation should be paid for all or part of the affected structures and other fixed assets at replacement value.

b. Resettlement Compensation Standards

15. The resettlement plans for individual subprojects should conform to the national and provincial laws and regulations as well as ADB’s Policy on Involuntary Resettlement. The actual compensation standards for land acquisition and demolition should be determined based on the actual situation in the subproject area. The principles and basis for determining compensation are as follows:

(i) Land acquisition. Compensation should be in line with the PRC Land Administration Law (1998), and the Liaoning Provincial Implementation Decree adopted in 2002, which stipulates the regulations for land compensation, resettlement subsidies, young crop compensation, house compensation and other measures to carry out resettlement. According to the policy, the compensation for farmland will be based on the average annual output value (AAOV) over the past three years and multiples set forth according to the per capita land holding among affected villages. Based on relevant national law and provincial and local regulations, the compensation for farmland, including land compensation, resettlement subsidy and green crop compensation will be set to at least 16 times of AAOV. For temporary land occupation, the compensation will be based on the AAOV, length of occupation, and cost of land reclamation. Any

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permanent land acquisition or temporary land occupation that affects green crops or trees will require compensation to be paid to the owner based on the harvest value of lost green crops and the replacement value of the trees. (ii) House demolition and attachments. For structures to be demolished, compensation will be set at the replacement value, based on analysis of material costs for a replacement structure in each subproject area. For those affected non-registered houses if any, compensation rates based on replacement value should be provided along with rehabilitation measures. The compensation for various attachments, infrastructure facilities, and moving allowance will be set in accordance with the compensation approved for similar projects in the subproject cities/counties. (iii) Non-residential structures. For non-residential structures, compensation will be set at the replacement value, based on an analysis of material costs in the subproject area. In terms of compensation for equipment relocation, moving allowance, lost wages and income during the temporary interruption, this will be determined in accordance with actual costs. For those affected non-registered business if any, compensation rates based on replacement value should be provided along with rehabilitation measures. (iv) Special facilities. The compensation payable where special facilities are affected will be determined in accordance with the relevant regulations and estimates quota, with reference to the unit costs for similar subproject areas.

E. Rehabilitation Measures

16. As the subproject works are generally located near cities or towns, the land acquisition area is not basic farmland. For most affected villages, the major income does not come from cultivated land, and the necessary demolition and acquisition will not have a serious negative impact on the overall village production systems and livelihood of the people. Following the principle of "resettlement as part of development”, land and agriculture based rehabilitation measures should be defined in the RPs as the main economic solution for individual subprojects. The overall rehabilitation approach should be as per the following:

(i) Economic Rehabilitation Planning. Economic rehabilitation as part of resettlement will mainly involve the development of agricultural production, which includes readjustment of the cultivated land within the original village and village group, modification to the cropping patterns, improvement of low yield cultivated land, and change of dry land to irrigated land. For land loss farmers, the main purpose is to increase the alternative income sources and to ensure that each resettled person can have at least the same or larger amount of income than that of lost farmland. In order to increase incomes of the APs, appropriate intensive farming, animal husbandry, and secondary and tertiary activities should be encouraged according to the particular economic conditions in the subproject city and town. Monetary compensation can also be provided for those farmers who do not need any land replacement allocation, as they have support from various non-farm activities. Gender consideration should also be included in developing appropriate economic rehabilitation measures, which include the number of female quota for proposed job training among APs. A number of females will be selected among total full time employment for the Project after completion. (ii) Rehabilitation of Relocated Households. In order to minimize the production and livelihood impacts caused by project construction, the rural relocated households will be resettled in the vicinity of their original residences within their current villages. For relocated urban residents, they will be provided with the option to choose between exchanging property rights in another place according to the urban land use plan, or a cash compensation settlement so they can purchase housing according to their 7

own needs. (iii) Rehabilitation of Affected Enterprises and Institutions. Cash compensation will be adopted for affected enterprises/institutions. Construction units shall be responsible for the restoration of affected infrastructure facilities. For those enterprises that remain in their current locations, they should make their own arrangements to build any replacement buildings. For those enterprises that need to be relocated, the project office and the local government in the project area should assist them to identify an alternative site in accordance with the urban land use plan. Compensation should also be provided for lost wages and lost production during the process of reconstruction and relocation. Affected workers will be assured of continued employment, either by the enterprises or by local government and such costs will be included in the compensation paid by the Project. (iv) Rehabilitation of Small Shop Owners. For small shop owners that are affected by the subproject development, cash compensation will be provided based on replacement value of lost and damaged assets, moving and transfer allowances, and lost wages and income during transition. The project office and local government should provide assistance to them during the process of relocation and rehabilitation, which include assistance of purchasing replacement shops or leasing similar shops for rehabilitation. (v) Rehabilitation of Vulnerable Groups. When implementing resettlement, special attention and preferential treatment should be given to rehabilitating the vulnerable groups. Each subproject RP will include eligibility criteria and special entitlements for vulnerable people; these people have been identified during the detailed measurement survey. The Project will provide financial and material assistance, as well as compensation and rehabilitation packages, as specified in the resettlement plan.

