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World Bank Document Doweama of The WorldBank FOROFFICIAL USE ONLY Public Disclosure Authorized Report No. 6657-TU Public Disclosure Authorized STAFF APPRAISALREPORT REPUBLICOF TURKEY CUKUROVAURBAN DEVELOPMENT PROJECT April 17, 1987 Public Disclosure Authorized Public Disclosure Authorized Urban and RegionalDevelopment Projects Division Europe,Middle East and North Africa Region Thi doument hasa nsftted dWnbuXonand may be u#d by falpints onlyin dw pofonnaucej of tbrofitocil dutis Its contentsmaly not odwtXe bedisclosed without World Bank auwdthoizXn.| REPUBLICOF TURKEY CUKUROVAURBAN DEVELOPMENT PROJECT CURRENCY EQUIVALETS US$l = 560 Turkish Lira (TL) (December1985) US$1 = 750 Turkish Lira (TL) (December1986) 100 TL = US$0.179 (December1985) 100 TL = US$0.133 (December1986) FISCAL YEAR January I - December 31 MDEASURES AND EQUIVALENTS 1 hectare = 10,000 squaremeters - 2.47 acres 1 meter = 39.37 inches 1 square meter = 10.76 square feet 1 cubic meter = 264 US gallons PRINCIPALABBREVIATIONS AND ACRONYM USED ASKI - Adana Su ve Kanalizasyon Idaresi CMTA - CukurovaMunicipalities Training Association CPA - Cukurova Project Account DSF - Development Support Fund DSI - State Hydraulic Works HUDC - Housing and Urban DevelopmentCompany IB - Iller Bank ICB - International Competitive Bidding ISKI - IstanbulSu ve KanalizasyonIdaresi LCB - Local Competitive Bidding LGD - Local GovernmentDirectorate of MOI MHF - Mass Housing Fund M0I - Ministry of Interior MPWS - Ministryof PublicWorks and Settlement MFA - Municipality Financing Agreement PCR - Project Completion Report PCU - Project CoordinationUnit PPBU - ProgramPlanning and BudgetingUnit PPF - Public Participation Fund PRIMU - ProjectReview, Implementation,and MonitoringUnit PTT - Posts and TelecommunicationsAuthority SPA - Special Provincial Administration SPO - State Planning Organization TEK - Turkish Electricity Authrrity TIU - Training Implementation Unit UEA - Urban Expansion Area WSD - Water and Sanitation Department ol OkmCALUSE ONLY REPUBLICOF TURKEY CUKUROVAURBAN DEVELOPMENT PROJECT STAFFAPPRAISAL REPORT Table of Contents Page No. LOAN AND PROJECT SUMMARY ................. ......................i - ii I. SECTOR BACKGROUND .................... .......................... 1 A. Introduction ............................................. 1 B. Urbanization Trends ................ ..................... 2 Population Growth and Spatial Distribution ............. 2 Urban Service Delivery ....... .......................... 2 C. InstitutionalArrangements for Urban Management............ ......O..a 3 Municipal ities ..... .. ........ a . ...a. .............. 3 Central Government Organizations .......................4 CentralGovernment Financial Support to Municipalities. 5 D. Government's Urban Policies .6....... ........................6 o¢verview....................... 6 *....... Municipal Strengthening .... 7 CentralGovernment Agencies .......................... 7 E. The Cukurova Municipalities 8 F. Bank Goals, Role, and LendingStrategy ...................... 9 Past Operations . ... .... ........9.... .. 9 LendingStrategy .. ...................................... 10 ProjectOrigin and Preparation Performance .............10 II. THE PROJECT ................... ................................11 A. Project Objectives ....... ................ 1111............ B. Main Features of the Project ............................... 11 C. Detailed Project Description ............................... 12 Area-Based Urban Development ........................... 12 Municipal Engineering Programs ......................... 13 Institutional Development ............................ 14 D. ProjectCosts ................................. 15 E. FinancingPlan ................................ 17 F. ImplementationArrangements ............................... 19 Status of Project Preparation .......................... 19 ImplementationSchedule ......................... 20 Procurement ........ ...... ........... 20 Disbursements. ................. 22 Financial Reports and Audits ......................... 22 Monitoring and Evaluation .............................. 23 Supervision Requirements'....................... 23 Thisdocument has a retricteddistributon andmay beused by ripients only in thepeffonnance ofthroffoci duties Its contents may not otherwise bedisclosed without World DBank authoiation. Page No. III. INSTITUTIONAL DEVELOPMENT ............ 24 A. Municipalities ... 24 General 24 Program Planning and Budgeting ............ 25 Urban Planning and Technical Services 25 Manpower Development .... 26 Financial Management ....... ......... ............. 26 B. Water and Sanitation Departments 27 C. Housing and Urban Development Companies .................... 28 D. Cukurova Municipalities Training Association (CMTA) ........ 