Document of The World Bank Public Disclosure Authorized

Report No: 24488-LE

Public Disclosure Authorized PROJECT APPRAISAL DOCUMENT

ONA

PROPOSED LOAN

IN THE AMOUNT OF US$31.5 MILLION

TO THE

LEBANESE REPUBLIC

FOR THE Public Disclosure Authorized CULTURAL HERITAGE AND URBAN DEVELOPMENT

March 24, 2003

Finance, Private Sector and Infrastructure Mashreq Department Middle East and North Africa Region Public Disclosure Authorized CURRENCY EQUIVALENTS (Exchange Rate Effective December 2002) Currency Unit = Lebanese Pond (LL) LL 1 = US$ 0.000667 US$ I = LL 1,500

FISCAL YEAR January - December

ABBREVIATIONS AND ACRONYMS

AfD = Agence Fran$aise de Developpement CAS = Country Assistance Strategy CDR = Council for Development and Reconstruction DGA = Directorate General of Antiquities DGU = Directorate General of Urban Planning EA = Enviromnental Assessment EIB = European Investment Bank EMP = Environmental Management Plan EU = European Union GDP = Gross Domestic Product ICB = International Competitive Bidding IDF = Institutional Development Fund IRR = Internal Economic Rate of Return M&E = Monitoring and Evaluation MIU = Municipality Implementation Unit MOC = Ministry of Culture MOE = Ministry of Environment MOH = Ministry of Health MOIM = Ministry of Interior and Municipalities MOT = Ministry of Tourism MPWT = Ministry of Public Works and Transport NPV = Net Present Value O&M = Operation and Maintenance PIP = Project Implementation Plan PMU = Project Management Unit RAP = Resettlement Action Plan ROW = Right of Way SA = Social Assessment UNDP = United Nations Development Programme UNESCO = United Nations, Educational Scientific and Cultural Organization USAID US Agency for Intemational Development WTO = World Tourism Organization

Vice President: Jean-Louis Sarbib Countiy Director: Joseph P. Saba Sector Director: Emmanuel Forestier Task Team Leader: Mohammed Feghoul LEBANESE REPUBLIC CULTURAL HERITAGE AND URBAN DEVELOPMENT

CONTENTS

A. Project Development Objective Page

1. Project development objective 3 2. Key performance indicators 4

B. Strategic Context 1. Sector-related Country Assistance Strategy (CAS) goal supported by the project 4 2. Main sector issues and Government strategy 5 3. Sector issues to be addressed by the project and strategic choices 11 C. Project Description Summary 1. Project components 13 2. Key policy and institutional reforms supported by the project 14 3. Benefits and target population 14 4. Institutional and implementation arrangements 15 D. Project Rationale 1. Project alternatives considered and reasons for rejection 19 2. Major related projects financed by the Bank and/or other development agencies 21 3. Lessons learned and reflected in the project design 22 4. Indications of borrower commitment and ownership 23 5. Value added of Bank support in this project: 24 E. Summary Project Analysis 1. Economic 26 2. Financial 26 3. Technical 26 4. Institutional 27 5. Environmental 28 6. Social 30 7. Safeguard Policies 32 F. Sustainability and Risks 1. Sustainability 33 2. Critical risks 34 3. Possible controversial aspects 36

G. Main Loan Conditions 1. Effectiveness Condition 37 2. Other 37 H. Readiness for Implementation 38

I. Compliance with Bank Policies 38

Annexes Annex 1: Project Design Summary 39 Annex 2: Detailed Project Description 45 Annex 3: Estimated Project Costs 76 Annex 4: Cost Benefit Analysis Sumrnary, or Cost-Effectiveness Analysis Summary 80 Annex 5: Financial Summary for Revenue-Earning Project Entities, or Financial Summnary 86 Annex 6: (A) Procurement Arrangements 88 (B) Financial Management and Disbursement Arrangements 94 Annex 7: Project Processing Schedule 101 Annex 8: Documents in the Project File 103 Annex 9: Statement of Loans and Credits 104 Annex 10: Country at a Glance 106 Annex I 1: Environmental Management Plan 108 Annex 12: Social issues 128 Annex 13: Project Safeguard Issues - Resettlement Policy Framework and Action Plan 138 Annex 14: Municipal Sector 153 Annex 15: Directorate General of Antiquities - Capacity Building 174

MAP(S) IBRD No. 32343: Lebanon - Cultural Heritage and Urban Development Project LEBANESE REPUBLIC CULTURAL HERITAGE AND URBAN DEVELOPMENT Project Appraisal Document Middle East and North Africa Region MNSIF Date: March 24, 2003 Team Leader: Mohammed D. E. Feghoul Sector Director: Emmanuel Forestier Sector(s): Other industry (30%), Sub-national Country Director: Joseph Saba government administration (20%), Central government Project ID: P050529 administration (20%), Roads and highways (20%), Lending Instrument: Specific Investrnent Loan (SLL) General water, sanitation and flood protection sector (10%) Theme(s): Other urban development (P), Municipal govemance and institution building (P), Civic engagement, participation and community driven development (S) Project.Financing Data [X] Loan [ ] Credit [ Grant [ ] Guarantee [] Other: For Loans/Credits/Others: Loan Currency: United States Dollar Amount (US$m): 31.5 Borrower Rationale for Choice of Loan Terms Available on File: El Yes Proposed Terms (IBRD): Fixed-Spread Loan (FSL) Grace period (years): 6.5 Years to maturity: 15.5 Commitment fee: 1% on principal amount Front end fee (FEF) on Bank loan: 0.00% Initial choice of Interest-rate basis: Type of repayment schedule: pq Fixed at Commitment, with the following repayment method (choose one): customized £1] Linked to Disbursement

Financing Plan (US$m): - Source- Local Forelgn fotal, BORROWER 6.56 0.00 6.56 IBRD 15.70 15.80 31.50 FRANCE: FRENCH AGENCY FOR DEVELOPMENT 5.40 5.60 11.00 FRANCE, GOV. OF (EXCEPT FOR M1N. OF FOREIGN 0.40 0.60 1.00 AFFAIRS-MOFA) ITALY, GOV. OF (EXCEPT FOR DEV. COOP. DEPT. - MOFA) 5.00 5.00 10.00 Financing Gap 0.63 1.20 1.83 Total: 33.69 28.20 61.89 Borrower: GOVERNMENT OF LEBANON Responsible agency: CDR/DGA/MUNICIPALITIES OF BALBECK SAIDA BYBLOS TRIPOLI TYRE Address: Tallet Al-Saray, P.O. Box 116/5351, Beirut, Lebanon Contact Person: Mr. Jamal A.R. Itani, President Tel: 961-1-981-375 Fax: 961-1-981-252 Email: Contact Person: Dr. Wafa Charafeddine, Project Manager Tel: Fax: Email: [email protected] Estimated Disbursements ( Bank FYIUS$m): FY 2004K, 2005 2006 2007 2008 -2009 Annual 3.60 10.36 7.99 5.94 3.21 0.40 Cumulative 3.60 13.96 21.95 27.89 31.10 31.50 Project implementation period: Expected effectiveness date: 10/01/2003 Expected closing date: 12/31/2009

-2 - A. Project Development Objective

1. Project development objective: (see Annex 1) The proposed Cultural Heritage and Urban Development project (CHUD) has two key development objectives: (a) to create the conditions for increased local economic development and enhanced quality of life in the historic centers of five main secondary cities; and (b) to improve the conservation and management of Lebanon's built cultural heritage.

These development objectives apply to five key secondary cities (Baalbeck, Byblos, Saida, Tripoli, and Tyre) which still show serious effects of damage, decay, poverty and economic stagnation resulting from the civil war. The cultural heritage assets of these five cities are of such outstanding worth that they must be integrated into municipal development plans and strategies for local economic growth and poverty alleviation. The CHUD objectives therefore reflect the recognition of the intrinsic value of built cultural heritage and its importance as an asset for sustainable economic and social development. By setting the two interrelated objectives the project aims to harvest the economic value of cultural heritage, capture the synergy between cultural heritage and urban development, and integrate cultural heritage preservation, local economic development, and poverty alleviation. It will also raise the awareness and appreciation of local inhabitants of the value of cultural heritage.

The project inscribes into the World Bank strategy in Lebanon and is in line with the overall Bank strategy for the Middle East and North Africa (MENA) Region, having as a goal to contribute to poverty reduction and build a climate for investment, jobs and sustainable growth. It is also consistent with the MENA strategy on Cultural Heritage. Along with the ongoing municipal, infrastructure and social projects, it represents an important component in the Bank's assistance strategy to promote regionally balanced and equitable growth in Lebanon.

The project is expected to have the highest impact in the following areas of focus of the MENA Strategy: - private sector development and employment creation, through enabling favorable and well regulated environment for private sector investments in disadvantaged neighborhoods; and - public sector efficiency and governance, through improving the quality of management of the heritage sector, and most importantly, of participatory urban rehabilitation, led by the municipal authorities.

It will also contribute to the implementation of the strategy in: - education and training, by stimulating demand for skilled labor, specializing in restoration and rehabilitation of built heritage, in arts and crafts, and culture oriented services; - water management, by coordinating with other Bank projects and international donors to resolve water and waste water related issues within the historic urban cores and on heritage sites; and - gender, by encouraging neighborhood provision of educational, medical, and recreational facilities for women and girls, through re-use of historic buildings and rehabilitation of traditional urban fabric, as well as providing employment and training opportunities through community-driven actions.

-3 - 2. Key performance indicators: (see Annex 1) The principal outcome and impact indicators, selected for measuring and monitoring progress towards the achievement of the project's development objectives are as follows: o Support to local development and enhancement of quality of life in the historic centers of five main secondary cities is measured by: (a) increased culture, tourism and heritage related local employment, facilitated by the municipalities; (b) increased number of rehabilitated histonc properties and public spaces in use for communal and tourist purposes; (c) rising property values in and around areas of historic and cultural importance.

o Inprovement of conservation and management of Lebanon's built cultural heritage overall and in selected archeological sites and historic city centers will be measured by: (a) increased employment of professionals in conservation and management of heritage; (b) increased efficiency of archeological site and urban protected zones management; and (c) increased rehabilitation activities in historic urban cores in compliance with approved regulations.

B. Strategic Context 1. Sector-related Country Assistance Strategy (CAS) goal supported by the project: (see Annex 1) Document number: R97-256 Date of latest CAS discusslon: December 4, 1997 The strategic objectives of the CAS include: (a) rehabilitation and expansion of infrastructure, institutional development; (b) environmentally sustainable development; and (c) upgrading human resource base and addressing poverty.

The proposed operation is directly inscribed in the CAS as "rehabilitation and preservation of Lebanon's cultural heritage and the development of sustainable and environmentally sound tourism" and is included under the base-case lending program. It also directly supports the CAS objectives of poverty alleviation, namely " target underprivileged areas through the provision of small-scale urban and rural infrastructure, upgrading of community infrastructure."

The project pursues the CAS objectives by addressing the specific needs of local communities in historic urban cores of the five rapidly expanding secondary cities. Dense and predominantly poor old town centers are often bypassed by infrastructure rehabilitation and service provision projects. Environmentally sustainable tourism, and particularly cultural tourism, in Baalbeck, Byblos, Saida, Tripoli, and Tyre will also be promoted as a potential source of growth for these culture-rich local communities.

-4 - 2. Main sector issues and Government strategy: Lebanon has a rich and diverse cultural patrimony inherited from many civilizations that existed on its territory. It is a small and highly urbanized country: 90% of its 4.3 million people live in urban areas. Most of Lebanon's intemationally renowned patrimony is found in the urban areas, including the very cores of historic towns. Due to pressures of modem development, postwar reconstruction and lack of means and mechanisms for patrimony preservation, the unique built cultural heritage is suffering from neglect and is progressively lost to modem constructions.

Lebanon is known for its active cultural scene, full of events, festivals, and exhibitions. However, the loss of historic urban fabric and singular monuments in the secondary cities is threatening the survival of many traditions, skills and activities practiced in an authentic urban setting. Residents and visitors rarely perceive archeological heritage, partially exposed, but largely buried under the layers of continuous town rebuilding, as integral part of history and development of the modem towns. Archeological sites are spatially and/or socially isolated from the neighborhoods in their vicinity.

Main sector issues The analysis of the main sector issues synthesizes the findings of studies carried out as part of project preparation, other available publications, and interviews and observations during field visits. Main sector issues can be summnarized as follows: - Low contribution of cultural heritage to local and national socio-economic and civic development. - Physical and environmental degradation of cultural heritage assets. - Outdated and under-funded sector institutions.

(a) Low contribution of cultural heritage to local and national socio-economic and civic development. Very little economic benefit is derived presently by local residents or municipalities from the rich cultural assets that are found within their communities. Municipalities are not able to program and implement infrastructure investments that would stimulate private sector initiatives to create jobs, and ensure an additional source of revenues coming from fees, property and professional taxes levied on productive operation of rehabilitated and re-used historic properties. Local commercial, social and recreational activity is largely marginal or irrelevant to the cultural heritage environment, resulting in a sense of opposition between local socio-economic development needs and the heritage preservation and tourism industry. Most tourism revenues are either captured by foreign tour operators, or by a small group of Beirut-based agencies and hotels.

Underdeveloped cultural tourism industrv About 333,000 tourists visited the archeological sites of Lebanon in 2000, a threefold increase since the beginning of the 90s, with a quarter of tourists visiting Baalbeck. While half of the revenue from entrance fees to major archeological sites are transferred to the local municipal budgets that benefits neither the preservation and presentation of the sites nor the quality of life in the adjacent communities. Municipal capacity to upgrade the level of basic service provision is severely constrained by low cost recovery and low incomes in urban cores, making it difficult, without external help, to implement a comprehensive urban rehabilitation project or promote environmentally sustainable tourism. With the exception of Beirut and Byblos, there are few opportunities or incentives for visitors to remain for more

- 5- than a few hours on the archeological sites, or to prolong and enrich their trips by exploring the urban life and historic monuments in the authentic urban cultural setting.

Most archeological and historic sites are poorly presented, and lack information and orientation for tourists. Often, they represent significant safety hazards because of unstable or crumbling structures and unregulated circulation. They lack basic amenities, such as visitor parking, shaded areas, seating, and toilets. In urban areas, the condition and access to cultural assets are further jeopardized by traffic congestion, chaotic parking, omnipresence of solid waste and wastewater, and in some cities, degradation of the coastal zones. Tourist infrastructure is poorly developed. Accommodation of all types is scarce. Despite rich culinary traditions, historic cores lack restaurants and cafes of all grades where visitors can stop while circulating in the old town. Traditional activities and artisan workshops are dispersed, poorly organized and promoted, and need assistance to improve the competitiveness of their products on the regional market.

Local guality of life not benefiting from cultural heritage assets The development of culture-rich Lebanese cities into "cultural cities" with their own "cultural industries" could provide a new engine for their social and economic development and have a significant impact on life quality. This potential is, however, largely untapped with the exception of Beirut. It presupposes a strong local leadership and public awareness, and a certain level of basic services in place as a precondition for the cultural industries to take off.

Historic towns still host a number of traditional productive and commercial activities that go hand in hand with the built environment and that are characteristic of the souqs: spices, perfumes, soaps, jewelry, pottery, sweets, fabrics, furniture and the like. However, as the commercial life of the city centers becomes progressively impoverished, such activities tend to be crowded out by the resale of banal imported commercial goods. No new modem cultural activities are encouraged and promoted in those parts of towns, despite unique historical settings and low property values and rents, usually attractive to young artists and start-up cultural businesses

The quality of life of the local population, and especially women and of children and young adults of both sexes is further reduced by lack of green areas and open public space, and by the predominance of decaying historic buildings that cannot, unless rehabilitated, host modem communal and civic services, like medical facilities, retail banking, cinemas, cultural centers or even recreational and sports facilities.

Finally, there are few channels by which the populations of historic city centers are consulted or informed about the planning or development issues of their areas. Urban populations primarily view the historic parts of the city either as a neglected area that they wish to leave, or an arena for the interplay of more powerful interests about which they are poorly informed and over whose actions and decisions they have no influence.

(b) Physicaland environmentaldegradation of cultmral heritage assets. Lebanon's main built cultural assets can be divided into three groups: archeological sites, historic monuments, and old town centers. Both archeological sites and urban heritage areas suffer from poor maintenance and management, buildings and monuments need structural repair and treatment of surfaces. Presentation of sites that would maximize their educational, tourist, and social value is almost non-existent. Air pollution, sewage overflows, visual intrusions and vehicular congestion are the main environmental problems in and around the main heritage areas.

-6 - Archeological sites The archeological sites have had a very low level of upkeep and overall management for over a quarter of a century. For example, archeological excavations in Tyre, one of Lebanon's five World Heritage Sites, have not been completed since the 70s. Valuable archeological remains are left exposed to ambient effects and unregulated human presence, which together with time accelerate deterioration of unearthed foundations and mosaics.

While the famous Qala'a archeological site in Baalbeck receives around 100, 000 visitors a year - about a quarter of all tourism to Lebanon - the visitors wander freely on the fragile site. Richly decorated stones are scattered unprotected and are losing surface detail. There are no guides and large parts of the site are not presented to the visitors, as they have been excavated but never documented and explained. The still standing structures of the temples represent significant visitor safety hazards.

Being integral parts of the urban areas, the sites are threatened by wastewater that, in case of Baalbeck, pours into the archeological area untreated. The international music festival at its present location is damaging the stones and structures on the site through high-impact scaffolding, vibration and human presence. As a general rule, modem constructions and infrastructure are encroaching on the existing archeological sites and are expanding over the areas that are still held as archeological reserves for future study.

Historic monuments Due to religious and social diversity of the Lebanese society, there is a rich variety of historic monuments dotting the historic urban cores: mosques, churches, madrassas, hammams, traditional guesthouses, fortresses and ramparts, villas and apartment buildings.

Places of religious worship are usually best maintained as they are still being used by the communities for the same purposes they had been originally built. At the same time, with the exception of some notable examples of local preservation and rehabilitation, traditional communal facilities such as most madrassas, khans, and some hammams are abandoned due to the loss of their original function in the local life, and often are seriously degraded, if not ruined. When used, they mostly accommodate squatters, warehouses or workshops. The same holds true for the old familial residencies, usually abandoned by their owners for lack of money to upkeep the residence or due to loss of the value and appeal of the location. If these historic monuments are to be saved from destruction, they need to be rehabilitated and adapted to carefully chosen new uses that will bring them into the field of the local community life.