17. As land acquisition is quite variable between the individual subprojects, and each area has a different range and availability of natural resources and infrastructure facilities, the rehabilitation schemes for each subproject will by necessity have to consider a range of different solutions and procedures to resettle and compensate people and businesses for the enforced changes required to accommodate the project works. These solutions and procedures should be detailed in the RP for each subproject. A general entitlement matrix indicating basic principles and entitlements for different types of impacts is included in Table SA-R.1.

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Table SA-R.1: Entitlement Matrix for Liaoning Small Cities and Towns Development Demonstration Sector Project Affected Affected Responsible Policies and Entitlements Type Persons Agencies (i) For the affected state-owned urban land users, such as enterprises, institutions, and residents, cash compensation will be paid for the loss of the land areas. LPMO, and Permanent Users of (ii) The compensation rate will be based on the principle of local land land state-owned replacement value and will allow the relocated land users to resources occupation urban land obtain replacement land in similar locations for rehabilitation. (iii) For the affected other urban land areas, such as unused bureau land, river channels, and so on, administrative transfer of the land will be carried out. (i) Compensation standard for various rural lands should be in line with the PRC Land Administration Law (1998) and the Liaoning Provincial Implementation Decree (2002), which stipulates the rates for land compensation, resettlement subsidies, young crop compensation, and other attachments. Specifically, the compensation for farmland will be based on the average annual output value (AAOV) over the past three years and multiples set forth according to the per capita land holding among affected villages. On average, the combined land compensation and resettlement subsidy will be at least 20 times of AAOV in the project Owners of areas in accordance with Land Administration Law. If the collectively- proposed land compensation and resettlement subsidy is owned not sufficient to provide economic rehabilitation, the LPMO, and Permanent irrigated combined amount could exceed 30 times of AAOV with local land land land, dry approval of the provincial government. resources acquisition land, fruit (ii) The compensation rates for green crop and ground bureau garden, fish attachments based on replacement value will be paid pond, etc. directly to the APs. (iii) For land loss farmers, they will be provided with replacement farmland through land readjustment and various economic rehabilitation measures, such as greenhouse vegetable and animal husbandry activities. The funding of rehabilitation measures will come from land compensation fee and resettlement subsidy to be paid directly to affected villagers or village groups. (iv) For those village groups with no possibility of land readjustment or development, the resettlement subsidy will be paid directly to the APs, and the village groups shall manage and use the land compensation fee. (i) The compensation fee for temporary land occupation will include young crops cost, loss of output during occupation, and land reclamation cost. (ii) The compensation fee for loss of output will be determined according to the AAOV and length of occupation time. The average time limit of the temporary land acquisition is set at LPMO, local Temporary Owners of two years. land resources land rural land (iii) The compensation for land reclamation will be based on bureau, and acquisition actual cost. contractor (iv) While the compensation for green crop and loss of output during land occupation will be paid directly to APs, the compensation for land reclamation could be paid either to the contractor for restoring land condition after occupation or to the APs for restoration. 9