28 E. The Project Review, Implementation, and Monitoring Unit 29 IV. FINANCIAL ANALYSES ................... 30 A. Cost Recovery and Financial Objectives 30 B. Municipalities ....................... 31 InvestmentPrograms and Financing Plans ............ 0... 31 PastFinancial Performance ............ 32 FutturePerformance ......... ..... 33 Creditworthiness ..... ......... 34 C. Water and Sanitation Departments ...... 34 FinancingPlan for Water and SanitationInvestments .... 34 PastPerformance ...... 36 Finat,cialObjectives . ...*......... .......... 37 D. Housing and Urban Development Companies ................... 38 Financial Policies ... 38 MarketingStrategy and Pricing Policy ..... 38 ExpectedFinancial Performance 39 V. PROJECT JUSTIFICATION AND RISKS ............................. 40 A. Project Impact ............................ ........... 40 General ....................................... ..... 40 Economic Justification. .............. ...............40 Urban Poverty Impact ....* ............ ......... 43 Environmental Imiact ................ 43 B. Project Risks ......... o.*.................... 43 VI. ASSURANCES, AGREEMENTS AND RECOMMENDATIONS .................... 45 TEXT TABLES 2.1 Project Cost Table ............. 16 2.2 Project Financing Plan ... ............... ** -.. 400........... 18 2.3 Procurement Arrangements ....... .. .......... 21 4.1 Financing Plan for Municipal Investment Programs, 1987-94 ...... 32 4.2 Structureof Municipalities'Recurrent Receipts and Expenditures 33 4.3 Financingof Water and SanitationDepartments Investments, 1987-94 ................................ *...*. 35 5.1 EconomicRates of Return of Area-Based Urban DevelopmentComponents ............................... 41 5.2 EconomicRates of Return of Water and SanitationComponents .... 42 Page No. ANNEXES 1. Municipal Engineering Services ........ e..................... 49 2. Detailed Cost Estimates ......... ................ ............. 64 3. Summaryof Arraugementsfor Implementation,Finance, and Cost Recovery .................................... 72 4. ImplementationSchedule/Action Plan ........................... 73 5. Estimated Schedule of Disbursements ........................... 89 6. Municipal Organization and Staffing ........................... 90 7. Housingand Urban DevelopmentCorporation Policy Statement..o... 105 8. Cukurova Municipalities Training Association Finances ......... 116 9. Project Review, Implementation, and Monitoring Unit ...o........ 117 10. Municipal Finances ......... ................................... 128 11. MunicipalWater and SanitationCompanies: Organization and Finance ....... .......... ................... 147 12. Housingand Urban Development Companies Finances .............. 166 13. IncomeDistribution, Affordability and PovertyAnalysis, Economic Analysis ............. o............................., 174 14. Contents of the Project File .................................. 182 MAP IBRD No. 20386- Turkey:Cukurova Urban DevelopmentProject This report reflectsthe findingsof a mission to Turkey from September28 to November8, 1986, comprising(for varying periods)F. Mitchell (economistand missionleader), M. Armaly (administrativeassistant), B. Assimakopoulos(engineer/planner), G. Graves (trainingspecialist), F. Johnson (urbanplanner), D. Jones (financialadvisor), G. Lee (consultant, municipalfinance specialist), and J. Pettigrew(consultant, engineer). - i - REPUBLIC OF TURKEY CUKUROVA URBAN DEVELOPMENTPROJECT STAFF APPRAISAL REPORT LOAN AND PROJECT SUMMARY Borrower: Republic of Turkey Implementing Municipalities, Housing and Urban Development companies (HUDCs), Agencies: Water and Sanitation departments (WSDs) in Adana, Mersin, Tarsus, Ceyhan, and Iskenderun, Iller Bank (IB), and Cukurova Municipalities Training Association (CMTA) Amount: US$120.0 million Terms: Seventeen years, including four years of grace, at the standard variable interest rate Onlending The Borrower would lend US$119 million to.IB, partly to finance the Terms: Project Review, Implementation, and Monitoring Unit (PRIMU) in IB and technical assistance and equipment for IB, and partly for project municipalities and their subsidiary WSDs and HUDCs. The Borrower would deduct a one time fee of 2.75 percent from disbursements. IB and sub-borrowers would repay on identical Ferms and conditions to the Bank loan, except in the case of funds for HUDOs, which would be repaid to IB, and by IB to the Borrower, approximately pro rata with HUDC land gales. Subborrowers would bear the foreign exchange risk. The remainder of project funds would be passed by Government to the Cukurova Municipalities Training Association (CMTA) on a grant basis. Project The project would support the Government's policy to strengthen provi- Description: sion of local services
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