Albeit imperfect, but a significant inventory of historic properties exists in Lebanon since the 1930s. Protected monuments are listed in the National Heritage Inventory, that in 2001 contained about 486 properties. In the particular case of Tripoli, the municipality asked to designate a historic zone based on the census of protected monuments. As a consequence, 128 buildings were listed between 1994 to 1996, out of which 75% are in the specially designated historic zone. Unfortunately, listing and even designation of the monuments or groups of buildings is far from producing the desired effect, and most protected monuments continue to be in unsatisfactory condition, either closed to the public or squatted and used for storage. Local rehabilitation efforts have sometimes resulted in the sharpening of the divide between local community life and international cultural and tourism promotion.

-7 - Old town centers Old town centers, despite rich history and unique identities, are witnessing rapid degradation of the built stock and urban environment. For example, in the old town of Safda, home to 14, 000 people, 77 % of buildings are in bad condition and in need of conservation actions; in the old town of Tripoli, home to 16, 500 residents, 48% of buildings are in bad or ruinous conditions, while the other 46% require some rehabilitation, including facade work. Due to lack of context-sensitive urban regulations, construction activity in the historical centers leads to the loss of their unique character. Unregulated replacement of old urban fabric by modem constructions, street-widening, together with collapsing old buildings is eroding the stock of heritage buildings and changes the traditional use of space within the historic areas. The deplorable condition of the built stock is a reflection of the underlying socio-economic problems of the historic urban spaces. Lack of economic opportunity for the local residents generates a vicious cycle of progressive impoverishment and degradation of the once most vibrant and culture-rich urban areas.

Deteriorated environmental quality of cultural heritage sites Given their complex street pattem and marginal role in urban economies, city centers also suffer from lack of adequate environmental amenities, such as sanitation, drainage, solid waste management. Some archeological sites, such as the Roman quarry in Baalbeck, are used as solid waste dump-yards. Fragile coastal zones, rich with marine archeological remains, like in Tyre, are exposed to dumping and illegal uses. Priority environmental measures include: land use planning sensitive to protection of the natural setting of archeological sites; creation of green spaces and public parks and gardens, coastal zone treatment in old port cities; traffic management; and waste and waste water management.

(c) Outdated and under-funded sector institutions. (See Annex 15) Institutional and budgetary obstacles in operation of the institutions responsible for heritage preservation and rehabilitation are exacerbated by the diversity of cultural assets - archeological sites, mosques, churches, madrassas, hammams, historic palaces, traditional resthouses, residential housing, and supporting infrastructure, and plural ownership pattems - state, municipal, religious, and multiple private ownerships. The regulatory capacity of the public sector has to be strengthened to provide guidelines and an enabling legal environment to stimulate private sector sponsorship of cultural heritage preservation.

While the Municipal Law of 1977 gives many rights to regional and municipal authorities, they lack resources and skills to address their nationally and intemationally important historic assets either directly, or through heritage conscious urban development policies. The local councils elected in 1998 after a long hiatus in local representation, are faced with many challenges, including achieving some level of financial self-sufficiency and building the local revenue base from property and professional taxes. Some municipalities are taking initiative to beautify the most publicly significant parts of their towns as a token of their commitment to urban rehabilitation and post-war revival, and actively support the concept of historic preservation zones in their urban master plans.

The Urban Code of 1962 contained a requirement to elaborate detailed plans and regulations for historic sites. Its revision in 1983 preserved this requirement and stipulated that the plans and detailed regulations can delimit districts which have to be protected or developed "for aesthetic, historic, or ecological reasons"; their character should be preserved during restoration and construction, and special building regulations should be introduced. Specific preservation districts will be then integrated into urban master plans. In practice, there exist only a few urban Master Plans that delimit the historic areas. Moreover, with the exception of the special case of the center of Beirut, and a few pilot studies, there are no detailed plans for preservation of these historic areas.

- 8 - The laws governing conservation of cultural properties are outdated and do not cover the wealth of the country's patrimony; they are poorly enforced, and few incentives for preservation are built into the legal system. The main laws relevant to heritage protection date back to the Antiquities Law of 1933 and to the Urban Code of 1983. The termn "antiquities" stands for a "historic monument " built either prior to 1700, or of historic or artistic public interest, if built later. The law is not taking into consideration the evolution of the concept of heritage as recorded in the 1972 UNESCO Convention.

The procedures of property designation (classement) and property listing (inscription) on the National Heritage Register are the two currently available operational tools for protecting historic monuments. Since 1936 only individual important historic monuments were designated and listed. In 1973, the souqs of Byblos and Zouq were listed, and in 1990-1997 groups of private buildings were added on the National Register for the first time, mostly in coastal cities. However, mechanisms of designation and listing are not well adapted to protecting groups of buildings due to the need to compensate multiple private owners and other serious financial repercussions for the protecting authorities, and, therefore, have not been effective.

The cultural heritage administration in Lebanon is legally vested in the Ministry of Culture (MOC), created in 1993, and specifically in the Directorate General of Antiquities (DGA). The DGA was originally created in 1933 under the Ministry of Education and then transferred to the Ministry of Tourism (MOT). Since 1993, the DGA is part of MOC. At the same time, a Directorate for the Operation of the Archeological Sites and Museums (DOAM) was created within MOT. Thus, the functions of administration and safeguarding of cultural sites are entrusted in the DGA of MOC, while promotion is vested into the DOAM of MOT.

In practice the responsibilities are not clearly assigned. Security and safety issues, provision of lighting, landscaping, information centers, site interpretation, visitor facilities and animation are not distributed clearly, are under-funded, and consequently are often non-existent. The DGA is understaffed and has a budget far from sufficient to cope with the upkeep and management of properties under its direct administration. It is constrained by its administrative status in attracting sufficient qualified staff at competitive remuneration, raising funds, executing large projects, and subcontracting conservation work to private sector.

When the discussion of patrimony is extended beyond the DGA's archeological, monumental, and expropriated real estate property to include a broader concept of the urban historic cores, complete with monuments in municipal, religious, and private property and use, and the whole historic living urban neighborhoods, the management authority appears even more dispersed. Urban planning authorities, namely the Higher Council of Planning and the Directorate General of Urban Planning (DGU) of the Ministry of Public Works, are responsible for producing and approving urban master plans in close cooperation with the DGA (for protected zones), and concerned municipalities. While DGA has no urban planners on board and hence has no capacity to elaborate protected and special zone regulations, newly elected local authorities dispose of very limited resources and technical capacity to implement these plans and enforce specific regulations pertaining to protected properties.

The share of the DGA in the national budget is below 0.1 percent (about US$5.15 million in 2001 including US$1 million for expropriations), but the mobilization of non-governmental funds is on the rise. In 1996 the National Heritage Foundation was established and is entitled to accept grants and private contributions. It has renovated the National Museum and handed it over to the DGA, once completed in 1998

-9- There are also some active private associations such as the National Association for the Preservation of Patrimony and Historic Residences (APSAD); the Hariri Foundation (created in 1983) and Audi Foundation (created in 1995), both based in Saida; the Ren6 Mouawad Foundation in Tripoli. All of them are active in preparing and executing rehabilitation projects.

Government's strategy

Insufficient institutional capacity and limited funding of both the municipal and cultural sectors are seen as the major constraints to development and implementation of a comprehensive strategy for cultural heritage preservation and management by the Government.

In 1995 the Ministry of Tourism, obtained with the assistance of UNDP, France and the World Tourism Organization (WTO), a comprehensive plan for the reconstruction and tourism development that includes cultural heritage rehabilitation and promotion of cultural tourism to a number of historic and archeological sites, including the five CHUD project cities.

MOC, as a first step of the cultural heritage sector reform, has initiated a process of updating its legal framework. Eight laws and their related decrees are at various stages of preparation and approval. Given the extent of the preservation and rehabilitation activities, required at a national scale, the Government is contemplating cooperation with other stakeholders that have technical expertise, private sources of financing and ability to organize public participation.

The new law on patrimony, currently under preparation, strives to provide incentives to public-private partnerships by (a) clearly defining the legal rights and obligations of historic property owners and corresponding compensations due, and (b) reducing time and value lost during bureaucratic approval processes.

The Draft Law on organization of the Ministry of Culture proposed to restructure the Ministry of Culture and provide a new framework in which a reformed DGA is going to perform its duties. The proposed structure for the DGA, renamed Directorate General of Archeology and Built Heritage, is as follows: at the central level, Directorate of Archeological Excavations, Directorate of Built Heritage, and Directorate of Archeological. The number of regional directorates is being discussed and dedicated site management structures for the largest archeological sites (Baalbeck and Tyre) are being proposed.

The set of new laws, however, has not yet been fully discussed by the interested parties, and according to the international expert reviews, is not free from internal contradictions and gaps.

To date, a number of small-scale rehabilitation activities have been carried out all over Lebanon on a pilot basis. However, they have not translated into an overall improvement of the tools and mechanisms of cultural heritage preservation, especially in the case of built cultural heritage of historic secondary cities.

At the same time, there is a growing awareness of the role the municipalities should play in promoting local economic development and improving the local quality of life. Decentralization reforms in Lebanon, aimed at accruing the capacity and responsibilities of municipalities are assisted by a large number of intemational donors. The municipal sector has been benefiting from substantial technical assistance programs of the European Union, USAID, and the World Bank (First Municipal Infrastructure Project, Emergency Reconstruction and Rehabilitation Project, Administration Rehabilitation Project, and Community Development Fund Project). Support is directed to the Ministry of Interior and Municipalities, and to the municipalities themselves. Among other things, the government is cooperating

- 10 - with the EU in improving tax collection at the local level, establishing solid waste collection (e.g. Tyre), and encourages twinning of municipalities in Lebanon and Europe (e.g. Marseille and Tripoli). The USAID program covers 80 municipalities. Among its main components is the development of automated procedures for issuing municipal permits and licenses and improving management capacity of the municipalities. The World Bank First Municipal Infrastructure project aims at the immediate rehabilitation of selected basic municipal infrastructure and reforming the system of municipal finance to enable municipalities to take charge of their local infrastructure maintenance and rehabilitation needs.(see Annex 14 on more information about the municipal sector and the five project municipalities).

3. Sector issues to be addressed by the project and strategic choices: The Government has asked the World Bank for assistance in scaling up dispersed urban heritage rehabilitation efforts to a national level by assisting major secondary cities, and leveraging investment and technical assistance from other donors and UNESCO. The project intervenes at the level of the historic cores of the five secondary cities, that all suffer from the main sector issues outlined above: low contribution of cultural heritage to their local socio-economic development and civic life, physical and environmental degradation of their archeological treasures, historic buildings and spaces, and low institutional capacity of major stakeholders.

Given the fact that the project resources and duration are far from sufficient to comprehensively address the problems of physical and enviromnental degradation of Lebanese cultural assets and deeply entrenched institutional weaknesses, the project aims at tackling the main bottleneck in the performance of the sector, that is low contribution of cultural assets to the national and local development, and strives to practically demonstrate the enormous potential of diverse cultural assets for the local economic and civic development in the five major secondary cities of Lebanon.

Strategic choice 1: Initiate long-term urban rehabilitationprograms for historic urban cores. The strategic choice was made to assist selected municipalities launch long-term programs of historic city center rehabilitation and preservation in cooperation with the national authorities. This comprehensive approach includes: - equipping each of the five municipalities with a vision of their cities as cultural places with own cultural industries, - providing cities with the urban planning tools and financial resources to start implementing this vision, - providing central institutions with financial resources and technical assistance to address the preservation and presentation of archeological treasures as part of the cultural vision of the cities and urban development; - working with the local population to achieve shared vision of cultural cities and maximize local residents' ability to derive benefits from the new economic and social opportunities. - targeting investments to achieve a higher quality of public spaces and public services to benefit the local residents and visitors, - piloting the rehabilitation of historic private housing stock as a main productive asset of the current residents of the city. Strategic choice 2: Channel resources to municipalities and leverage infrastructuresinvestments aimed at improving the quality of local life and economic opportunity. The project gives priority to investments that would directly contribute to improving the quality of life for the local communities, while at the same time making historic cities attractive to tourists. Such investments will include: decongesting and improving access to the central areas, re-designing the interface with the areas of heritage value and improving circulation within the urban fabric, bringing the conservation and presentation of selected archeological areas to international standards expected by visitors, rehabilitating historic buildings for affordable housing and in order to accommodate cultural and small business activities for the local community members. These benefits of the project, along with growth of local employment during and after project implementation, will increase the ownership of the project among the local community members, which will take its achievements further. Given the range of resources available or planned for community-level initiatives, the project's strategic choice was not to duplicate these initiatives but to establish a mechanism by which the municipality could assist citizens and local communities to access these resources (Community Development Fund, European Union Social Fund, micro-credit schemes, bilateral and NGO initiatives). For upgrading infrastructure networks in the 5 cities beyond circulation, access and parking improvements in the old towns, the project will work closely with CDR and its international partners. In the cases of Tripoli and Tyre, the project will coordinate its activities with the programs of other international donors (AfD, JBIC, EIB) to improve urban transport, waste water and water services. In Baalbeck, it will coordinate with the water and wastewater project, financed by the World Bank.

Strategic choice 3: Encourage communications and learning. The project will develop and implement a communications strategy in the field of local public relations, learning and promotion of cultural activities. The populations in and around the sites need assurance that the project will be implemented in their interests. The project will enhance their attachment to the place, increase their appreciation of its value, and motivate them to participate in its implementation, and will assuage possible fears of cultural invasion or alienation caused by an influx of tourists, so that visitors may be both welcomed and educated. It will promote systematic listening and learning about local institutions and cultures, and about the processes of project implementation and its outcomes, and it will assist the cities to project their identity which consists not only of its physical heritage, but also of the living cultural heritage and creativity of its inhabitants, in order to attract investment in cultural tourism and enhance the local economic base. This effort is needed to bring more visitors, increase and widen their demand for goods and services, and attract investment in cultural tourism. The project will encourage exchange of information and communications expertise between the five municipalities.

Strategic choice 4: Reinforce critical functions of sector and urban planning institutions and build municipal capacity. By reinforcing the capacity of DGA, strengthening heritage related functions of DGU, and the capacity of technical units of the municipalities, the project will contribute to introducing the principle of participatory planning of heritage conservation and management, private-public partnerships in heritage preservation, promoting heritage-related local economic development especially for economically disadvantaged areas and groups, and building awareness in the local communities of their shared responsibility for the preservation of local heritage. To the extent possible, the project will support the Government in its reform of the cultural heritage sector efforts in formulating, designing, and initiating the implementation of a new regulatory, legal and administrative framework for the Lebanese cultural heritage.

- 12 - C. Project Description Summary 1. Project components (see Annex 2 for a detailed description and Annex 3 for a detailed cost breakdown): The proposed project has three components: (a) rehabilitation of historic city centers and urban infrastructure improvements; (b) archeological sites conservation and management; and (c) institutional strengthening. O Component 1 - Rehabilitation of Historic City Centers and Urban Infrastructure Improvements. These activities will be carried out in and around the old towns of the five project cities of Baalbeck, Byblos, Sauda, Tripoli and Tyre. This component includes: (a) upgrading of and improvements to public spaces; (b) conservation and adaptive reuse of monuments and historic buildings; (c) support to cultural heritage related productive and commercial activities; (d) support to the rehabilitation of the housing stock, (e) enforcement of city center zoning regulations; (f) traffic and parking improvements for historic centers; (g) protection and landscaping of coastal and green areas; and (h) studies for urban redevelopment adjacent to historical cores. In the case of Tripoli and Tyre, they will be implemented in conjunction with a parallel project addressing the deficiencies of water and wastewater infrastructure. o Component 2 - Archeological Sites Conservation and Management. These activities will take place primarily in Baalbeck and Tyre, two of the main archeological sites of Lebanon, both inscribed on the UNESCO World Heritage list. Additional activities will take place in Tripoli. This component includes the following complementary activities: (a) research and documentation; (b) conservation of surfaces and structures; (c) site presentation to visitors; d) site management; and e) further archaeological studies.

• Component 3 - Institutional Strengthening. This component includes the following complementary technical assistance and capacity building activities: (a) management of historic centers by municipalities and DGU; (b) strengthening municipal support to local economic development and communications; (c) reform of the cultural heritage institutional and regulatory framework; (d) restructuring and strengthening of the DGA; and (e) CDR project management.

Indicative /aof Bnk. Oof Costs ~~~financn Bak'- ______,, ______.______(US$M ) Total (US$M ) financing 1. Rehabilitation of Historic City Centers and Urban 42.59 68.8 23.95 76.0 Infrastructure Improvements 2. Archeological Sites Conservation and Management 13.66 22.1 4.08 12.9 3. Institutional Strengthening and Project Management 5.33 8.6 3.17 10.1 0.0 0.00 0.0 Total Project Costs 61.58 99.5 31.20 99.0 Interest during construction 0.00 0.0 0.00 0.0 Front-end fee 0.32 0.5 0.32 1.0 Total Financing Required 61.90 100.0 31.52 100.0

- 13 - 2. Key policy and institutional reforms supported by the project: The main national policy contributions, expected from the project, are as follows:

Support to the Government strategy of regionally balancedgrowth. The project will improve municipal management of historic urban cores in 5 secondary cities in close cooperation with urban planning authorities through assisting the five municipalities in acquiring the administrative and technical skills to better manage their cultural heritage assets and to ensure their on-going upkeep and productive use for the benefit of the local residents.

Assistance to the legal and administrative reform of the cultural heritage sector. The DGA would receive assistance in restructuring itself into a modem and efficient administration to effectively manage the national cultural heritage assets, staffed at the appropriate level, and empowered to enter into practical agreements with other parties and expand its revenue-base. In parallel, outdated legislative framework will be modernized to answer the current challenges of cultural heritage conservation and to recognize its interconnection with urban development.

The project is not setting overly ambitious goals for its impact on the practice of urban planning and heritage conservation in Lebanon. The scope of project's physical works is almost exclusively limited to the agreed perimeters of the 5 historic urban cores, including the archeological sites in the case of Baalbeck and Tyre. The direct counterparts are the 5 municipalities, while the DGA and DGU are involved in approval and validation of all urban planning decisions. By bringing the reformed DGA, DGU, and the concerned municipalities together and through ongoing monitoring of their collaboration during project implementation, the project will pilot approaches to participatory urban planning in Lebanon, conscious of heritage conservation. By establishing small municipal implementation units to promote initiatives in local economic development, and communication, the project will strengthen the ability of the municipalities to leverage for its citizens direct economic benefits and further investments in cultural heritage (Section 4 below).

3. Benefits and target population: The benefits of the CHUD project can be summarized in three broad categories: economic, social and institutional.