Affected Affected Responsible Policies and Entitlements Type Persons Agencies (i) For rural houses to be demolished, compensation will be set at the replacement value, based on analysis of material costs for a replacement structure in each subproject area. The compensation for various attachments, infrastructure facilities, and moving allowance will be set in accordance LPMO and Owners of with the compensation approved for similar projects in the local land Rural subproject cities/counties. resources Houses (ii) The relocated rural households will be resettled nearby bureau within their current villages. (iii) For each relocated household, the village will provide a replacement housing plot funded by the Project, which will be connected with roads, water supply and electricity. (i) For demolished urban houses, compensation will be set at the replacement value, based on analysis of material costs for a replacement structure in each subproject area. The compensation for various attachments, infrastructure facilities, and moving allowance will be set in accordance with the compensation approved for similar projects in the LPMO and Owners of subproject cities/counties. urban local urban (ii) The relocated urban households will be provided with two land resources houses rehabilitation options. One is to provide replacement bureau housing with better quality and similar sizes. The other option is to provide cash compensation at replacement value. The objective of these two options is to ensure that the living condition of the relocated people could be House restored or improved. demolition (i) For owners of non-residential structures, such as enterprises, institutions, and shops, compensation will be set at the replacement value, based on an analysis of material costs in the subproject area. (ii) For those enterprises that remain in their current locations with relatively minor impacts, they will make their own arrangements to build any replacement buildings based on cash compensation received. For those enterprises that need to be relocated, the project office and the local government should assist them to identify an alternative site in accordance with the urban land use plan. Owners or (iii) In terms of compensation for equipment relocation, the LPMO and users of non- moving allowance, and lost wages and income during the local land residential temporary interruption will be determined in accordance with resources structures actual costs. bureau (iv) Affected workers will be assured of continued employment, either by the enterprises or by local government and such costs will be included in the compensation paid by the Project. (v) For small shop owners that are affected by the Project, cash compensation will be provided based on replacement value of damaged assets, plus moving and transition allowances, and lost wages during transition. (vi) The project office and local government should provide assistance to them during the process of relocation and rehabilitation. Owner or in All the special facilities affected by the Project shall be LPMO and Special charge rehabilitated and rebuilt according to the actual conditions affected relevant facilities departments by the Project, the original standard, scale and function. The PMO departments

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Affected Affected Responsible Policies and Entitlements Type Persons Agencies shall plan the investment according to the rehabilitation plan, and provide compensation funds for the relevant public departments in charge of special facilities to organize the implementation. The compensation payable where special facilities are affected will be determined in accordance with the relevant regulations and estimates quota, with reference to the unit costs for similar subproject areas.

F. Preparation and Approval Procedures for Resettlement Plan

18. For all of the Liaoning Small Cities and Towns Development Demonstration Sector Project’s subprojects, where land acquisition and resettlement is necessitated, individual RPs must be prepared and implemented according to the policies confirmed in this RF. Following the ADB’s operational procedures for involuntary resettlement, detailed RPs have been prepared for three core subprojects, with a full RP for Donggang subproject, a short RP for Kazuo subproject, and due diligence review for subproject. ADB will review and approve them during project preparation. For the five subsequent subprojects, the provincial and project PMOs will organize the design institutes to carry out a detailed and 100% impact measurement survey based on final design, and sample socio-economic survey of APs with at least 20% of seriously affected people prior to implementation. For the subprojects when 200 or more people experience major impacts, which are defined as (i) being physically displaced from housing, or (ii) losing 10% or more of their productive assets (income generating), a full RP will be required. The subprojects that include involuntary resettlement impacts not deemed significant will require a short RP. Both the full and short RPs should be prepared in accordance with this RF. After review by Provincial PMO, both short and full RPs will be submitted to ADB for approval prior to civil works contract awards. The provincial PMO, subproject PMOs, independent resettlement monitoring agency, and ADB project team will supervise and monitor the resettlement implementation for individual subprojects.

19. According to this RF, the RP should include the following contents:

(i) General Description of Project, (ii) Project Impacts, (iii) Socio-Economic Profile of the Project-Affected Areas, (iv) Legal Framework and Policy, (v) Rehabilitation Plan, (vi) Institutions and Responsibilities, (vii) Consultation, Participation and Disclosure, (viii) Grievance Procedures, (ix) Monitoring and Evaluation, (x) Resettlement Cost and Budget, and (xi) Resettlement Implementation Schedule.

G. Institutional Arrangements

20. For Liaoning Small Cities and Towns Development Demonstration Sector Project, the PPMO will be responsible for management of the overall project implementation. The LPMOs for the eight subprojects are the IAs who have the subproject specific responsibility to implement the RPs according to this RF. The PPMO will authorize the LPMO of each subproject city and town to conduct regular monitoring, supervision and reporting of the resettlement implementation as per the requirements of this RF and subproject RPs. The institutions to be responsible for the planning, management, implementation and monitoring of the resettlement 11 activities include:

(i) Provincial Resettlement Leading Group for Liaoning Small Cities and Towns Development Demonstration Sector Project, (ii) PPMO for Liaoning Small Cities and Towns Development Demonstration Sector Project, (iii) Resettlement Office of PPMO, (iv) Municipal (County) Project Resettlement Leading Group, (v) Municipal (County) LPMOs, (vi) Resettlement Offices of Municipal (County) LPMOs, (vii) Town (township/sub-district) Resettlement Implementation Offices, (viii) Village (Residential) Committee, and Villagers’ Group, (ix) Selected Design Institutes for Resettlement Planning, and (x) Selected Independent Resettlement Monitoring and Evaluation Institution.