Economic. Urban regeneration, including improved infrastructure, will improve the local quality of life and the experience of tourists. The Lebanese economy in general would benefit from increased value added in tourism and cultural sectors, as well as creation of a market for a large segment of real estate that is currently illiquid, namely derelict built stock in historic cores. New labor market segments will be created or stimulated as well: mostly private sector jobs or self-employment in activities directly and indirectly related to rehabilitation and restoration work, and goods and services for tourism and cultural industries. The marginal benefit of new activities will be increased by creating new local employment opportunities and stimulating local economic initiatives in locations where unemployment is higher than the national average.

Social. The tangible social benefits include improved quality of life through urban environmental upgrading, and the creation or enhancement of public spaces and the diversification of their uses for community purposes, particularly in the deteriorated urban cores and margins of historic sites; improved housing conditions and community service facilities in neglected areas; improved conditions for commerce. The intangible social benefits include the reintegration of cultural heritage sites, presently

- 14 - zones of neglect, marginalization and poverty, into the larger economic and social life of the city. Through safeguarding the diversity and richness of the cultural heritage, and improving its presentation and accessibility, and through support to associated local enterprises, the project would enhance local appreciation of the multiple values of that heritage for its own sake, and as a source of enjoyment and mutual benefit for local residents and visitors.

Institutional. Improved management of cultural heritage will have a long-term impact on how scarce public resources are used in order to safeguard the irreplaceable historic assets, and to derive economic benefits from the cultural sector as a whole, by creating an improved framework for stakeholder interaction. Municipalities will particularly benefit from having an enhanced and recognized role and capacity to participate in cultural heritage development. An experimental component will test and learn from selected small-scale initiatives to promote public-private investment partnerships in historic housing upgrading.

The benefits will accrue to a large number of people that come in contact with the heritage assets on a daily basis (local residents), periodically (people recurrently visiting the sites for famnily, business, or recreational reasons), and tourists, that visit the place occasionally. Local residents spend the longest time in contact with the heritage that for them represents potentially more of a productive asset than of a consumption item, which is the tourist perspective. Therefore, the primary target population to benefit from this project is the local population, specifically the low-income residents of the historic urban cores. The local population in major secondary cities amounts to: in Baalbeck about 60,000, historic center 11,000; Byblos about 150,000, old town 15,000; Saida about 150, 000, old town 14,000; Tripoli about 500,000, old town 16,500; and Tyre about 50,000, old town 10,000.

4. Institutional and implementation arrangements: The main institutions involved in the project implementation are:

Council for Development and Reconstruction (CDR). CDR is a public authority established to be the Government's arrn for planning and implementing projects for economic development and for rehabilitation and reconstruction of public infrastructure. To ensure effective and timely implementation, CDR was granted exceptional authority and was exempted from laws and regulations applicable to the public administration; it is subjected to special control regulations specified in its own Law. CDR is playing a major role in the renewed effort to provide the country with an overall development vision through a regional planning exercise that will, among other things, highlight the economic development potential of particular areas and cities. CDR is in charge of planning and implementing major infrastructure projects that will soon provide cities with much-needed basic urban services, such as water supply, sanitation and waste water treatment, and solid waste management.

Municipalities. After about 30 years of appointed municipal authorities, municipal councils were directly elected in June 1998. Despite their limited resources, the municipalities have an important role to play, and it is essential for them to be fully involved in the planning and design of all cultural heritage and urban development investments, and in turn to involve and motivate their local communities. Small municipal implementation units in the five cities will coordinate local initiatives, participate in and serve as a bridge between the public and the project.

Directorate General of Antiquities (DGA). Under the Ministry of Culture (MoC), the DGA has the mandate to protect, conserve and preserve the national heritage, including maintaining sites and historic buildings, overseeing and undertaking research and excavations, and publishing. Legislation governing the sector dates back to 1933 and consequently requires updating. DGA is represented in each region

- 15 - (mohafaza). It has very limited resources and relies widely on supports from UNESCO and a wide network of cooperating universities and international, national, and local organizations.

DirectorateGeneral of Urban Planning (DGL) of the Ministry of Public Works. DGU is responsible for preparing urban land-use zoning master plans in all Lebanese municipalities. Its current focus is on secondary cities, where most of the cultural heritage is located. Greater coordination is needed to ensure, particularly with regard to key cultural heritage cities, that these master plans include special land use and building regulations to preserve their historic centers.

Project's Oversight. To address the need for coordination among the numerous agencies and institutions involved in cultural heritage and urban development activities, an interministerial Committee for the Conservation of Historic Cities was established during project preparation It is supported by the CDR and includes representatives of the Ministry of Culture, Ministry of Interior and Municipalities, Ministry of Finance, CDR, DGA, MOT, DGU; and the municipalities of Baalbeck, Beirut, Byblos, SaYda, Tripoli and Tyre. At the level of the Historic Cities, Local coordination committees are being established by the Minister of Culture, such as the "High Committee for the Conservation of the Urban and Historical Heritage of Old Tripoli" established in 2002.

Executing Agency:

CDR would be in charge of the overall project management, and for this purpose it will create a Project Management Unit (PMU). Given its management role, PMLU has a simple organizational structure and consist of a limited number of qualified professionals: a Project Manager (CDR Staff), a Project Coordinator (PMU Staff), and three other professionals: a Municipal Engineer (Civil Engineer) with a proven expertise in the use of Project Management tools/software and experience in public procurement, an Architect-Planner with conservation expertise, and a Social Scientist. CDR will designate one financial officer from its Finance Department to process all project's financial transactions and prepare all necessary financial reports required by the IBRD and the other project's co-financiers. The PMU may have additional technical, financial and support staff. All posts have clear Terms of Reference (ToRs) and measurable performance indicators that are reviewed annually. Staffing and detailed terms of reference for the PMU can be found in the Project Implementation Plan. The full staff of the PMU will be hired by effectiveness, until then the Project preparation team in CDR is continuing its coordination functions.

PMU will be in charge of: (a) supporting CDR's interactions with the Ministry of Finance for the progressive disbursement of the World Bank loan, against periodic financial and progress reports; (b) substantive and frequent interactions with Ministry of Culture, DGA, DGU, and a host of other public administrations to successfully pilot the implementation of the project; (c) organizing, staffing and supervising the five Municipal Implementation Units; (d) preparing CDR's contracting on behalf of DGA the additional professional staff it will require as well as the firm in charge of the management of the archaeological interventions; (e) reviewing and clearing all requests of payment to contractors and consultants under all four project components; and (f) ensuring the overall quality control, monitoring and evaluation, and the congruence of project implementation with the project development objectives and identified activities, as well as with the legal and administrative terms of the Loan Agreement. The PMU will be staffed with technical, and administrative staff, and will include an accountant who will track all the financial transactions related to the project implementation. The PMU will use consultants to assist with the project's environmental management and monitoring (Terms of Reference are included in the Project Implementation Plan).

- 16 - Implementation Arrangements for Individual Components:

Rehabilitation of Historic City Centers and Urban Infrastructure Improvements. The nature of the activities listed under these components requires a close proximity with the historical city centers and intense interactions with a number of local stakeholders, as.well as the ability to steer and adjust project implementation on the basis of the local responses and the pace at which administrative constraints are sorted out. The Municipalities of the five project cities currently-do not have permanent staff or services devoted to these very special urban areas, as on the contrary these have been mostly neglected by public administrations. For these reasons, it is proposed that a Municipal Implementation Unit (MIU) be established as a support to the Municipality in the five project cities. They would be staffed with architects/urban planners, conservation specialists and social scientists, in addition to administrative support staff. The staffing levels and resources available to each of the MIUs will depend of the amount of work to be carried out in each city within these two components (see Annex 2).

The MIUs, which would be established as integrated special units of the Municipalities, would report directly to the Municipal Council, and where possible would operate out of offices located in the historic city centers themselves. The staff of the MIUs would be contracted and supervised by PMU at CDR, that has the responsibility for the management of the overall project, that will also include the resources for the MIUs establishment and operation. On the basis of the component activities, the MlUs would be responsible for: (a) the definition and supervision of detailed technical studies to be commissioned to local consultants or carried out directly; (b) the supervision of works by construction firms or through labor-intensive schemes with building brigades; (c) the interaction with the administrations and technical services of the Municipality, the DGU, the DGA, MOT and any other public and private sector entities involved with project implementation; (d) the interaction with, and the administrative and technical assistance to, the resident populations, non-governmental and civil society organizations, aimed at fostering a two-way dialogue on project benefits, fostering participation, identifying needs and opportunities for local economic development and service delivery, and leveraging resources; and (e) monitoring projects outputs, changes to the baseline indicators, and contributing to monitoring and evaluation reports on the impact of the project in the project cities.

Archeological Sites Conservation and Management. The proposed interventions are extraordinary by definition, as they are supposed to cater for over a quarter century of neglect of the archaeological sites. Given DGA's current technical and managerial limitations, it is proposed that, through the overall CDR's project administration, it have recourse to a project management firm (specialized in archeological works) for the supervision of the implementation of the proposed interventions, while retaining a direct involvement in some of them and the overall responsibility for all of them. At the.same time, the implementation of these activities represents a unique opportunity for DGA to train its professional staff in the different aspects of complex archaeological and site management work. With the on-going advisory support of UNESCO, DGA professional staff would have the scientific responsibility and ownership of the research and documentation activities.

The implementations arrangements are summarized in the Chart 1 below.

-17 - Chart 1: Implementation Arrangements Ovomlht Higher Cnmmittootor tho PsaveaMn of HiotDric ClUte3 Ministr of Cultture, Minuster of Tounsm, CDR, DGU, DGA and Mayors of fistonc Cities

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million, and the full allocafion could be claimed when disbursements reach US$5 million.

- 18 - Replenishment of the SA would follow Bank's procedures, and a Bank's statement of SA transactions would support all replenishment applications. The SA would be audited annually by independent auditors acceptable to the Bank and the audit report should be submitted to the Bank for review no later than six months after the end of each project fiscal year.

Audit Arrangements. CDR will be responsible for consolidating project accounts for all components. Project's accounts, including Special Account and SOEs, will be subject to external auditing by a qualified independent auditor under terms of reference acceptable to the Bank. All audit reports will be submitted to the Bank, in English, no later than six months after the end of each fiscal year. In addition, the auditor shall prepare a management letter describing the internal control and operating procedures affecting project implementation, and any other matter which should be drawn to management's attention. The auditor is expected to be appointed prior to effectiveness. Responsibility for project accounting and financial management would be assigned to a qualified financial accountant/financial management specialist to be assigned and supervised CDR's Chief Finance Officer.

Monitoring and evaluation arrangements. The PMUJ at CDR would be responsible for monitoring progress against agreed-upon performance monitoring indicators specified in Annex 1. Monitoring indicators to evaluate development objectives and outputs are detailed in the Project Implementation Plan. The Project Implementation Plan .(PIP) consolidates the implementation and monitoring and evaluation (M&E) arrangements. A standard format for Quarterly progress reports would be validated during the Project Launch Workshop, which would be organized following Loan effectiveness. The progress reports would cover implementation status; deviations, if any, from the implementation schedule and procurement plan; problems and constraints and corrective actions being taken; and updated disbursement and commitment tables. The PMU would prepare a detailed mid-term report to serve as the basis for a mid-term project review, scheduled for the second quarter of 2006. The PMU will also prepare and submit an Implementation Completion Report to the Bank within six months of the closing date of the Bank loan.

Beneficiary assessment surveys would be conducted for representative areas and investments to monitor the impact of the project on the five selected communities. Consultants would also undertake post-evaluation technical audits on a sample of operations to ensure quality control, especially for works requiring special skills (archeology, restoration, etc). Beneficiaries, municipalities and the DGA, would participate in the on-going monitoring and mid-term evaluation process and would be helped to maintain a database with relevant physical, fiscal, and socio-economic data, which would provide an important input for monitoring and evaluation.

D. Project Rationale 1. Project alternatives considered and reasons for rejection: To achieve the project's development objectives, the following alternatives were considered:

Beirut vs. Secondary Cities. Beirut was not included among the project sites, as it has been receiving a lion's share of resources going into the sector till now. The secondary cities are left mostly on their own in terms of resources and capacity. The catalytic effect of the project is expected to be much higher in those secondary cities as it can create conditions for establishing themselves as cultural cities and boost related investments, local economic development and employment.

- 19- Single Project Area vs. Multiple Sites. The geographic proximity of most heritage sites in Lebanon, combined with religious diversity and needs of regionally balanced and equitable development, have determined the choice of 5 project secondary cities versus one regional project area. Further, the choice was made to intervene in the most critical locations, in particular the urban cores, which, when conserved and well managed, will serve as anchors for private and community based projects inside and outside the historic centers.

Cultural Tourism Promotion vs. Quality of Life. The scope has been reviewed at the pre-appraisal stage to reflect the change in project's design and development objectives. Concentrating only on heritage conservation and cultural tourism development, as initially intended, would have misaligned the project efforts and reduced its development effectiveness and long-term impact on the local communities.

Living vs. Built Heritage. Lebanon's cultural scene is very active. It was decided to give priority to preserving the authentic setting "at the source" of the living heritage, and to induce people to come to the locations where they can experience the living heritage and contribute to its preservation through the mechanisms of the tourism and local economy.

Natural Sites vs. Archeological Sites. Besides the 3 archeological sites of Baalbeck, Byblos, and Tyre, Lebanon has 2 natural sites that appear on the UNESCO World Heritage list: Wadi Quadisha and Forest of the Cedars. It was decided to concentrate on built heritage, including the archeological sites of Baalbeck and Tyre, located within urban municipality boundaries in order to increase the impact of the project on the targeted population of the urban poor.

DGA and Municipalities as Executing Agencies vs. CDR. The capacity of DGA and municipalities is very weak and interministerial coordination is difficult. While the real ownership of the project remains with DGA for archeological part and municipalities for the urban rehabilitation, CDR will facilitate the procurement and financial management of the project. Additionally, CDR has significant experience of working with the Bank projects and implementing infrastructure projects for the municipalities.

ProgrammaticLending vs. Sector Investment Loan. SIL was chosen as a lending instrument, as the sector urgently needs a large scale investment operation to preserve and rehabilitate rapidly deteriorating historic assets and at the same time create jobs through civil works component. The project would provide much needed technical and institutional learning that would create conditions for further investment in the sector. At this stage, however, the fact that the sector is not mature and is only defining its operational boundaries, and the weakness of sector institutions, precludes a programmatic lending approach.

Community Driven Development vs. Urban Development focus. To achieve its development objective of supporting local development and enhancing the quality of life in the historic centers of five main secondary cities, the project chose to work in tandem with the on-going Community Development and Municipal Infrastructure projects and other similar initiatives that provide finance and technical support to the demand-driven projects of the local communities. The project will not duplicate such functions, but will provide additional liaison and communication facilities that will enable communities to access needed resources and services particularly for poverty reduction.

- 20- 2. Major related projects financed by the Bank and/or other development agencies (completed, ongoing and planned). . . Latest Supervision Sector Issue Project (PSR) Ratings (Bank-financed projects only) Implementation Development Bank-financed Progress (IP) Objective (DO) Deficiency in basic infrastructure Emergency Reconstruction and S S damaged or neglected during the civil Rehabilitation Project (ERRP) war Environmental health hazards and Solid Waste and S S pollution Environmental. Management Project Weak management capacity of public Administration Rehabilitation S S sector institutions Project (ARP) Weak capacity to upgrade and First Municipal Development S S maintain local infrastructure and weak project municipal finances Inefficiency of water and wastewater Beka'a Region Water and S S services, large water losses and low Wastewater Project cost recovery Low level of services in rural and Community Development S S disadvantaged urban communities Project Vocational and technical training not Vocational and Technical S S responding to the market demands Education Project Other development agencies Low level of infrastructure provision - EU insufficient implementation capacity Support to Regional Development UNDP/CDR Program of Baalbeck-Hermel Assistance to improve distribution and EIB quality of drinking water Social and Economic Fund for EU Development Assistance to re-establishment of the EU Lebanese Administration (ARLA) Private Sector Development France Assistance to municipalities USAID Expert assistance to DGA UNESCO Archeological conservation operations Italy in Byblos German Archeological Institute: Germany on-site museum on-site in Baalbeck Tourism Strategy, MOT needs WTO assessment, and Tourism promotion IP/DO Ratings: HS (Highly Satisfactory), S (Satisfactory), U (Unsatisfactory), HU (Highly Unsatisfactory)

- 21 - 3. Lessons learned and reflected in the project design: The Bank has so far financed no cultural heritage or urban development projects in Lebanon. However, the design of the proposed project draws upon the experience of other similar Bank-financed projects. The main lessons reflected in the project design are the following

Emphasizing and monitoring linkages between heritage and development. As stated in the recent OED review of the World Bank experience in cultural properties ("Cultural Properties in Policy and Practice", December 2001), cultural heritage in Bank interventions dates back to its financing reconstruction in postwar Europe. The study identified 217 Bank loans, credits and grants since 1970 that included intended or unintended cultural heritage activities. More specifically, the project design internalized the experience of other similar World Bank projects in the MENA region: Hafsia Rehabilitation in Tunisia, Fez Medina Rehabilitation in Morocco, Bethlehem 2000, Second Tourism Development Project in Jordan, Tunisia Cultural Heritage project. The MENA experience is consolidated and strategized in the MENA Cultural Heritage Strategy. Lebanon CHUD is not a self-standing project in patrimony or tourism, but rather an urban rehabilitation project that is aiming at capturing the synergy between urban development and cultural heritage preservation, local economic development and implementation of physical development plans. It is striving to maximize and monitor linkages between cultural heritage and poverty reduction through income and employment improvements and empowerment of local communities. The project design also benefited from other experiences of planning and implementing old town rehabilitation in the region, the Mediterranean, and elsewhere aiming at providing more jobs and services for the local residents.

Maximizing municipal involvement at the preparation and implementation stages. A crucial lesson learned through municipal development projects and cultural projects within the municipal boundaries, is about the need to involve municipalities early on, despite weak capacity, in all stages of work, and having reasonable expectations of their capacity, while backing them with assigned technical and managerial support. The activities of the project in the urban cores will be thus fully owned by the local authorities and integrated into their daily management routine. While the archeological component will be managed by a specialized consulting firm in close cooperation with the DGA, the archeological interventions of the project in Baalbeck and Tyre are not designed in isolation from the urban rehabilitation components: conservation works will be generating local employment and educational benefits for the local communities, and the municipalities are playing an important role in building community support for proposed rehabilitation of the zones immediately adjacent to the archeological sites.

Upfront approval of land-use regulations for protected areas. Urban rehabilitation activities or archeological site improvements, to be sustainable need to be protected by special regulations for heritage zones, namely through detailed land-use plans and building codes. Existing town planning laws in Lebanon require preparation of such plans and codes, though this requirement is never fulfilled by urban planning and cultural heritage authorities. During project preparation, detailed rehabilitation plans and protected zones regulations have been prepared in a participatory manner, and approved by the municipal councils as a condition for negotiations. Implementation arrangements and capacity building have been designed to ensure enforceability of the land use and building regulation during and after project implementation.

Long-term nature of heritage conservation and old town revival. While project interventions in both archeological and urban areas have been designed to address the critical issues in the most consistent way, they cannot solve all the existing problems within the lifespan of the project. Experience elsewhere has shown that archeological sites are being continuously studied and re-interpreted after initial

- 22 - conservation projects, providing an endless source for education, research and training. Urban revival of historic urban areas takes a long time to bring about qualitative changes in living conditions for its residents. The project is building long-term commitments from the major stakeholders within the sector through improving the regulatory framework, reinforcing institutions, and developing local skills, while at same time revealing linkages with other sectors.

4. Indications of borrower commitment and ownership: GOL willingness to reform the cultural heritage sector. The MOC has initiated the process of reform of the legal framework with 8 laws and decrees at various stages of preparation and approval. A High Planning Committee for the Preservation of the old town of Tripoli has been created to overcome the deficiencies of the current regulatory system in the short-run. There is a political will to create more Committees like this to assist the project's implementation. An institutional assessment of the DGA was conducted during project preparation to assess the sector capacity building needs and advise MOC in its proposed restructuring. The Government has asked, as part of CHUD project preparation and implementation, to summon international legal expertise to assist in formulation of the new laws and regulations. MOC has been very proactive during project preparation and is clearly acting as a champion among the involved mninistries and authorities. The DGU is working together with the DGA to incorporate heritage preservation concerns into new and revised Master Plans for the 5 project cities and withstanding a lot of pressure to zone new areas for urban expansion that could be detrimental to the patrimony and cultural tourism.

Openness and engagement of DGA during project preparation. DGA has been part of all project preparation activities, and worked closely with the consultants carrying out archeological and urban studies. It has undergone an institutional assessment, and provided all necessary inputs for its successful completion. Staff responsible for Baalbeck and Tyre archeological sites have been very instrumental in assisting the consultants on the ground and liaising with the local community.

High expectations and active participationof municipalities. Municipalities have been competing for participation in the project and worked closely with the consultants to define priorities for critical projects and well as communicating local community concerns. They have committed to carrying out necessary expropriations and, when needed, resettlement projects for the affected residents, and have internalized the implications of compliance with Bank policy. The municipalities are initiating their own, albeit modest and ad hoc, attempts to start the urban regeneration in their cities and are seeking cooperation nationally and internationally. This testifies to a high and growing level of ownership of the CHUD project by the local counterparts.

Unified support during the major stakeholders' workshop in Baalbeck. As part of the project preparation, a workshop was held in Baalbeck, May 10-11, 2002, on cultural heritage and urban development. The purpose of the workshop was to discuss the issues of cultural heritage sector management and its integration with urban development in the light of the proposed CHUD project. The common theme of the discussions was the role of cultural heritage in supporting the Government of Lebanon's strategy for regionally balanced and equitable growth. Over 100 participants were present, including the Minister of Culture, the President of CDR, the Mayors of the five project cities, and the Directors General of the DGA and DGU, academia representatives and NGOs, among other parties involved in project preparation. Mayors, of the five project cities, assisted by the urban consultants, have presented their visions and discussed their expectations from the CHUD project that showed a good level of mutual understanding and communication between different parties that will be finally implementing the project.

-23 - Mobilization of civil society. A stakeholder analysis study, commissioned as part of the project preparation, had identified major stakeholders nationally and locally in each of the project cities. They are actively participating in project preparation, as well as pursuing their own initiatives. An urban regeneration study for Saida, initiated by the Hariri Foundation was a pioneering study for old town rehabilitation. Private Lebanese banks have expressed interest in contributing private funding for rehabilitation efforts. Religious trusts (Waqf) are proposing to cooperate on rehabilitation projects involving their properties. Lebanese University in Tripoli, as well other institutions of higher learning are sharing the results of their research and surveys. National and local NGOs and associations are proposing projects to increase the irnpact of the project on the local communities, such as cultural centers and training programs for developing and marketing local crafts and tourism related services.

Proactive participationof local professionals. The project preparation activities have relied to a large extent on the contributions of the local archeologists, architects, urban planners, engineers, economists and social scientists. They are very dedicated to the project and to the municipalities, often their places of residence, work or origin. The mobilization of local professional community is an important resource for local consensus building and local awareness campaigns during project implementation.

CDR's commitment to project implementation and coordination. CDR has been very responsive and assumed a role of facilitator of dialogue between various stakeholders. It has contributed significant funds to finance project preparation studies, assisted consultants in getting access to information and documentation for related infrastructure projects so as to avoid duplication and incompatibilities in preparing action projects within the municipalities where CDR coordinates major infrastructure upgrading operations.

5. Value added of IBank support in this project: The value added of the Bank's support in the proposed project will come from several contributions to its design and implementation, of which the most important are: Multi-sectoral and strategic approach. The Bank brings a unique multi-sectoral approach to cultural heritage management which integrates infrastructure development, land use planning, tourism strategies, institutional capacity building, community development, education, economic and financial planning. This approach is pursued through (a) the CHUD project's scale, geographic distribution of interventions, and implementation arrangements; and (b) strategic linkages with other on-going and planned Bank projects in Lebanon, most importantly the Water and Waste water project in Baalbeck, Community Development Project, and Municipal Infrastructure Project

Visibility and leveraging other donor financing. The Bank is able to leverage grant funds necessary for thorough project preparation and implementation (Japanese Government, Italian Government, French Government), and attract other donors either through cofmancing arrangements, or in complimentary parallel projects. Because of the Bank backing, the project gets a high regional and international visibility and attracts the highest-quality experts.

Investment project with an expected high institutional benefit. The Bank helped designed the CHUID project in such a way as to insure maximum institutional impact on the sector without jeopardizing the delivery of expected outputs. The project assumes a two-pronged approach: (a) direct support to legal and regulatory reform and reinforcement of the DGA and municipalities, and (b) indirect capacity building through the project implementation design that compels DGA, municipalities and other stakeholders to cooperate closely on a day to day basis.

-24- Knowledge sharing and outreach. The Bank is grounding its investment projects in sharing knowledge that encourages change in policies and institutions and is catalytic to development. Borrower gets access to intemational best practice, local consensus building is facilitated, implementation assistance and advisory services are provided. In the situation of the post-war reconstruction process in Lebanon and concentration of heritage debates on the heritage of Beirut, some of the poor and war-devastated municipalities (e.g. Tyre, Baalbeck) or old towns within richer municipalities (e.g. Saida, Tripoli) might fall behind in identifying rehabilitation projects for their heritage-rich communities. Municipalities, though becoming more aware of the potential benefits of preserving and using their heritage, have not had the opportunity to be mentored in this process, as well as to leam from the experience of others. The project will provide such training and experience-sharing opportunity, while at the same supplying necessary financing to back up the long-term approach to heritage preservation.

Poverty reductionfocus and introduction of social safeguards. The poverty reduction mandate provides an opportunity to target and monitor delivery of benefits to low income communities. Operations are chosen on the basis of the tangible and intangible benefits they bring to the local community to raise incomes, reduce vulnerability and create conditions for local empowerment. Moreover, the application of the Bank social safeguard policies and particularly the Resettlement Policy Framework provides additional security for potentially vulnerable residents or businesses who might be involuntarily displaced in order to bring old monuments back into communal use or as a result of infrastructure improvements.

-25 - E. SuMMary Project Analysis (Detailed assessments are in the project file, see Annex 8) 1. Economic (see Annex 4): o Cost benefit NPV=US$ million; ERR = % (see Annex 4) o Cost effectiveness o Other (specify) Cost effectiveness is used for this Project. Urban regeneration projects can sometimes be evaluated by tracking increased land and/or rental values as a result of the project. However, the context of Lebanon, the necessary data is not available. Property and transfer taxes are not administered well, there are problems with the cadastre and the real estate market in these historical areas is not well documented. Thus, there is no realistic way to predict the increase in monetary flows as a result of the project, and hence the benefit to the economy. At the same time, it is just as difficult to estimate the decrease in economic activity (over the medium term) if the project is not implemented. For those reasons, the benefits cannot be quantified monetarily and a cost effectiveness methodology has been used for the economic analysis. However, at mid-term review it is recommended that some elements of a cost benefit analysis be examined, i.e., the increase in land/rental values in the historical areas as a result of the Project.

2. Financial (see Annex 4 and Annex 5): NPV=US$ million; FRR = % (see Annex 4) To assess the financial capacity of the concemed municipalities to sustain such investments - regardless of the conventional expenditure assignment amongst government tiers in Lebanon - the associated outlays were compared to the financial resources of the municipalities. In terms of financing requirements, the project's investments represent a financing envelope that exceeds by far the funding capabilities of individual municipalities and would thus fall outside the scope of local government responsibility.

Fiscal Impact: Over the 6-year implementation period, the Government will have to provide US$6.56 million in counterpart funds under the Project. This level of investment is less than 0.1 percent of the country's total annual year 2000 gross domestic investment (about US$3.0 billion) and should not pose any overall fiscal constraint. There will be a slight increase in recurrent expenditures resulting from all new or rehabilitated infrastructure under the Project. These are estimated at about US$1 million per year. Repayment of the loan from IBRD (US$3 1.5 million) is the responsibility of the Ministry of Finance and there will be no pass-through of this obligation to another entity. The fixed spread loan would be repaid over 15.5 years with a grace period of 6.5 years.

3. Technical: There are no technical issues, with the exception heritage management, restoration and conservation works in fragile archeological sites, the latter having been addressed during project preparation by detailed assessments and studies carried out by a specialized international consultancy firm and reviewed by experts from the UNESCO World Heritage Center. For the implementation phase, specialized intemational consultancy firms and contractors will be involved under the scientific oversight of experts to be designated by UNESCO.

- 26 - 4. Institutional:

4.1 Executing agencies: CDR would be responsible for project execution through a Project Management Unit (PMU). The core team of the PMU will be composed by CDR staff and consultants that have been managing the project preparation. CDR has been working with the Bank projects under similar arrangements and proved very efficient and knowledgeable of the financial management and procurement requirements of the Bank.

4.2 Project management: The PMU at CDR would be responsible for all aspects of project management. It would be in charge of interactions with the Ministry of Finance for the progressive disbursement of the World Bank loan, against periodic financial and progress reports, substantive and frequent interactions with Ministry of Culture, DGU and other implicated public administrations, organizing, staffing and supervising the Municipal Implementation Units, contracting on behalf of DGA the additional professional staff it will require as well as the firm in charge of the management of the archeological interventions, reviewing and clearing all requests of payment to contractors and consultants under all four project components, and ensuring the overall quality control and the congruence of project implementation with the project development objectives and identified activities, and well as with the legal and admninistrative terms of the Loan Agreement.

In view of the scope of the project activities and of DGA's current technical and managerial limitations, it would have recourse to a firm for the oversight of the implementation of the proposed interventions, while retaining a direct involvement in some of them and the overall responsibility for all of them.

The Municipalities of the project cities currently do not have permanent staff or services devoted to these very special urban areas, as on the contrary these have been mostly neglected by public administrations. Infrastructure projects such as road construction and water supply are generally carried out directly by the Ministry in charge, with little involvement of the Municipalities. For these reasons, it is proposed that a Municipal Implementation Unit (MIIJ) be established as a support to the Municipality in each of the five project cities.

4.3 Procurement issues: The Council for Development and Reconstruction (CDR) would be responsible for all project-related procurement and disbursement activities.

The greater part of project financing will be for civil works, for example, rehabilitation and upgrading of buildings, roads, sidewalks, public spaces, drainage, street lighting etc. Given the expected size of the sub-projects (up to about US$2 million), and them being spread over five cities, it is expected that about 75 percent of works would be contracted through Bank procedures for National Competitive Bidding (NCB), and the remaining 25 percent through International Competitive Bidding procedures. Contracts for simple works and incidental materials estimated to cost less than US$50,000, up to an aggregate amount not to exceed US$500,000 may be procured under lump-sum, fixed-price contracts awarded on the basis of quotations obtained from at least three (3) qualified domestic contractors in response to a written invitation.

-27 - Goods would be procured through International Competitive Bidding, International and National Shopping (NS) procedures, satisfactory to the Bank.

Consultancy services required to assist the PMU, DGA, and the municipal implementation units, would be procured using the Bank guidelines for procuring consultants on the basis of the short-list of local consulting firms and above US$200,000 on the basis of short listing of both international and national firms.

4.4 Financial management issues: The Executing Agency (CDR) financial management system has been assessed, based on the Bank's new FMR (Financial Monitoring Reports) Guidelines, and found satisfactory. The financial management assessment is sumnmarized in the Annex 6(b).

5. Environmental: Environmental Category: B (Partial Assessment) 5.1 Summarize the steps undertaken for environmental assessment and EMP preparation (including consultation and disclosure) and the significant issues and their treatment emerging from this analysis. The project uses an integrated approach to environmental assessment, mitigation, and monitoring in the preparation and implementation phases. It supports improvements in environmental quality in the urban environment, including management of cultural property, and provides for special environmental training for capacity building and environmental awareness. It has also relied on public participation as an element of the environmental assessment process for investments in the rehabilitation of cultural heritage sites. Annex 12 presents the Environmental Management Plan (EMP), which would be monitored during supervision and evaluated at mid term and on completion.

Environmental assessment. A detailed environmental assessment was prepared for the project in compliance with the provisions of OP 4.01 for screening Category B projects. It includes an analysis of planning alternatives, development of an EMP that includes environmental mitigation and monitoring measures, and an extensive public consultation process. The environmental assessment is available at the Info Shop, Resident Mission, and at CDR's offices in Lebanon for public consultation.

Environmental impacts. The Environmental Assessment found that the Project would result in an overall improvement in urban environmental quality as well as improvements to the quality of life of the residents in the five involved cities as a result of (a) rehabilitation of degraded cultural sites and improving public accessibility to these sites; (b) improving social life in and around the old city centers; (c) improved traffic circulation in city centers; (d) conversion of many streets to pedestrian only; and (e) complementary improvements in parking management.

The primary benefits would come from improved accessibility to quality cultural heritage sites, which is accompanied with socio-economic growth due to increased attraction rates of visitors/tourists, reduced noise and emissions from vehicles along streets converted to pedestrians only, and enhanced access to city centers with cultural heritage sites which is associated with improved social life in these centers. Another significant positive environmental impact relates to the elimination of wastewater discharge into enclosed ports (i.e. the city of Tyre). The Tyre old town wastewater system will be upgraded under a separate parallel project, which implementation schedule is being coordinated with the CHUD.

The primary adverse environmental impacts are associated with the construction period. In addition, there would be temporary impacts associated with the re-routing of traffic around the construction areas during the rehabilitation activities in the various cities. These impacts can be minimized by careful planning of the staging used for construction and rerouting of traffic, careful supervision of construction

- 28 - activities and use of environmental monitoring to support management decisions by the CDR and other parties. Since one of the main objectives of the CHUD project is the attraction of a larger number of visitors/tourists, it is expected that increased solid waste and wastewater generation rates will occur. While the additional rates are not significant to cause an environmental impact under normal conditions in a typical city, it should be noted that the existing solid waste and wastewater conditions in all involved cities require better management irrespective of the proposed CHUD project. In this context, various projects/programs are underway in the involved cities; they are listed in the EA report. The capacity of these projects/programs once completed will easily accommodate the increased rates associated with the implementation of the CHULD project.

Another potential negative environmental impact during the operation phase relates to increased vehicle-induced emissions associated with the attraction of larger numbers of visitors/tourists. These emissions are best mitigated through the improved traffic circulation and parking management in and around old city centers anticipated through the CHUD project.

5.2 What are the main features of the EMP and are they adequate? An EMP, including mitigation and monitoring measures, has been prepared as an element of the Project. Mitigation actions focus on environmental supervision of the construction contractors and actions to reduce traffic flow problems and ensure environmental protection during the construction phase. The monitoring plan provides for quality-controlled air, noise, dust, and water measurements to be used as baseline and trend data to support management decisions. In addition, the project supports a training program in environmental management, which targets the needs of national and local government officials, consulting firms, construction contractors, and local NGOs. 5.3 For Category A and B projects, timeline and status of EA: Date of receipt of final draft: November 2002

5.4 How have stakeholders been consulted at the stage of (a) environmental screening and (b) draft EA report on the environmental impacts and proposed environment management plan? Describe mechanisms of consultation that were used and which groups were consulted? A project of this kind is naturally driven mainly by technical and social considerations, and then attempts to take into account, as far as possible through consultations, the interests of beneficiaries, project-affected persons, and other stakeholders. The country's nature and history have encouraged political traditions that stress mutual accommodation among interest groups through power-sharing arrangements rather than open public consultations. The public meetings conducted for the environmental and social aspects of the project continue to break new grounds in terms of consultation. a. Primary beneficiariesand other affected groups: Beneficiaries. the inhabitants of the five involved cities are direct and indirect beneficiaries of improved cultural heritage sites through socio-economic growth typically brought about by attracting increased numbers of visitors/tourists to the area. The municipal councils in these cities enthusiastically support the idea of restoring active and productive urban life, conserving heritage, rehabilitating the degraded urban fabric, capitalizing on the tourism potential, and improving the standard of living of local community. They are committed to ensuring that municipal development strategy and initiatives have to be well coordinated with the needs of cultural heritage preservation. They welcomed the proposed project as having significant potential to contribute to national and local economic development, bringing improvements to the quality of life of the residents of the municipalities concemed.

- 29 - b. Other key stakeholders: Ministry of Culture, Directorate General of City Planning of the Ministry of Transport and Public Works, Ministry of Interior and Municipalities, Ministry of Environment, and the 5 individual municipalities of Baalbeck, Byblos, Saida, Tripoli and Tyre. Preparation of the environmental assessment included consultations with these institutions as well as universities, merchants associations and other private sector parties, community organizations and non-governmental organizations.