21. In the RP for each subproject, details should be presented on the staff, responsibility, and relationship of these institutions that are required (see RPs for core subprojects). In addition, assessment of institutional capacity and resources capacity of IAs should be carried out, based on which, detailed training programs will be developed and included in the RP. Although the PPMO has extensive experience with the implementation of Government-funded projects, which also involve land acquisition and resettlement, most staff of the eight LPMOs have had less exposure to implementing foreign loan funded projects, and with ADB resettlement policy requirements. A resettlement workshop on resettlement policy and practice was conducted for the staff of all eight subprojects during the project preparatory technical assistance (PPTA). Additional training for resettlement staff from each subproject will be included in the individual RPs.

H. Public Consultation, Information Disclosure, and Participation

22. Prior to implementing the Project, public consultation and information disclosure should be undertaken within the project area. Knowledge and acceptance of the proposed compensation policies and rehabilitation measures for the APs is a precondition for approval of the RP. The RF was provided to APs in all core subproject cities and towns by September 2008 and to subsequent subproject cities and towns by November 2008. For the subprojects, resettlement information booklets will be distributed to the APs to provide details on impacts and compensation rates as well as cut-off dates prior to ADB approval of each subproject. The RPs will be made available in the relevant government offices at municipal, county, and township levels. Any updated RP will be disclosed to the APs prior to ADB approval. During implementation, disclosure of impacts measurements, compensation entitlements and payments will be publicly disclosed in each village or residential committee.

23. Public participation includes involving the affected communities and project stakeholders in the whole resettlement process. It is important that an activity management mechanism is established that will encourage the APs to actively participate in the resettlement activities. The project APs should be encouraged to participate in the overall process of compiling and implementing the RP. To achieve this, the communities and APs should be invited to consultation meetings during the preparation of the RP, so that they can become fully informed of the RF and the planned developments. The PPMO and LPMOs should solicit the opinion of the APs on the resettlement and compensation policies, as well as from the local government and resettlement representatives. Everyone who may be affected by the subproject and the RP should be encouraged to participate in discussions and help formulate the decisions for the resettlement and reconstruction work.

I. Appeal Procedure

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24. The RP is prepared in accordance with the needs of the whole subproject. During implementation of the RP, APs’ complaints may arise because of problems or change to the actual subproject implementation activities that had not been foreseen when the RP was prepared. In order to ensure that the APs can voice their complaints when any problem arises in connection with the land acquisition and/or resettlement of the APs, an appeal procedure is defined within this RF and in the RPs. The purpose of this appeal procedure is to provide a mutually satisfactory means for rapid response to any AP’s complaint, to avoid any likelihood of a complicated legal procedure. The detailed procedure is as follows:

(i) If any AP does not agree with the compensation or resettlement plan, he/she can voice his/her complaint to the village or residential committee. The village or residential committee should keep records, consult with the local resettlement office and provide a reply to the AP within 1 week. (ii) If the AP is not satisfied with the reply, he/she can appeal to the township or sub- district resettlement working office, which will take records, consult with the local resettlement office and provide a resolution to the AP within 1 week. (iii) If the AP still does not accept the proposed resolution, then he/she can appeal directly to the local city or county Project Resettlement Office (PRO), which is the main organization responsible for the whole subproject. The city or county subproject resettlement office should make a record of any appeal and provide a resolution within 1 week. (iv) If the dispute still cannot be resolved, then the AP can appeal to the PPMO, go through an administrative appeal according to the Administrative Procedure Law of PRC, or go directly to the People’s Court. The Resettlement Office is responsible for keeping records of all appeals, and the resultant resolutions.

25. APs will be aware of their right to appeal through the participatory meetings and from the resettlement information booklet by following the new provisions in the land administration law and regulations. The Project will also publicize information through the mass media and collect the APs’ opinions and suggestions, which will then be investigated and resolved through all necessary administrative levels in a timely manner.