5.5 What mechanisms have been established to monitor and evaluate the impact of the project on the environment? Do the indicators reflect the objectives and results of the EMP? The EMP includes an environmental monitoring plan that provides for the monitoring of environmental issues by an environmental specialist who will be a member of the project supervision team. The plan includes routine monitoring, during the construction phase, of health and safety conditions, restoration of landscaped areas, and proper disposal of waste materials. This would be complemented by quarterly monitoring of key environmental parameters by qualified independent consultants, including air quality, noise, and water quality, accidents and traffic pattems. The indicators adopted for this work reflect the objectives of the EMP and provide a basis for improved project results. Provisions have been made for the participation of Bank environmental specialists as part of the supervision missions, and enviromnental aspects of the project would be covered in the Mid-Term Review and the Implementation Completion Report (ICR).

6. Social: 6.1 Summarize key social issues relevant to the project objectives, and specify the project's social development outcomes. The main social issues (See Annex 12 on social issues for more detail) relating to upgrading the quality of life in the five key historic cities arise from (i) the sharp contrast between the high intrinsic aesthetic and historical values of the sites, and the stagnant development and inadequate living conditions in and around the sites; (ii) between the high value placed on these sites by intemational and national elites, and the low value placed on them by local populations, who derive no benefit from their existence, and from those developers whose plans and intentions may be out of character with the sites' aesthetic values; and (iii) the institutional difficulties and obstacles to development of culturally and situationally appropriate economic activities that would bring local benefit. In particular, the social risk exists in some sites of elite capture or benefits. Where gentrification is already an established or inevitable process beyond the resources of this project to address, the project may be able to assist in identifying appropriate solutions for the poor inhabitants of urban cores displaced by market forces.

The key social development outcome would be that the local population and municipalities would share in the benefits of local economic growth arising from upgrading the sites and tourist attractions, and would have enhanced appreciation of the value of these sites.

6.2 Participatory Approach: How are key stakeholders participating in the project? An extensive consultative stakeholder analysis was conducted during project preparation. Key stakeholders are local municipalities, the local populations in and around key heritage sites (segmented in different interest groups) ; key govermnent ministries and departments responsible for urban planning, heritage conservation and tourism; and a range of interested NGOs and civil society organizations.

- 30 - Except in one location (Saida), there is no organized forum or structure outside the project for these stakeholders to participate; the key institutional forums will be set up at the level of the five municipalities where key stakeholder units will be represented in project steering committee activities. Project investments comprise elements that respond to the interests of each stakeholder (heritage conservation; municipal development; upgrading and economic stimulus activities for local citizens and NGOs); and the municipalities have an intrinsic interest in building local bases of support. Several key stakeholders are influential in national cultural, political or economic life. The only practical method of incorporating these stakeholder interests is in the project context at the level of the municipality concerned. The municipalities consults with stakeholders on a regular basis, although the quality of this consultation varies from place to place.

A potential site-specific stakeholder issue arises between the interests of landlords and tenants/occupants in the renovation of privately owned rented buildings. These issues were highlighted in the stakeholder analysis and care will be taken not to promote investments that would result in the economic displacement of poor people to their disadvantage. See Annex 12 for more detailed treatment of this issue. 6.3 How does the project involve consultations or collaboration with NGOs or other civil society organizations? A wide range of civil society organizations is involved. Municipalities, being autonomous locally elected bodies, are themselves civil society organizations and incorporate others. NGOs at city and national levels that deal with a range of project related issues, including: promotion of culturally appropriate tourism; rehabilitation of historic buildings; promotion of poverty alleviation activities, cultural activities, environmental protection, urban regeneration and small scale economic activities. Other bodies directly involved include Municipal chambers of commerce, the various waqfs (frequently owners of historic properties).

6.4 What institutional arrangements have been provided to ensure the project achieves its social development outcomes? The municipalities concemed will recruit into their project implementation establishment social science expertise to address directly issues of community participation and communication, inclusion in economic benefits, services and facilities, and involvement of NGOs. In addition, the project will assist local communities to access resources for small scale local investments consistent with project objectives from the Municipal Development Project and the Community Development Project, both financed by the Bank, and from a wide range of other available resources. 6.5 How will the project monitor performance in terms of social development outcomes? Monitoring social development outcomes will be a specific task of the social scientists to be recruited and in particular of the lead social scientist in the PMU. The key monitoring focus will be the level of CH-related economic activities; and popular attitudes to the heritage site. Given the highly varied and locally specific nature of each site, it is likely that qualitative and narrative indicators will be significant.

- 31 - 7. Safeguard Policies: 7.1 Are any of the following safeguard policies triggered by the project? Policy - Triggered --- Environmental Assessment (OP 4.01, BP 4.01, GP 4.01) * Yes U No Natural Habitats (OP 4.04, BP 4.04, GP 4.04) U Yes * No Forestry (OP 4.36, GP 4.36) U Yes * No Pest Management (OP 4.09) (9 Yes * No Cultural Property (OPN 11.03) * Yes (9 No Indigenous Peoples (OD 4.20) U Yes * No Involuntary Resettlement (OP/BP 4.12) 4 Yes U No Safety of Dams (OP 4.37, BP 4.37) U Yes * No Projects in International Waters (OP 7.50, BP 7.50, GP 7.50) (U Yes * No Projects in Disputed Areas (OP 7.60, BP 7.60, GP 7.60)* U Yes * No

7.2 Descnbe provisions made by the project to ensure compliance with applicable safeguard policies. Environmental Assessment and Cultural Property Project preparation included preparation of an environmental assessment. The environmental assessment contains an Environmental Management Plan with a special a cultural heritage component to address issues related to cultural property. Implementation of the environmental management plan and resettlement action plan would be an integral part of the project supervision process, and environmental and social specialists from the Bank would participate in supervision missions to monitor these implementation activities. The direct involvement of the Directorate General of Antiquities (DGA) in the implementation of this project, and the project's central objectives of cultural property preservation and enhancement, will ensure ample compliance with Bank policy. Compliance with environmental and social aspects of the project, including cultural heritage issues, would be addressed through regular supervision and be evaluated in detail at the Mid-Term Review and ICR. The draft environmental assessment and Resettlement Action Plan are being subjected to a public consultation process and have been disclosed at the InfoShop, Resident Mission, and a variety of locations in Beirut. Involuntary Resettlement. The renovation of urban cores and rehabilitation of certain strategic sites and buildings will involve the involuntary resettlement of small numbers (tens of families). Because the sites are scattered and the list of potential interventions still not definitive (possible interventions not yet definitely retained or clarified include Marketers in Tripoli, Khan el-Rabu in Tyre and Gouraud Banracks in Baalbeck), a draft Resettlement Policy Framework has been prepared (Annex 13) together with a Resettlement Action Plan for the first phase of the rehabilitation of the Khan El Askar (Tripoli). This historic structure was first used by the Municipality for temporary accommodation of flood victims in 1958, and reoccupied over the years. The municipality has never been able to fulfill its undertaking to provide the inhabitants with altemative social housing. The project will provide this long-awaited social housing in the immediate vicinity, and enable the building to be rehabilitated as a cultural and artisanal center (summary in Annex 2). The project appraisal concluded that the policy framework and the RAP were well understood by the relevant institutions municipality) and that there were good grounds to expect the RAP to be well executed (details are in Annex 13). Provisions made include a local social scientist assisting CDR with future RAP preparations, social scientists in the MIUs whose TORs include supervising social aspects of RAP implementation.

- 32 - F. Sustainability and Risks 1. Sustainability: The project's aspects that would promote sustainability are:

Municipal and local capacity will be reinforced. The bulk of the project investments is going into the rehabilitation of public assets directly and indirectly managed by the municipalities using local skills and materials. To ensure the sustainability of projects benefits municipalities will be helped to strengthen their financial and technical capacity and improve administration procedures in order to stimulate further rehabilitation activities, including via private-public partnerships, and ensure proper maintenance of assets and infrastructure. It is expected that the project will generate additional revenue for the municipalities through property value appreciation, increased construction, commercial and tourism related activity. The project will build the necessary capacity and skills and provide assistance through the MIUs directly reporting to the mayor. However, the overall capacity, increasing the local revenue base, and putting in place a sustainable system of intergovemmental finance will remain a major challenge for the municipal sector reform. The First Municipal Infrastructure Project, donor assistance to municipalities from EU and USAID, EIB, AID, JICA and other sources, will work together on empowering the municipalities.

Favorableconditions will be createdfor community driven local development. Because of the project's focus on improving the quality of life for the local communities, it is expected that local residents will see first-hand the benefits of heritage preservation and rehabilitation activities and seize the opportunities it creates for a broad-based economic revival in areas that are currently classified as poverty clusters by the World Bank Community Development Project. The deprived urban cores of Tripoli, Tyre, Saida, Baalbeck all currently appear as priority target areas for community development action projects and are expected to benefit from the two parallel operations.

Public-privatepartnerships in rehabilitation will increasingly share the cost of heritage preservation. Municipalities, religious groups, NGOs and associations, as well as some private owners will have gained technical, legal and financial knowledge in implementing public and private rehabilitation projects. It is expected that a positive momentum will be generated to attract private investors and other donors into scaling up of rehabilitation activities. Public assistance, oversight, and control over site and historic zone management. The capacity of the central authorities, charged with management and regulation of cultural properties will be reinforced as a result of the project. Standard procedures of quality control and certification of private and public contractors specializing in conservation, restoration, and rehabilitation will be introduced and tested. Urban master plans will be complemented by the detailed plans and regulations for archeological and historic city centers and enforcement of the zoning and building regulations by DGA and municipalities will be closely monitored.

- 33 - 2. Critical Risks (reflecting the failure of critical assumptions found in the fourth column of Annex 1): Risk Risk Rating Risk Mitigation Measure From Outputs to Objective Difficult fiscal and macro-economic M The project is designed to increase the situation resulting in hampered economic base of the project municipalities by infrastructure improvements in the creating opportunities for development of local project municipalities, unreliable and regional tourism and culture related central-local transfers and political industries, as well as generating more vulnerability of intemational tourism economic activities in general by making the market will limit the project urban historic cores more accessible, clean and better rehabilitation benefits to local population managed. Project outputs will contribute to and sustainability of its investments. overall infrastructure improvements, and will make local communities more self-sufficient in their resource base. The project will be providing special assistance to municipalities to communicate increased opportunities to the most disadvantaged members of the community. The project design has minimized the counterpart funding requirement.

The strategy of the government to reduce S The project is bringing visibility to the sector, its expenditure will prevent necessary is being cofinanced by the French and the human and financial resources to become Italian Govermments, and is demonstrating the available to the DGA and, therefore, limit close relationship between heritage its capacity to conserve and manage preservation and land development. Lebanon's built cultural heritage. Intemational experience of cost sharing and out-sourcing in archeological preservation and involvement of local communities to safeguard their heritage will be made available to Lebanon through a capacity building program that in tum will reinforce the regulatory and oversight role of the DGA.

From Components to Outputs While the urban rehabilitation packages S PMU at CDR will closely monitor the progress are thoroughly designed and zoning in project delivery and maintain a continuous regulations for historic cores are dialogue with the municipalities in order to approved, urban improvements will not assist them through the MIUs or directly in be fully implemented and enforced due to case they experience capacity problems. At limitations in management capacity, midterm, absorption capacity will be evaluated staffing, and regulatory discipline in in each project city and necessary adjustments project municipalities. would be made to project resource allocation. Communication strategies will be prepared and implemented to insure pubic awareness and support of project goals and activities.

- 34 - City wide infrastructure or trunk N The project is fully owned by the infrastructure improvements financed municipalities, that passed municipal council outside the project will disrupt the timing resolutions prior to negotiations, and is of rehabilitation activities in the historic coordinated out of the CDR. The PMU and the zones. MlUs will be constantly monitoring the coherence of operations in the broader municipalities and take necessary steps to coordinate at all levels of implementation the city wide activities with the operations in the historic cores.

Public spaces and infrastructure will be M The choice of investments was made with improved, but these improvements will careful consideration for the benefits they not benefit the lower-income population would bring to the local economies through and will not have a significant effect on improving quality of spaces and public health, employment and economic opportunities service provision, employment and income for the local population. Instead the generating opportunities. A site-based facility improvements will benefit only selected in each municipality will provide citizens with private owners and/or national elites. information and support to access economic and technical resources and ensure local-level coordination between different community activities.

Public spaces and infrastructure will be M The project is designed to target public improved, but complicated land and real interventions so that they provide as many estate property ownership pattem in old incentives as possible to the private owners to towns, current rental law and lack of invest in their historic properties. The project is access to credit will stunt the piloting small scale housing rehabilitation mobilization of private capital and schemes, supporting rehabilitation of rehabilitation of private buildings and communal parts of buildings with the housing stock. Instead, some private understanding that more site specific analysis owners will want to cash in on the of institutional factors and socio-economic increased real estate values and attempt process of owner and tenant behavior will be to replace their historic buildings by performed in consultation with the stakeholders modem high-rises in violation of the and scaled up activities will be designed. norms of the approved urban zoning rules for the historic areas. Zoning and building regulations distinguish between zones where only restoration is allowed and zones where context sensitive infill is permitted and even encouraged. Municipal council resolutions on overall rehabilitation program and enforcement of the zoning regulations have been passed as a condition of project negotiation.

- 35 - The two archeological sites will be M The reform of the Ministry of Culture is documented, conserved and presented, creating a new reinforced DGA, that would but the sustainable management structure also have regional and site-specific offices. would not be put in place to maintain the Creation of site specific offices in Baalbeck results of the project. and Tyre as a matter of priority is a condition for project effectiveness.

The reformed DGA will receive S The of the major lines of capacity building will necessary capacity building assistance, be to equip DGA with the tools and operational including a priority action program, but procedures to out- source many activities, enter would not have resources to performn into partnerships with municipalities, public according to this comprehensive priority and private sector, and impose clear procedures action program, and instead return to that oblige private and public developers to "fire-fighting" and ad hoc activities. share in the costs of studies and archeological and heritage preservation.

Overall Risk Rating M Risk Rating - H (High Risk), S (Substantial Risk), M (Modest Risk), N(Negligible or Low Risk)

3. Possible Controversial Aspects: Risk of gentrification. One of the development objectives of the project is to enhance the cultural heritage role in improving the local quality of life and fighting poverty. Nevertheless, urban rehabilitation tends to raise property values and returns to the blighted historic centers cultural and economics activities that benefit from the central location in the historic structures with predominantly pedestrian access. The poor residents that long inhabited the degraded properties and the recent newcomers, that were attracted by cheap rents and established their workshops, may face a choice to relocate, or to stay and weather the higher cost of living provided that the new economic opportunities accompany the rising property values. During project implementation the social change is going to be closely monitored and mitigating measures proposed. However, a priori, the project activities are expected to generate minimal involuntary resettlement and displacement pressures. It is expected that employment opportunities will be created by project activities in construction, service provision, new trades, and tourism related businesses that would benefit the current residents, including local women and youth. At the same time, urban rehabilitation will attract students and artists to settle in the area and help maintain its lively and diversified character. Focus on upgradingpublic spaces and communal infrastructure. Protecting the urban historic cores in its integrity inevitably raises the problem of sustainable rehabilitation of private housing stock. The project aims at rehabilitation of public spaces, improving access and public service provision in the old towns, thus already providing an indirect subsidy to private owners. Some technical and financial assistance will be also provided to willing private owners for private housing rehabilitation according to established norns of conservation and within the approved zoning and building codes. Some pilot projects of structural upgrading of the residential stock will be promoted, especially in the vicinity of urban enhancement project activities. The project can not and is not intended to solve the problems of housing policy in Lebanon, and the team is fully aware of the limitations that the current rental law and complexity of property ownership structure impose on rehabilitation of the historic urban stock.

- 36 - Dedicating scarce resources to archeologicalconservation. Archeological sites of Tyre and Baalbeck represent the World Heritage and are magnets for visitors to Lebanon. The international community has already contributed with grant money to finance the studies and technical assistance and will continue bearing the brunt of the costs for this project component. The project design is conscious of the importance to ration the available funding in such a way that the concerns of the world scientific community in proper documentation, understanding and preservation of the sites are reconciled with the needs to provide a satisfying visitor experience to tourists of various levels of interest and knowledge of archeology, as the financial contribution of such visitors to the local and national economy is very important, and will be the greater, the longer and the more satisfying their stay will be. Educational benefits of safe, well researched and well preserved archeological sites for the young Lebanese, including students from the local communities have not been quantified, but are of major importance as well. Situations of urbanplans inconsistency with Bank poverty reductiongoals. The rehabilitation activities, financed by the project in the 5 cities will be consistent with the provisions of the approved detailed plans for the historic old towns. However, situations may arise when outside the CHUD interventions zones, the urban master plan or regional development plans, approved by authorities may have provisions incompatible with the World Bank policies or project objectives (e.g. highway in Saida, extension of highway in Tyre). In such cases, the Bank conveys its views to the relevant authorities, studies the mitigation measures proposed, and decides on the acceptable level of involvement in a particular rehabilitation program.

G. Main Loan Conditions 1. Effectiveness Condition None

2. Other [classify according to covenant types used in the Legal Agreements.] Accounts/audit - Annual audit reports of project accounts and SOEs will be prepared and submitted in English by independent auditors acceptable to the Bank within six months of the end of each fiscal year. - Documentation to support expenditures financed under SOEs or otherwise will be maintained in English by CDR and made available for review by Bank supervision missions. Proiect Manazement - CDR will maintain the Project Management Unit and MIUs established for the project with staffing, terms of reference, and qualifications satisfactory to the Bank. Reporting - By the end of March 2006, CDR to submit to the Bank a detailed mid-term report to serve as the basis for a mid-term review of the project implementation. CDR to submit also quarterly progress reports. - The PMU (CDR) will also prepare and submit an Implementation Completion Report to the Bank within six months of the closing date of the Bank loan.

- 37 - M0. IReadiness Dor implDementafon FA 1. a) The engineering design documents for the first year's activities are complete and ready for the start of project implementation. D 1. b) Not applicable. g 2. The procurement documents for the first year's activities are complete and ready for the start of project implementation. Z 3.The Project Implementation Plan has been appraised and found to be realistic and of satisfactory quality. 0 4. The following items are lacking and are discussed under loan conditions (Section G):

L. Compliance with lBankl Policies 1 1. This project complies with all applicable Bank policies. Pi 2. The following exceptions to Bank policies are recommended for approval. The project complies with all other applicable Bank policies.