J. Monitoring and Evaluation

1. Internal Monitoring and Examination

26. Both the PPMO and the LPMOs for each subproject, as the project IAs, will be responsible for the internal resettlement monitoring activities. The monitoring work will include reviewing the main implementation milestones, evaluating the resettlement impacts, and if necessary revising the subproject RPs. The PPMO and LPMOs will be responsible for ensuring the effective performance of the resettlement institutions during resettlement implementation, including strengthening the coordination between different institutions. LPMOs will prepare quarterly progress reports on the land acquisition and building demolition activities, and the PPMO will consolidate these reports into their quarterly reports for submission to ADB as the routine review and monitoring of resettlement implementation issues. The reports would include any suggestions for consideration and future action.

27. The internal monitoring will include:

(i) Updates of implementation schedules and progress of the last quarter and works/actions planned in the next quarter; (ii) The allocation of housing sites, house reconstruction, and relocation activities; (iii) Assessment of implementation progress and the quality of the replacement 13

facilities for the resettled people and their productive activities; (iv) Investigation, coordination and provision of suggestions to deal with any issues that arise (previously or newly) for the resettlement institutions and the APs during the resettlement implementation process; (v) Oversight on the restoration of family income once relocation and resettlement has been completed; (vi) Measures taken for vulnerable groups or individuals; (vii) The allocation, disbursement, and use of resettlement compensation; (viii) Assessment and support for participation and consultation during the implementation period; (ix) Progress on training relocatees’ and promoting future options for their future livelihood; and (x) Implementation issues and proposed follow-up actions.

28. The PPMO will be responsible for preparing and submitting to ADB an annual resettlement summary report and a final comprehensive resettlement completion report once all resettlement activities have been finished.

b. External Monitoring

29. A qualified external resettlement monitoring agency should be retained to undertake independent external resettlement monitoring and evaluation for the whole Project. The monitoring and evaluation agency must be acquainted with the resettlement activities, and able to provide both the evaluation and suggestions for improving the overall resettlement and rehabilitation process that secures the livelihood of the APs. The monitoring team is intended to be an independent communication channel for the APs, so as to ensure the resettlement planning and implementation fulfills the needs of the APs, and that the procedures adopted are also compliant with the national laws and provincial regulations, the RPs and ADB policy. The independent resettlement monitoring and evaluation agency shall conduct field investigations periodically and prepare resettlement project monitoring and evaluation reports every six months, to be submitted simultaneously to the PPMO and ADB for review.

30. The specific content of the external monitoring will include:

(i) Monitoring and evaluation of the resettlement implementation schedule; (ii) Monitoring and evaluation on the use of the resettlement funds; (iii) Monitoring and evaluation of the rehabilitation of production facilities in or as related to the project affected area (PAA) and APs; (iv) Monitoring and evaluation of the compensation payments to relocatees’ and the re-establishment of productive economic activities; (v) Assessment of the APs’ income levels and living standards, as a basis to ensure they have been adequately compensated and their standard of living and income improved or at least fully restored to pre-project levels.

31. In terms of reporting requirement, in general external monitoring and evaluation will be carried out every six months during the project implementation, with completed external monitoring and evaluation reports submitted to both ADB and project sponsors. Prior to implementation of land acquisition, a baseline survey should be carried out for the project APs based on sample household survey, which will be evaluated every year during the course of project implementation. After completion of land acquisition and resettlement, a resettlement completion report should be prepared.

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K. Resettlement Cost and Budget

1. Preparation Principles

(i) Costs for a subproject resettlement program, including economic rehabilitation, demolition and resettlement, and demolition and relocation of special facilities, should be prepared according to the relevant national policies and design regulations, and included with the cost estimation for the construction works. (ii) Compensation standards for land compensation, resettlement subsidy and young crops compensation will be confirmed according to relevant regulations in the Methods of Liaoning Province for Implementing the Land Administration Law of the PRC. (iii) Compensation standards for structures will be based on an analysis of replacement prices for a typical house in the PAA. The compensation standard for auxiliary facilities, scattered trees and demolition subsidy will be determined according to the design or compensation standard for a similar project. (iv) Compensation for special facilities, based on the maintenance of their functionality according to the principles of “original scale, original standard and original function”, will be determined in accordance with the detailed work that will have to be undertaken. (v) Based on detailed cost estimates for the three core subprojects, the total resettlement cost for three core subprojects is CNY58.8 million or $8.64 million, and the cost for subsequent subprojects will be available after completion of draft RPs for subsequent subprojects. These land acquisition and resettlement costs will be included as part of the total project cost.

2. Compensation Funds

32. Each LPMO, assisted by the relevant design institute, should carefully compile a resettlement cost estimate, which will be included in the RP prepared before each subproject can be evaluated, as per the requirements outlined in this RF.