Mohmm D. E. F ghoul Emmanuel Forestier a Team Leader / Sector Drector Country Director

-38- Annex 1: Project Design Summary LEBANESE REPUBLIC: CULTURAL HERITAGE AND URBAN DEVELOPMENT

,:,7,,, . , . ',,l-,,,Key Perforrnance; Data Collection Strategy -. Hierarchy of Objectives Indicators - Critical Assumptionis Sector-related CAS Goal: Sector Indicators: Sector/ country reports: (from Goal to Bank Mission) * Rehabilitation and * Improve conditions of * Municipal Sector Study Broader access to better expansion of built cultural assets maintained assets and infrastructure, and * Poverty Assessments infrastructure, and institutional development; stronger sector institutions have a positive impact on quality of life.

* Environmentally * Improved management of sustainable development built heritage as part of urban development

* Upgrading the Human * Increased contribution of Resource Base and built heritage to Addressing Poverty regionally balanced and equitable development

- 39 - Key Performance Data Collection Strategy Hierarchy of Objectives Indicators _ Critical Assumptions Project Development Outcome I Impact Project reports: (from Objective to Goal) Objective: Indicators: 1. Create conditions for local 1.1 Increased culture, tourism CDR PMU monitoring The importance of Lebanese economic development and and heritage related local reports, DGA and built cultural heritage for the enhance the quality of life in employment, and private municipalities budgets, MoT humanity, local social the historic centers of five sector investments, facilitated statistical reports, DGA cohesion and economic well main secondary cities. by municipalities. statistics being warrants its preservation and rehabilitation together 1.2 Increased number of with other pressing needs of rehabilitated historic post-war rebuilding of the properties and public spaces in country. use for communal and tourist purposes.

1.3 Increased appreciation by residents and visitors of the contribution of cultural amenities to local quality of life and visitor experience.

1.4 Rising property values in and around areas of historic and cultural importance.

2. Improve conservation and 2.1 Increased employment of management of Lebanon's professionals in conservation built cultural heritage and management of heritage.

2.2 Increased efficiency of archeological site and urban protected zones management.

2.3 Increased rehabilitation activities in historic urban cores in compliance with approved regulations recognizing the centrality of their cultural heritage to their economic and social development.

-40 - Key Perfornance Data Collection Strategy Hierarchy of Objectives Indicators __ Critical Assumptions output from each Output Indicators: Project reports: (from Outputs to Objective) Component: 1. Improved livability of the 1.1 Square meters of CDR PMU Project monitoring 1. The project investment will urban areas targeted by the rehabilitated street network report containing data, result in important urban project; and public spaces, coastal described above; infrastructure and quality of zone, harbor areas in protected DGA periodic reports and public space improvement in perimeter. iftr disadvantaged center city areas 1.2 Length of pedestrianized sources and will help local 1.2eLentho o predestraned s communities become more street network i protected UNESCO expert reports self-sufficient in their resource Municipal records base. 1.3 Number of controlled1.3 Number of controlledMuipareod ~~~2.The lower and middle class parking spots per resident in Periodic opinion surveys residents seize the benefits and protected perimeter. realize the new opportunities 1.4 Square meters of green created by the project space per resident in protected investments. perimeter. 3. Necessary human and 1.5 Rehabilitated open public financial resources will spaces ( including harbor, become available for coast, port) as % of total preservation and management protected perimeter. of cultural heritage. 1.6 Square meters of 4. Archeological and built rehabilitated historic buildings heritage conservation, in public use per resident of management, and use, protected perimeter. becomes a considerable economic activity at a local 1.7 Amount of financial scale. support leveraging private housing rehabilitation. 5. Cities develop the capacity to market their historical and living cultural heritage and to project image of investible sector

2. Improved local economic benefits in the project cities 2.1 Provision of services at 6. Visitors expand the range of municipal level to increase goods and services demanded. employment in services and 7. Local population finds new tourism related activities. economic opportunities for 2.2 Recognition by residents living and working in or next and tourists of improved to the heritage sites. benefits. 8. Strengthened national and 2.3 Cities market a wider local institutions in charge of range of services, tournsm and cultural heritage are well investment opportunities. integrated with other territorial development authorities and their voice is strong in the national and local decision-making process.

- 41 - 3. Improved conservation 3.1 Exposed archeological and management of selected structures and artifacts on archeological assets and project sites catalogued and historic city centers. inventoried by end of the project. 3.2 Archeological structures and artifacts protected against structural and surface damage by end of project; site presentation plan implemented. 3.3 Archeological studies launched and completed. 3.4 Increased number of rehabilitation and repair permits by 3% by mid-term and by 5% by end of project. 3.5 Increased real estate values per sq.meter of sold and rented residential and commercial property in historic city centers.

4. Improved performance of 4 1 Implementation of the national and local institutions MIUs. in charge of built cultural 4 T heritage. 4.2 Trainig and TA delivered to municipalities. 4.3 GIS implemented. 4.4 Delivery of TA program to DGA. 4.5 UNESCO expert reports; 4.6 Equipment installed and operational. 4.7 TA to DGU delivered; implementation and operation of PMU.

-42 - Key Perfornince Data Collection Strategy Hierarchy of ObjectivesC - Indicators .Citical r*- Assumptions Project Components / Inputs: (budget for each Project reports: (from Components to Sub-components: component) Outputs) A. Rehabilitation of US$ 42.594 million Project progress reports, Urban improvements planned Historic City Centers and financial audits, and will be fully implemented and Urban Infrastructure supervision mission reports enforces, and adequate Improvements management capacity and (a) Upgrading of and regulatory discipline will be improvements to public put in place at the level of spaces: municipalities. (b) Conservation and adaptive Improvements will benefit the reuse of monuments and lower-income population and historic buildings: will have a significant effect on employment and economic (c) Support to cultural opportunities. heritage related productive Private capital will be and commercial activities: attracted into cooperating on (d) Support to the urban rehabilitation and rehabilitation of historic particularly into historic housing stock: housing rehabilitation within (e) Enforcement of city center the established zoning and zoning regulations: building norms. (f) Traffic and parking improvements: (g) Protection and landscaping of coastal and green areas: Studies for urban redevelopment.

B. Archeological Sites US$ 13.661 million Enough personnel is hired and Conservation and trained to operate the sites. Management in Baalbeck Allocated financial resources and Tyre are adequate to support quality (a). Research and maintenance and operation of documentation: the sites. (b). Conservation of surfaces Municipalities are involved and structures: into the rehabilitation process, and technical capacity is (c). Landscaping and site created to proactively manage management heritage assets and enforce (d). Site presentation to approved zoning and building visitors regulations Further Archaeological Infrastructure improvements in Studies, the historic zone are implemented in close coordination with the larger city infrastructure plans.

-43 - C. Institutionral US$ 5.325 million DGA, while reinforced is Strengthening entering in productive (a). Technical Assistance and partnerships with public and Project Management support pnvate sector entities. for the Municipalities; (b). b) Technical Assistance & Capacity Building for the DGA; (c). T. A to the DGU for historical city centers management; Project Management by CDR

-44 - Annex 2: Detailed Project Description LEBANESE REPUBLIC: CULTURAL HERITAGE AND URBAN DEVELOPMENT By Component:

Project Component i - US$42.59 million Rehabilitation of Historic City Centers and Urban Infrastructure Improvements 1.1 This component includes all of the activities to be carried out in or around the centers of the five project cities of Baalbeck, Byblos, Saida, Tripoli and Tyre. In order to attain the rehabilitation of the historic city centers, a number of activities have been envisaged to tackle the specific issues of the traditional urban fabric, and others to maintain the central urban functions via improvements to the urban infrastructure. Therefore, all project-supported activities in the five cities would fall into one or more of the following sub-components: (a) upgrading of and improvements to public spaces; (b) conservation and adaptive reuse of monuments and historic buildings; (c) support to cultural heritage related productive and commercial activities; (d) support to the rehabilitation of the housing stock; (e) enforcement of city center zoning regulations; (f) traffic and parking improvements; (g) protection and landscaping of coastal and green areas; and (h) studies for urban redevelopment. In the case of Tripoli and Tyre, these activities will be implemented in conjunction with a parallel project addressing the deficiencies of water and wastewater infrastructure.

1.2 The project-supported activities in the five cities are described in Attachment 1 to this Annex. (a) Upgradingof and improvements to public spaces 1.3 Within the historic city centers, public spaces, such as streets and squares around the monuments, in the commercial (souqs) and the residential areas, are generally degraded and have benefited little from municipal investments over the years. Given the special urban characteristic of these city centers (medinas), the semi-public spaces within the residential areas - narrow passageways and internal courtyards linking the public streets to the housing units - are also very degraded and tend to become "no-man's-land" where refuse and rubble accumulate.

1.4 Project activities would include street paving, street lighting, reconstruction of public stairs, and the consolidation of building structures where they cross over streets. In addition, renovation of the elevations of the buildings and of the store fronts would be carried out in the main commercial areas, and public squares would be redesigned and provided with paving, lighting, urban furniture and landscaping. Electrical and telephone lines will also be reorganized so as to minimize their physical and visual impact in the streets and squares of the city centers. Semi-public spaces would be up-graded with necessary basic repairs as a first step towards the rehabilitation of the housing clusters. Many of these activities would be carried out after the improvements to the storm drainage, water supply and sanitation networks that are being or will be carried out - where needed - under separate financial and implementation arrangements. Were such arrangements not confirmed by appraisal, project activities would include some of the essential on-site investments that are a prerequisite to carry out the above-described project activities.

1.5 Given their significance, the historic city centers are already or have the opportunity of becorning important attractions for national as well as international visitors. This tourism role will be significantly enhanced by the proposed project interventions on the built cultural heritage and by the fostering of culture and tourism oriented activities within the city centers. Circuits will be designed so at to enable visitors to orient themselves within the often labyrinthine urban fabric, and to direct them from the entry points of the historic city to the key architectural highlights as well as to the traditional commercial and

-45 - productive areas. These visitor circuits will be supported by a visitor information center within the historic city, and by a system of signage in various languages. Additional resources to support the visit will include guides, brochures and specific documentation on the cultural and commercial activities of interest to the visitors.

(b) Conservation and adaptive reuse of monuments and historic buildings: 1.6 The city centers are rich in classified monumerts and historic buildings, although only a few of them are currently in a good state of conservation, and even fewer are being used for their original or other purposes. Such monuments and buildings are nevertheless the architectural and urban highlights of the city centers, and represent the key visitor attraction points in the context of the historic urban fabric, of interest as a whole. These buildings - mosques, churches, productive and commercial complexes, religious and academnic institutions - sometime belong to private owners, but are more generally the property of the Department of Antiquities, of the Municipality, or of the local Waqfs (Religious Trusts).

1.7 Project activities would include the conservation of some of the classified monuments and historic buildings. Priority would be given to those that: (a) belong to the public sector; (b) could be object of significant adaptive reuse for cultural, social or visitor-related commnercial activities; (c) are located within central areas or next to commercial or tourism circuits; and (d) are in danger of collapse or of severe damages in the absence of an intervention. Project activities would include the definition of the agreements among owners and third parties for the conservation of the buildings as well for the management of the cultural, social and commercial activities that they will host. In some cases, like in Saida and Tripoli, significant historic buildings are occupied by displaced persons and commercial activities. These will need to be relocated for the conservation and adaptive re-use operations to be able to take place, under the responsibility of the Municipality, and as a condition for those interventions.

(c) Support to cultural heritage relatedproductive and commercial activities: 1.8 The project city medinas still host a number of traditional productive and commercial activities that go hand in hand with the built environment and that are characteristic of the souqs: spices, perfumes, soaps, jewelry, pottery, sweets, fabrics, furniture and the like. However, as the commercial life of the city centers becomes progressively impoverished, such activities risk being "crowded out" by the re-sale of banal commercial goods, such as imported second-hand clothes. Investments in the public spaces, historic buildings and tourism circuits create the opportunity for an increase in the demand for traditional craft products.

1.9 Most cities have a substantial range of local development initiatives undertaken by NGOs, private sector and individuals for the benefit of and in partnership with the local population often in relation to traditional artisanal activities and usually including women as beneficiaries. They also have a good range of new initiatives active or in the pipeline and financed by a variety of institutions including the Bank itself. Therefore, there is no great need for this project to finance additional interventions at that level. However, there is in each city a clear need and request for support at the municipal level to alleviate poverty and to revitalize depressed or stagnant inner city economies. A site-based municipal facility would: (a) provide citizens with information and support to access economic and technical resources for small scale business development; (b) link demand to employment and skills training; and (c) assist citizens to access education, health and other social services. It would also provide development agencies with information on comnunity needs and existing or planned initiatives, thereby promoting local-level coordination and discouraging duplication. It would acquire a good understanding of household or community level development strategies, and work with these agencies to design and implement appropriate programs. It would also maintain essential information for monitoring and evaluation. Annex 12 contains job descriptions for this function.

-46 - 1.10 This subcomponent incurs clear communications needs. First, the populations in and around the sites need assurance that the project will be implemented in their interests. The project will work to enhance their attachment to the place, increase their appreciation of its value, and motivate them to participate in its implementation. It should also assuage possible fears of cultural invasion or alienation caused by an influx of tourists, so that visitors may be both welcomed and educated. Second, there needs to be systematic listening to the people and learning about local institutions and cultures, and about the processes of project implementation and its outcomes. Third, the city needs to project its identity, which consists not only of its physical heritage, but also of the living cultural heritage and creativity of its inhabitants. This effort is needed to bring more visitors, increase their demand for goods and services, and attract investment in cultural tourism. The dissemination of this information can be through print, broadcast media, websites, and by trained municipal guides. The communication function will be integrated with the socio-economic support function of the MIU and TORs are provided in Annex 12.

1.11 Project activities would therefore include the support to the creation or expansion of productive and commercial units that would concentrate on traditional arts and crafts, as well as related traditional cultural activities. This support will include: (a) feasibility, market studies, and assistance with product design; (b) the identification of possible and additional sources of credits or grants; (c) facilitating the location of the activity in an appropriate building of the historic city center in the proximity of the tourism circuits, of the main monuments and commercial areas; (d) and some direct financial incentives to the creation or expansion of the productive or comnmercial unit, which could include the capital costs of necessary equipment. In addition, the parallel Bank-financed Community Driven Development project already under implementation will be available to provide financial support to initiatives and proposals aimed at fostering local economic development to the benefit of the poor in the historical urban cores; and (f) technical assistance related to issues of communication, participation, trust and cultural sensitivity.

(d) Support to the rehabilitationof historic housing stock: 1.12 In the project cities the historical city centers provide the main residential opportunity to the poorest segment of the urban population. A number of factors are of obstacle to rehabilitation of the housing stock: (a) a highly fragmented tenure; (b) conflicting or unclear legal records; (c) lack of financial resources for poor resident owners, and lack of incentives to rehabilitate for absentee owners in view of the rental caps; (d) the spatial configuration of the medinas, where the residential units are not organized in separate buildings but rather interconnected into overlapping clusters; and (e) accumulated decay and neglect that has occurred over the last half century. Despite these difficulties, the investments in public spaces, monuments and historical buildings proposed as sub-components 2.a and 2.b will create a favorable momentum for the rehabilitation of the historical housing stock, which should be primarily benefit the local residents.

1.13 To facilitate the investment by private owners in the renewal of the building stock, the project would finance the rehabilitation of building elevations, including doors, windows, overhangs, signage, utility lines and surface treatment in some crucial commercial and residential streets that are in the vicinity of, or connecting, major public spaces and/or monuments that benefit from rehabilitation investments under sub-components 2.a and 2.b. Such investments combined will contribute to re-qualify the overall urban fabric in those key areas.

1.14 To avoid the risks of gentrification and to ensure that the local residents benefit from the public sector efforts at revitalizing the degraded urban cores, the project would also collaborate with the organized ownership of clusters or blocks, often including residential and commercial units, so that a

-47 - comprehensive rehabilitation of the communal parts of the buildings would occur. This is considered essential given the risks for the survival of the buildings due to the absence of ordinary maintenance. Project support would consist in the administrative and legal assistance required to prepare the rehabilitation works, in the preparation of architectural and engineering studies, and in a financial contribution towards the rehabilitation costs of up to 30 %. The collaborative modalities envisaged include the co-financing of the rehabilitation works by the owners of the units in proportion to the percentage of the overall building they possess. This financing could take place in various ways: (a) via cash contributions towards the costs of the rehabilitation works; (b) via the acquisition of a micro-credit with a commercial bank guaranteed by the Municipality; or (c) via contributions of unskilled labor. Were the owners not willing to commit to their financial participation, an outstanding debt on the property would be recorded by the Municipality, that would finance the related costs on their behalf, for a value not to exceed 30% of the total.

1.15 The construction or rehabilitation of housing units for temporary occupancy or for resettlement purposes is also included under this sub-component. In the case of temporary housing units to be built, they will be designed as infill operations within the context of the historic urban fabric, wherever possible, or in the vicinity thereof as second-best location.

(e) Enforcement of city center zoning regulations: 1.16 Construction activity within the historical city centers needs to be lirnited to the rehabilitation and maintenance of the existing buildings, and to infill operations where collapsed structures or infrastructure projects have created fringe areas or open spaces that constitute negative urban voids. Given the investments described under this component, rising real estate values should provide the incentives for private investments to take place in commercial as well as residential activities. It is of the highest importance to promote such investments as well as to ensure that they occur within the respect of tight urban regulations and building by-laws that are coherent with the characteristics of the historical urban fabric, and with the significance of the architectural and archaeological highlights present in or around the historical city centers. For this purpose, a detailed zoning regulation - applied to a clearly determined perimeter defining the historic city centers - has been developed during project preparation for each of the project cities, and their official approval by the DGU and the Municipalities is considered a condition for negotiations. These codes specify acceptable building heights, volumes, set-backs, and styles, the characteristics of the elevations, openings, overhangs, doors and windows, as well as the colors and the details to be respected for both rehabilitation and new construction. Under project implementation, it is expected that these codes would be internalized by the Municipalities, further refined and detailed with operational procedures. A system for the submission, screening, review and approval of the rehabilitation and construction perrnits would be put in place, and the promotion of investments by private sector operators within the historic city centers, in respect of the regulations, would be pursued. q9 Traffic and parking improvements: 1.17 In all of the project cities there is a need to improve the vehicular accessibility of the historic centers, while at the same time protecting them from the current invasion of motorcars that impoverish their livability to residents and their attractiveness to visitors. In the case of Tripoli in particular, severe difficulties of access to the historic city center also negatively affect the commercial outreach of the souq, that is progressively loosing its traditional city-wide clientele, and are of serious obstacle to any potential expansion of the cultural tourism visitors flow, one of the expected benefits of the investments proposed under Component 2. Urban traffic studies, such as the JICA one for Tripoli, have pointed the opportunities for re-routing city-wide vehicular flows further away from the city centers, while improving traffic management systems and limiting the access to the central historic areas to residents,

-48 - deliveries and emergency access only. This would also entail creation of small regulated parking areas and the use of park-meters in the vicinity of and within the historic centers. These crucial and cost-effective interventions would require sigrificant enforcement commitment on the side of the concerned Municipalities, and introduce the principle that the common right to vehicular movement is subject to varying conditions in the different parts of town.: Such changes and regulations of traffic patterns would be necessarily accompanied by the supply of parking areas to cater for the demand generated by the attractions and the activities taking place in the historic centers. Where such areas are necessarily located at some distance, like in the case of Byblos, a shuttle service would be provided at times of intense usage of the parking sites (festivals and other special cultural events). Parking facilities would cater to different user groups, primarily local residents and external visitors, and apply different usage conditions (paying and non-paying). They would be located on publicly-owned land, be combined with the construction of commercial facilities, and represent income-generating investments for the Municipalities. These may decide to build and operate them, to establish operating concessions after construction, or to enter into BOT agreements with private operators. (g) Protectionand landscapingof coastal and green areas: 1.18 The archaeological sites and the historical city centers at the core of the proposed project interventions are surrounded by the modern areas of the project cities, and the interface between such different urban components has to be appropriately managed. In the three coastal cities of Byblos, Saida and Tyre, project sites are adjacent to and in direct proximity of the sea-shore. Project activities would include the protection of the coast-line from urban abuse, the creation of low-impact pedestrian circuits along the coast, the elimination of intrusive structures, and an appropriate level of landscaping. These areas always represent significant recreational opportunities for residents, and pleasant additions to the cultural circuits for visitors; they also often offer views over important maritime archaeological remains. In the cities of Baalbeck and Tripoli, the project sites would be greatly enhanced by the creation and the maintenance of public gardens in what are currently semi-abandoned areas that belong to the Municipality, in proximity of archaeological areas and historic city centers. (h1) Studiesfor urban redevelopment 1.19 Project supported activities would include assistance to the Municipalities for the technical and financial feasibility definition of urban redevelopment programs, up to the commercial agreements with investors or operators. In the case of Tripoli, a major urban redevelopment opportunity is to be found in an area situated North of the historical city, consisting of land belonging to the Municipality and to private owners, where a combination of commercial, residential and public facilities could be envisaged. Where no infill areas are available for temporary housing units construction within the historic city center such residential requirements can be combined with the commercial developments, enabling the Municipality to cross-subsidize them within the same operation. Component I: Rehabilitation of Historic City Centers and Urban Infrastructure Improvements Component Description Total Est Cost USS mUllon Induding ______Contingencies I Rehabilitation of Historic City Centers and Urban Infrastructure Improvements 1.1 Baalbeck: 9.149 1.2 Byblos- 3.079 1.3 Saida: 3.647 1.4 Tripoli: 19.286 1.5 Tyre: 7.433 Total Component I 42.594

-49 - Project Component 2 - US$ 3.66 million Archaeological Sites Conservation anid Mianagement

2.1 This component includes the following complementary activities: (a) research and documentation; (b) conservation of surfaces and structures; (c) site presentation to visitors; (d) site management.; and (e) further archaeological studies. The physical investments would take place primarily in Baalbeck and Tyre, two of the main archaeological sites of Lebanon, both inscribed in the UNESCO World Heritage Center list. Additional works would take place in the Crusader Citadel of Tripoli.

2.2 The project-supported activities in the five cities are described in Attachment I to this Annex.

(a) Research and documentation: 2.3 The sites have had a very low level of upkeep and overall management for over a quarter century (i.e. during the civil war and the post-conflict reconstruction period). In some cases the archaeological investigations under way at the outbreak of the war were hastily stopped, leaving excavations exposed to both weather and theft. Record-keeping on the part of the DGA has been lacking, and there is a significant back-log of research and documentation that needs to be carried out. This applies to monuments and artifacts that have been excavated, exposed, and that have not been duly documented and interpreted, as well as to the general need to catalogue and properly stock on site the artifacts, stone fragmnents, inscriptions, mosaics, and frescoes. Complete inventories of the known assets on site would be produced, measurements and interpretations recorded, and related photogrammetric and cartographic surveys produced and filed.

(b) Conservationof surfaces andstructures: 2.4 In parts of the archaeological sites, exposed structures or substructures would be backfilled for protection purposes after research and documentation would be complete. In others, the research and documentation exercises would be followed by conservation interventions on surfaces, so as to minimize the damages induced by weather, time, improper uses of the sites and visitor abuse. Structural conservation needs would also be addressed, to minimize the damages caused by earlier conservation interventions with inappropriate materials, and to control the risks to visitors and to the survival of the monuments due to the instability of vertical structures. Protection of exposed surfaces and structures against severe exposure to the weather would be introduced in some cases, especially where erosion of sculpted areas is evident.

(c) Landscapingand site management Accesses to the sites and their boundaries would be re-defined in conjunction with the rehabilitation of the neighboring historic city centers (see Component 2), to better integrate the archaeological areas in the urban fabric and vehicular and pedestrian circulation flows. Visitor parking needs would also be consequently accommodated. Where possible, service roads, unsightly service constructions and abandoned excavation equipment will be eliminated to further integrate the archaeological sites, enable integrated visitor flows, and improve site appearance. Site museums would be rehabilitated or expanded to expose additional artifacts found on site, once conserved. Landscaping of the sites and vegetation cover would be significantly enhanced, given the amount of backfilling that would create the opporaunity for planting of shrubbery and lawns, and in some cases the need to create visual barriers between the

- 50 - archaeological areas and the surrounding modem buildings. Overall safety of the sites for the visitors would be enhanced, as well as the protection of the sites from vandalism and theft thanks to better enclosures and control over unwanted intrusions.

(d) Site presentationto visitors 2.5 Research, documentation and conservation are essential in themselves, but are also the prerequisites for site presentation to the visitors, which entails a number of complementary activities. Currently, the archaeological sites do not offer themselves easily to the visitors: many areas are inaccessible, the sites are fragmented and separated by physical boundaries, historical layers are often confused, and there is little support to the visitor's understanding of the sites. In addition, site amenities that could make the visit a pleasurable or comfortable experience are in general not available. Over and above the back-filling of some of the currently open excavations, the sites will also be liberated from the scattered architectural fragments that currently confuse the visual understanding.

2.6 Interpretation "themes" would be identified, related to the historical period, identity and original purpose of the buildings. Specific areas within the sites would be highlighted through appropriate signage and the use of visitor support devices, such as audio-wands and explanatory site brochures. Visitor centers would be created and the existing museums expanded, providing overall introduction to the sites' history and significance, via plans and reconstructions, 3D reproductions and models, lithographs and photographs, film documentaries, slide shows, and temporary exhibitions. Visitor circuits would be designed and made visible throughout the sites with signage and where possible handicapped-accessible routes, also reflecting the different amount of time that different visitors may want to spend on site. Visitor circuits would be provided with rest areas, benches and other facilities, such as overview platforms.

(e) FurtherArchaeological Studies. 2.7 To promote the continuation of the conservation and presentation work, the project would finance a series of studies that would enable DGA to pursue the investments beyond the life-time of the project in all of the five cities; these would include: (a) an archaeological mapping of the inland areas of Tyre, given the fact that the most ancient human settlements occurred on the mainland before Alexander's causeway connected it to the then city-island of Tyre; (b) an update of the archaeological studies of the main site of Byblos, that has not been studied in the last five decades, in order to identify current state of conservation, priorities for action and proposed presentation scenarios, along the same methodology used for the sites of Baalbeck and Trye during project preparation; (c) marine archaeology studies for the sites of Tyre and Byblos, where preliminary studies carried out by UNESCO-sponsored experts show the existence of important remains that could be the object of specialized visits thus augmenting the interest of the two cities to visitors; and (d) studies on the archaeological sites of Saida, such as the ancient Sidonian acropolis and the unique Phoenician Echmoun Temple, located just outside the city.

- 51 - Component 2: Aschsological SOtee Con m aOlon and N angmemo nt

Including -

2 Archaeological Sites Conservation and Menagemieat 2.1 Baalbeck - site of Al-Qalaa 5.556 2.2 Tyre - sites of El Mina and El Bass 5.217 2.3 Detailed studies and supervision services for Baalbeck and Tyre Archeological works 1.475 2.4 Tripoli - (Citadelle St. Gilles) and Saida (Chateau de la Terre) 1.244 2.4.1 Tripoli Citadelle St Gilles 0.365 2.4.2 Saida Chateau de la Terre: Consolidation interventions and site presentation 0.880 2.5 Further archaeological studies 0.168 2.5.1 Tyre inland areas archaeological mapping 0.112 2.5.2 Byblos archaeological surveys 0.056 Total Compoment 2 1I3.661

- 52 - Project Component 3 - US$ 5.33 million

Institutional Strengthening and Project Management

3.1 This component includes the following technical assistance and capacity building activities: (a) management of historic centers by municipalities and the DGU; (b) reform of the cultural heritage institutional and regulatory framework; (c) the restructuring and strengthening of the DGA; and (d) project management.

(a) Management of historiccenters by Municipalities and DGU

3.2 Municipalities currently have a limited mandate as to the provision of urban services - generally in the hands of the Ministries - and to the improvement of municipal infrastructure. In addition, wealthy residential or commercial districts are getting the disproportionate allocations of the scarce municipal resources to the detriment of the impoverished historic centers. The institution in charge of urban planning, of the enforcement of the zoning regulations and of the release of building permits is the Direction General or Urbanism (DGU), which is part of the Ministry of Public Works and Transport. It has regional offices in the major cities, including those targeted by the project. DGU commissions the preparation of master plans to external consultants, the approval of which by the Higher Council of Urban Planning, subject to the review by the Municipalities concerned. The master plans generally designate the historic city centers as areas of special importance, which is reflected in their zoning. However, they do not provide the detailed land-use and building regulations that would be needed to ensure preservation and sustainable development of the designated zones.

3.3 Under the project implementation, it is proposed to assist the five Municipalities in acquiring the administrative and technical abilities to better manage their historic city centers and to promote their on-going rehabilitation. This will take place via: (a) the promotion of private-public partnerships receiving contributions of local businesses for the operation and permanent maintenance of the refurbished public spaces, conserved historical buildings, and additional investments aimed at improving urban maintenance operations; (b) the introduction of the use of geographic information systems (GIS) at municipal level for the inventory of the historical building stocks the tracking and registration of real estate transactions that may be occurring on fragmented properties, and the overall improvement in the urban management of the historic urban cores; and (c) the operation of three Municipal Implementation Units in the cities of Baalbeck, Tripoli and Tyre as special units of the Municipalities aimed at managing the introduction of these innovations. Administrative and financial provisions would have to be subsequently made by the Municipalities to integrate such units in their technical services organization as "Cellules de Sauvegarde et de Mise en Valeur', given that the rehabilitation of the city centers, will need to continue over a significant time horizon. The current interest expressed by the Mayors and the municipal councils for the rehabilitation of the historic cities is a sign that they would support the sustainability of such measures.

3.4 Under this sub-component, technical assistance would also be provided to the DGU to adopt the concept and the practice of special planning and building regulations to historic city centers, based on the examples and practice of such tools in the project cities, so that DGU may make use of them in its current and future work. This would lead to (a) a new generation of urban planning instruments developed or commissioned by DGU that would internalize the practice of special zoning for historic centers; and (b) facilitate the future revision of the legislation on the protection of traditional urban fabric as opposed to individual monuments or buildings (see Attachment 2 to this Annex).

- 53 - (b) Reform of the culturalheritage institutionaland regulatoryframework 3.5 Currently the sector is governed by a framework law established in 1933 during the French Mandate, that defined built cultural heritage primarily as antiquities prior to the 18th century, and established the Directorate General of Antiquities (DGA) as the administration in charge of their protection. The DGA is now part of and under the tutelage of the Ministry of Culture (MOC). There is a clear need to modernize this ancient legislative framework, given the current more complex challenges of cultural heritage conservation and its potential role in local economic development. There is a parallel need to reform the DGA and to make it into a modem, efficient administration to effectively manage the national cultural heritage assets, staffed at the appropriate level, and empowered to enter into practical agreements with other parties.

3.6 A reform of the sector's legislative and regulatory framework is currently under study, and it expected that the international experience that was discussed with the Ministry of Culture and the DGA during project preparation would lead to the successful completion of the reform process. This subcomponent would entail a detailed revision of the current legislation governing the management of built cultural heritage and leading to the drafting and official approval of new legislation, paying special attention to improving the coordination between various pieces of legislation affecting heritage protection and promotion, harmonization of different legal protection measures, including inventory lists, and elaborating executive decrees that will set rules and procedures for the application of the new law.

3.7 This sub-component would also include formulation of a general strategy for cultural property. The formulation of a general policy should be a nationally driven exercise with the Minister of Culture as the main actor aided by MOC's senior personnel, and national and international concerned bodies. It should set policy goals and their translation into clear objectives and implementation strategies. The action plan foresees technical assistance to support this exercise. The priorities of the strategy will determine the expansion of the revenue basis of the DGA, that currently depends exclusively on the yearly allocations from the national budget via the Ministry of Culture. The budgeting process, including the programming, monitoring and, therefore absorptive capacity of the DGA for the available budget appropriations would be rationalized and improved. In addition, the new legislation would also provide for the establishment of site management units for Baalbeck and Tyre that would report directly to the Director of Antiquities, and that would be distinct from the regional delegations; this would allow for better site management.

(c) Technical assistanceand capacity buildingfor the DGA 3.8 The assessment of the DGA's current operating modalities, staffing and financial constraints carried out under project preparation, would be followed under project implementation by a technical assistance and capacity building program in close collaboration with the Ministry of Culture's advisors, that would include(for more details see Annex 15): (a) DGA re-structuring and staffmg under the proposed new law on the organization of the Ministry of Culture, following updating the missions to suit sector demand; (b) Inventory of built heritage to overcome the present absence of such an inventory that is a most important weakness preventing any effective conservation and safeguarding program (the task of building an appropriate heritage inventory is huge in scope and could not be undertaken by the DGA alone with its own means; in this component the minimal requirements to build a capacity and a system within the DGA are considered, a separate Project is foreseen to assist the DGA in building the national heritage inventory); and (c) implementing a planning budgeting system, that is results-oriented and combines strategic planning and performance budgeting. The system will be used to make appropriation and expenditure decisions based on a precise identification of needs and goals.

- 54 - 3.9 The implementation of this sub-component entails assistance in the following activities: (a) formulation and organization of the strategic planning and budgeting system; (b) development of an associated computerized system; (c) preparation of operation manuals; (d) developing human resource policy and management framework, training of personnel; and (e) communication and outreach activities.

3.10 Advisory services will be provided by UNESCO in support of the DGA for scientific oversight of the methodology and approaches used in carrying out the conservation of the archaeological artifacts under the project. These services would be provided via periodic missions of experts designated by UNESCO and whose reports would be validated by the organization.

(d) Projectmanagement 3.11 CDR would be in charge of overall project management, and for this purpose it will create a Project Management Unit. The PMU will be in charge of: (a) interactions with the Ministry of Finance for the progressive disbursement of the World Bank loan, against periodic financial and progress reports; (b) substantive and frequent interactions with Ministry of Culture, DGU, and a host of other public administrations to successfully pilot the implementation of the project; (c) organizing, staffing and supervising the three Municipal Implementation Units in Baalbeck, Tripoli and Tyre, where there is larger share of project resources to be invested and where the municipal authorities cannot count with appropriate technical services; (d) contracting on behalf of DGA the project manager and the firm in charge of the detailed engineering and of the supervision of the archaeological interventions; (e) reviewing and clearing all requests of payment to contractors and consultants under all four project components; and (f) ensuring the overall quality control, monitoring and evaluation, and the congruence of project implementation with the project development objectives and identified activities, as well as with the legal and administrative terms of the Loan Agreement. For all of these activities, the PMU will be interacting with the staff of the World Bank entrusted with the supervision of the disbursement and of project implementation. The PMU will be staffed with technical, legal and administrative staff.

- 55 - Component 3: Institutional Strangte7nlng and Project Management

Incl. Coningancies 3.1 Technical Assiatzace andlPiroject Manoagement snpport for the Municipalities n.056 3.1.1 Municipal Implementation Umts in the five project's municipalities 1.459 3.1.2 Technical assistance, including training services, to the five project's municipalities 0.173 3.1.3 Introduction of GIS systems in municipalities 0.224

3.2 Technicnl Assistance & Capacity Bluilding oir thke I)irectorate General of 1.449 Antiquities 3.2.2 Technical Assistance for DGA's strengthening (Capacity Building) including support to 1.000 Cultural Heritage reforms 3.2.3 UNESCO advisory services to DGA for archaeological works 0.279 3 2.4 Equipment for the DGA 0.170

3.3 Technical Assistance to the llirectorate GenerEal of Uirban Planning for historical 0.2S1 city centers management

3.4 Project Maniagement by CD1;R 1.739 3.4.1 Services for project management 0.898 3.4.2 Services for implementing the Environmental Management Plan (EMP) 0.337 3.4.3 Equipment for project management 0.168 3 4.4 Operating costs for project management 0.337

_ _Total Component 3 5.325

- 56 - Attachment 1: Project-supported activities in the five cities

Lebanon: Cultural Heritage and Urban Development Project

1. Baalbeck

Rationale and expected impacfr Baalbeck, the provincial capital of the Bekaa Valley, is famous for its Roman archaeological site, on the UNESCO World Heritage.list and the most renown one in Lebanon. The historical development of the urban settlement has been dominated by the presence of the site, but the local economy is mostly related to its regional administrative and commercial functions. The municipality endorses a future vision of Baalbeck where cultural tourism would bring greater local benefits than it currently does and that lower income residents would be able to share these benefits. For this to happen, the archaeological sites have to be maintained and further integrated in the urban fabric, the central commercial area has to be re-oriented to indude development and marketing of a greater range of local products and services, and through-traffic that now cuts across town has to be re-directed away from the central area. In addition, residents must have improved skills and enhanced resources for small and medium business development and tourism related employment; residents and visitors interaction must be enriched, more information must be available at all levels, and the municipality must be enabled to play a greater role in promoting and coordinating cultural tourism development in consultation with its inhabitants. The new zoning and building regulations and the actions financed under the project contribute to the implementation of this vision. Expected benefits include a higher quality of public spaces that would benefit both local residents and visitors; a greater offer of interesting sights that would attract visitors in spending more time in Baalbeck and increasing the demand for local accommodations; and numerous opportunuties for local economic development for a larger share of the low-and middle-income population of Baalbeck.