3. Funds Arrangement

33. The city or county LPMOs should pay compensation for land acquisition, demolition of buildings and other costs for each subproject to the APs and units through their resettlement offices. According to the compensation policies and standards defined in the RP, the payment and usage of compensation funds will be carried out under the supervision of the internal monitoring agencies, with regular review by the external monitoring agency.

L. Resettlement Implementation

34. The RP for each subproject should include a detailed implementation schedule for the resettlement activity in the subproject area. The schedule should be closely linked to the construction schedule, and the specific activities to be undertaken. The payment of compensation for land acquisition and demolition, the provision of other livelihood rehabilitation measures (in cash or in kind), and the allocation of subsidies or allowances should be paid in installments according to the planned resettlement implementation activities. A preliminary implementation schedule for all 8 subprojects is included in Annex SA-R.2.

Annex SA-R.1: Land Acquisition and Resettlement for 8 Subprojects Subproject Relocated Relocated Land Farmland Temporary Farmland Houses Other Building No. 2 2 City/County Household Population (mu) (mu) Land (mu) (mu) (m ) (m ) 1 Kazuo County 0 0 22 22 114 114 0 0 2 Linghai City* 12 42 761 565 0 0 1607 0 3 Donggang City 91 336 385 245 0 0 11,174 3,529 4 County n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 5 City 0 0 31 0 1,163 0 0 0 6 Haicheng City 2 10 0 0 0 0 930 930 7 Xifeng County 130 629 324 151 150 150 13,567 6,096 8 City 17 54 261 261 0 0 1,418 186 Total 240 1029 1023 679 1427 264 27089 10741 Core Subprojects 91 336 407 267 114 114 11174 3529 Percent of Total 37.9% 32.7% 39.8% 39.3% 8.0% 43.2% 41.2% 32.9% Subsequent Subprojects 149 693 616 412 1313 150 15915 7212 Percent of Total 62.1% 67.3% 60.2% 60.7% 92.0% 56.8% 58.8% 67.1% Note: The amount of land acquisition and demolition for Linghai subproject is not included since all of the land acquisition and demolition had been completed by 2007. Source: Liaoning PPMO.

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16 Annex SA-R.2: Implementation Schedule for All 8 Subprojects Task Name Start Finish 2009 2010 2011 2012 2013 2014 2015 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 Donggang City 1/1/09 6/30/14 Land acquisition and resettlement 2/1/09 2/28/12 Design and Tender Documentation 1/1/09 2/28/12 Tendering 5/1/09 4/30/12 Qingnian North Road and services 5/1/11 6/30/13 Yingbin West Street and services 7/1/09 3/31/11 Xincheng Road and services 5/1/10 9/30/12 River Improvement 7/1/09 9/30/11 Area Upgrading 5/1/10 6/30/14 Stormwater Pumping Stations 2/1/10 6/30/12 Renmin Bridge 3/1/10 12/31/12 Drainage Culverts 2/1/10 6/30/12 Kazuo Mongolian Autonomous County 1/1/09 12/31/12 Land acquisition and resettlement 2/1/09 5/31/11 Design and Tender Documentation 1/1/09 5/31/11 Tendering 6/1/09 7/31/11 Water Intake Works 8/1/09 11/30/11 Water Transmission Pipes 12/1/09 12/31/11 Intermediate Pumping Station 8/1/09 11/30/11 Water Treatment Works 4/1/10 11/30/12 Water Distribution Pipes 8/1/10 12/31/12 Linghai City 1/1/09 6/30/14 Design and Tender Documentation 1/1/09 1/31/12 Land acquisition and resettlement 2/1/09 1/31/12 Tendering 5/1/09 3/31/12 Zhongxing Street, Jiankang Road, Qingnian 7/1/09 9/30/12 Street, and services Shangye Road, Jimao Street, Jinling Road, 4/1/10 3/31/13 Shenji Road, and services Bayi Street, Xincun Road, Tiebei Road, 7/1/10 5/30/14 Baokang Street and services Road maintenance equipment 3/1/10 2/28/14 Reservoir and Pumping Station 4/1/11 6/30/14 Other Subprojects 1/1/09 6/30/15 Design and Tender Documentation 1/1/09 11/30/13 Land acquisition and resettlement 6/1/09 12/31/13 Tendering 6/1/09 1/31/14 Construction Works 8/1/09 6/30/15 Institutional Development and Training 4/1/09 3/31/15