1.1. City entrances and interfaces, new public spaces and parking: The through-traffic will be distanced from the archaeological area, the street that provides the Northwestern boundary to the site will become a pedestrian promenade overlooking the site, parking areas for tourists and residents will be provided at the South and North city entrances, Moutran Square will be entirely rehabilitated, sidewalks will be improved, through-traffic will be diverted, and a new building will house a cluster of productive activities in order to relocate some of those that are currently on the street facing the archaeological site, car-repair workshops and others;

1.2. Rehabilitation and revitalization of the historic street pattern: A number of historic pedestrian circuits will be rehabilitated, so as to regain the connectivity for residents and visitors to various monuments and spots of cultural interest, cutting across vehicular streets; paving, lighting and signage will enhance the quality of the following pathways: Interface to Hay el Sohl; Ummayad Mosque to Serail Square; Moutran Sq. to Hay Qalaa, Venus Temple area, and Ras el Ain; Souq el Moutran; Catholic Church to Mercury Temple hill; Souq el Moutran to Mercury Temple hill; this pedestrian network will reinforce the links with and between the Moutran Souq, that is being already rehabilitated by the municipality, and the market square, which is the hub of commercial Baalbeck;

- 57 - 1.3. Rehabilitation of the Ras El Ain axis: This key historical feature of Baalbeck will be rehabilitated from the Ras El Ain source and Zaher Beybers Mosque to the Essouq Mosque adjacent to the market area; the public park around the ancient source and sanctuary will be rehabilitated and landscaped; the water channel that runs parallel to the boulevard will be raised and treated as a quality feature as opposed to drainage, the pedestrian sidewalks will be improved and provided with trees and street furniture; new parking areas will be created on the northern and southern sides of the boulevard for visitors and residents;

1.4. Redevelopment of the Market area: Situated next to the Serail Square at one of the most central locations, the market area will undergo an extensive redevelopment in order to guarantee a hygienic operation of the meat, fruit and vegetable produce sale; a covered market structure complete with vending areas will replace the current sprawl of informal stalls and will entail the provision of water, sanitation and waste management infrastructure, under municipal rnanagement; on the Ras El Ain boulevard, a new two-story commercial building will provide street frontage where recent demolitions have created a void, and integrate the market area with enclosed space for commerce and service activities.

1.5. Re-use and rehabilitation of the Gouraud Barracks: This large complex situated at the north-eastern side of the Al Qalaa site, built in the '30, belongs to the Ministry of Defense and has been occupied since the civil war by displaced families. Given the heritage value of the complex and its location next to the archaeological area, a study will explore its potential adaptive reuses for cultural, tourist and administrative functions, and identify possible public-private partnership operations. The first intervention will entail the rehabilitation of one of the wings so as to transfer the offices of the regional administration from its current location on the Serail Sq.

1.6. Refurbishment and reuse of heritage buildings and complexes: A series of about ten classified heritage buildings belonging to the Ottoman and the Mandate periods, and located at the interface between the archaeological site and the historical urban area, will be refurbished: this will include the reconstruction of the Grand Hotel, the rehabilitation of the Catholic Church compound buildings, and of the Moutran, Amhaz, Samaha, Haydar, and Skaff houses; spaces around the buildings will be integrated within the re-design of the pedestrian areas; financial contributions will match the private owner's investments for the rehabilitation and reuse of the buildings as hotels, restaurants, bed & breakfasts and private museums;

1.7. Support to vernacular housing rehabilitation: Despite the extensive reconstruction of the last thirty years, there are six clusters of inhabited vernacular architecture made of units originally built with rubble stones and mud-bricks, that still maintain much of the original character; these clusters are mostly located in the proximity of the archaeological area, and provide a testimony to the traditional housing of Baalbeck, as well as a good location for tourism-oriented commercial and productive activities. One unit will be entirely rehabilitated in each cluster for demonstrational purposes, and financial incentives as well as technical administrative assistance will be made available to the inhabitants of the surrounding units to rehabilitate them following the traditional construction techniques; a total of about 65 units are expected to be rehabilitated this way.

1.8. Support to local economic development, cultural tourism, private sector participation, and communication: The city's initiatives and vision for local economic development and promotion of cultural tourism will be supported through training to improve tourism services (B&B, small restaurants, municipal guides training etc,); provision of information and guidance on accessing financial and technical resources for business development; support to the development of a website to attract more visitors and investment in goods and services for cultural tourism; and information to enable tourists to

- 58 - enjoy the city's offerings in an appropriate way. A continued program of consultation between the city and residents and various stakeholders will enable them to contribute better to the realization of the city's vision, and to evaluation of the outcomes.

1.9. Research, documentation, conservation and presentation of the archaeologicalsite of Al-Qalaa: The main area of the Great Hexagonal Court, of the Temple of Jupiter and of the Temple of Bacchus will be thoroughly researched, surfaces and structures will be conserved, and the site will be liberated from scattered fragments. The adjacent area of the Temple of Venus will be connected to the main site; the secondary sites of Bustan Nassif, Bustan el-Khan, Bustan Raad, Bustan Zein, the quarries, and Qubat Douris will also be partially researched and conserved. The entire archaeological site will benefit from site presentation interventions and from a comprehensive site management plan that will include a Site Visitors Center and other essential infrastructure.

- 59 - 2. Byblos

Rahonale and e4peckd mpactr. Byblos, perhaps the most ancient of the Lebanese cities, has grown over time around an archaeological site which is on the UNESCO World Heritage list, located on its sea-front. Conservaton efforts have started in the '70, and the medieval settlement, souq and harbor have been successfully preserved. The proximity to Beirut provides Byblos with a steady flow of visitors, but in recent years residentnal and commercial developments have started to threaten its character. The Municipality wants to pursue actions aimed at maintaining the integrity of the site, the attractiveness and character of the town, its accessibility to residents of the town and region, and a tourism-oriented economy. For this to happen, vehicular access to the historical city has to be curtailed, public spaces need to be rehabilitated in its central area, and the harbor and coastal zone have to be re-organized and made more accessible. There are few open spaces for the inhabitants of the city owing to enclosure of many parts of the old town. The opening up of public spaces will enhance community interactions and link the old and new neighborhoods. The new zoning and building regulation are based on these premises and the project will support the implementation of such investments; their expected impacts will be an improved quality of life for local residents through access to public space and amenities, a greater attraction of visitors, and increased economic returns. Local entrepreneurs in the municipal federation will enjoy increased economic benefits through municipal support to tourism related services and products and through encouragement of new initiatives to attract and retain visitors.

2.1. Improved access to the historic center andparkingfacilities:A new parking for visitor buses and cars will be built at the exit of the North Highway, to include an information center and a pedestrian bridge over the highway; the pedestrian access to the historic city will occur via the landscaped archaeological site of the Roman road, that will also serve as a visual introduction to the history of the city and to the visit. Additional interventions related to the accessibility of the historical city and to availability of parking include: improved pedestrian crossings in the proximity of the souq; the removal of a gas station to open the view over the cemetery garden; the rehabilitation of the access to the old city and to the Ottoman souq; the creation of a parking area for a shuttle service connecting the new parking next to the Highway to the harbor; the rehabilitation of the main northem gate and the reopening of the Tripoli gate in the medieval walls; the reorganization of the municipal parking; and improved pedestrian access to the harbor area.

2.2. Rehabilitation of public spaces and infrastructurein the historic center The main square facing the entrance to the archaeological site and to the Citadel will be rehabilitated and provided with a fountain, trees and various landscaping elements; to make it into a more welcoming pedestrian area, the adjacent parking lot will be separated from the square and secluded from its view. The garden of the Fossils Museum, the piazza of the Ottoman souq, and the UNESCO square will be rehabilitated, repaved and provided with appropriate urban furniture. A Visitors llnformation Center will be built as part of the Ottoman souq, and will include inforrmation booths, exhibition space and sanitary facilities. A wooden deck will be built cantilevering over the archaeological site, to increase its visibility and to provide additional space for open-air rest and entertainment. Rehabilitation works will be carried out to create a pedestrian promenade on top of the medieval wall surrounding the historic city on the Northern side, offering a view over the historic city, the archaeological site and the sea. Paving and lighting of some streets in the historic city will take place, as well as improvements to the sewerage network and the provision of two pumping stations.

-60 - 2.3. Improvements to the harbor areas and to the coastal zone: Vehicular access to the harbor will be limited and regulated by access bollards, so that its pedestrian use can increase; the entire quay area will also be repaved and landscaped. The medieval port tower will be conserved and renovated as a significant testimony to the antiquity of the harbor. The boat repair area adjacent to the new pier will also be repaved and provided with access to water and to sanitary facilities. The new pier will be repaved and provided with public lighting, while the panoramnic area on the jetty will have light protective structures. From the jetty, a sea-side pedestrian wooden promenade will surround the foot of the archaeological site, enabling visitors to access the Southem side of the historic city.

2.4. Support to local economic development, cultural tourism, private sector participation, and communication: The project will support the municipality's ongoing efforts to promote cultural tourism through linkages with related activities in the surrounding area. Information on goods and services will be produced, through a website, brochures, visitors' center etc. Demand based training activities for small local entrepreneurs (business development, management etc.) and for employment will be provided. The development of cultural tourism will be done in harmony with local values through information campaigns on the expectations of tourists (for residents) and those of the inhabitants (for tourists). All components of the project are implemented in consultation and with the participation of the local community and affected persons.

- 61 - 3. SOnid

Rationale and expected impactar Saida has an attractive if small historic city center in proximity of the sea, that is now surrounded by modern urban development and infrastructure. The conservation efforts of private foundations in the past decade have concentrated mostly on large monuments and have started to turn around the image of the historic city. The municipality is keen on reversing the decay of the traditional urban fabric and on attracting visitors and the location of cultural acuvinues in the spaces of the historic city, and has begun small scale infrastructure investments. Additional investments in the quality of public spaces and in the maintenance of the building stock, threatened by decades of disrepair and by the loss of real-estate value, are required, as the inhabitants of the old town represent the most impoverished segment of the city and suffer from general institutional neglect. The project wlll support such investments, and their expected impacts would benefit the local population as well as visitors, who will be attracted into longer stays on account of the sights within the historic city and of the archaeological sites. The project will also support the residents of the old city in acquiring skills that are adapted for cultural tourism.

3.1. Rehabilitation of public spaces in the historic center: In support of the on-going infrastructure investments by the municipality, a series of key public spaces and a circuit of pedestrian alleys connecting the main squares and monuments will be rehabilitated. This will include paving, lighting, provision of street furniture, as well as the restoration of adjacent building elevations, where doors, shutters, shop-front overhangs, water-spouts and other extemal elements will be renovated according to the traditional design patterns and building materials. In particular, the Bab Al Saray Square in the proximity of the Khan el Franj will be rehabilitated to become one of the key public spaces of the historic city. Covered pathways, a salient feature of the historic city, will be also improved.

3.2. Support to housing rehabilitation: Given the high percentage of renters among the population of the historic city, and to avoid a process of renovation of the housing stock that would exclude them, incentive mechanisms will be introduced including the co-financing of the maintenance and restoration of the communal parts of some building blocks, on condition of guaranteeing the occupancy by the present inhabitants. Intemal renovations will be left to unit owners and inhabitants. A focused study will be conducted to assess the respective socio-economic needs of owners and tenants and develop an appropriate intervention.

3.3. Research, documentation, conservation andpresentation of the Land Castle: Built on the site of the ancient acropolis of Sidon and situated at the summit of the historic city, the Land Castle dates from the Crusaders and Fatimid periods. Its remains, initially excavated in the '20s, will be liberated from the accumulated strata of soil, and documented, conserved, and presented to visitors through an appropriate site management plan. It will represent an important cultural and tourist attraction to the visitor, in addition to the Sea Castle.

3.4. Support to local economic development, cultural tourism, private sector participation, and communication: The highly depressed economic conditions of the residents of the old city, especially the fishermen, require specialized interventions. Priority social development needs (health, education, skills training and youth development needs) will be evaluated in a participatory manner. Links with expert organizations (such as NGOs, and other support) will be built to develop, finance and implement

- 62 - programs to address these needs. The project will also support marketing goods and services for cultural tourism and organize demand based training for the neediest communities to access these resources. The development of cultural tourism will be done in harmony with local values through information campaigns on the expectations of tourists and those of the inhabitants from the growth in tourism.

- 63 - 4. Tripoli

Rationale and expected im*pactr Tripoli, the second city of Lebanon, has a large historical city center that hosts very significant architectural monuments of the Crusader and Mameluk periods; its traditional urban fabric, city life, productive and commercial activities still are the symbol of the city to all its residents, but are threatened by an advanced process of decay and by a fifty-year long lack of public investments. The inhabitants of the historic city suffer from a depressed micro-economy, lack of social services and general neglect. The municipality wants to redress this imbalance and is intent on offering to the inhabitants of the medina opporturnties of local economic development and a better quality of urban life; it is committed to investing in the cultural resources of the historic city as assets for the development of the economy of Tripoli as a whole. For this to happen, better access to the medina must be provided while freeing it of vehicular traffic; public spaces of great value must regain their pedestrian qualities; the attractiveness of the souq to residents and visitors must be highlighted; a popular market serving the historic city needs to be provided with better facilities; some key monuments must be restored to become the magnets and anchors for a new set of cultural and community activities that would cater to the local residents but also attract to the medina more middle-income residents of Tripoli and visitors; the historical building stock needs to be maintained by its owners to regain value attract and private investrnents for its rehabilitation. The new zoning and building regulations are based on these premises.

The project supports such investments, with which the economic base of the historic city would be further reinforced. A significant urban re-development operation in a neighboring area will also be made possible by the project. In addition, the project will strengthen the municipality's capacity to respond to the socioeconomic needs of the inhabitants to develop tourism related services and products to attract and retain visitors and provide support to local economic initiatives related to cultural tourism.

4.1. River-side circulation,parking improvements and landscaping: The Western river-side Corniche Rachid Karame will be renovated up to the Al Bourtassi Sq. with the introduction of sidewalks, the planting of trees, the narrowing of the carriageway and the creation of parking areas on either side for residents and visitors. Through-traffic will be diverted to the Eastern river-side so as to relieve congestion in the historic city. The Al Bourtassia Sq. where many important monuments are located will become a totally pedestrian space and will be landscaped as such, while the access to the adjacent bridge will be redesigned for a more limited vehicle flow. The dead-end street below the Citadel will lead to a parking area for visitor buses and cars, and the Maoulawiya Park will be fully landscaped for the benefit of the local residents.

4.2. Resettlement housing and commercial space: To accommodate the families and activities that are currently occupying Khan el Askar, alternative housing will be built with municipal financing on nearby public land, and municipal retail space will be allocated accordingly in neighboring areas. The first phase will entail the provision of 27 apartments and of 28 commercial units, and the second phase will include 28 apartments and 3 commercial spaces. The phasing of the construction will precede the rehabilitation of Khan El Askar, so as to enable the resettlement to take place.

4.3. Northern neighborhood, Khan el Askar, public space and streetfrontage: A key anchor to the renewal of the historic city will be provided by the rehabilitation of Khan el Askar, a large municipally-owned historical building currently occupied by families displaced by the flooding of the Abu Ali River in the '50. Once rehabilitated in two phases, the Khan will house the Lebanese University Center for Restoration and Conservation of Monuments and Historic Sites, the Municipality's technical office for rehabilitation of the historic city, and other cultural, educational and community facilities to be

- 64 - determined. The adaptive re-use of Khan El Askar will be subject to the preparation of a business plan that will provide the municipality with guidelines to ensure its operation and maintenance and a predictable revenue stream. A series of commercial activities located on the external part of the Khan will continue to operate, all will gradually reorient themselves towards businesses that will cater to the renewed cultural and tourist characteristics of the area. The square between the Khan and the Al-Taweb Mosque will become fully pedestrian and connect to the entry to the main Souq Al Bazerkan. Significant improvements will take place in the souq, in the adjoining pedestrian streets and in the Berket al Mallaha and Souq El Haraj squares, affecting both public spaces and the rehabilitation of the elevations of the surrounding buildings. The Western intersection between Abdel Hamnid Karame and the Souq al Najjarine, providing access to the historic city, will be upgraded and landscaped, while the Souq al Najjarine leading to the Al Bourtassia Mosque Sq. will become partially pedestrian, and a drop-off round-about will be provided with movable bollards in front of Khan el Masriyyin. On the Western border of the neighborhood, the Rue des Eglises will benefit from the rehabilitation of its sidewalks and other improvements to its appearances.

4.4. Central neighborhood, Hammam El Nouri, public space and street frontage: In the central neighborhood the spine of the Souq Al Attarine up to Tallaat Rifayia St. and some adjacent pedestrian streets would be rehabilitated with improvements to the public space. El Nejmeh Sq., another important access to the historical city would be upgraded and landscaped, as well as the vehicular street leading to the Great Mosque. The Hammam al Nouri, a monument of significant architectural and historical value, situated next to the Great Mosque and belonging to the Waqf, will also be restored and become a museum of traditional religious and historical manuscripts and calligraphy.

4.5. Southern neighborhood, pubic space and streetfrontage: The Southernmost vehicular access to the historic city takes place in proximity of a public square that will be renovated, paved and landscaped; the street leading to Mosque Arghoun Shah and the pedestrian path leading to the Great Mosque, as well as Daftardar Sq. and el Moallak Sq., and the final section of the Souq Al Attarine, will be also upgraded according to the same general standards applied in other areas of the historic city.

4.6. Circulation and landscaping around the St. Gilles Citadel: Emir Fakhreddine St. running parallel to the Citadel will become one-way in the direction of the bridge and Al Bourtassi Sq., its carriageway will be reduced, sidewalks and street furniture will be introduced. A bus stop will be created on Emir Fakhreddine St. opposite the Citadel to enable the drop-off of tourists. New pedestrian alleyways and stairs will be built or upgraded to enable visitors and residents to reach the parking and the Maoulawiya Park, so that once the visit will be completed the buses will be able to cross the river directly.

4.7. Bab El Tebbaneh, fresh produce market Khan el Aarsat and streetfrontage: The Eastern side of the historical city has degraded due to the encroachment of modem high-rise apartment blocks and the poverty of the Bab El Tebbaneh neighborhood. The vegetable and fruit market that caters to the population of this area has spilled over on the riverside boulevard causing significant traffic congestion on a main through-traffic artery. An underpass would ensure that vehicular circulation would not interfere with the pedestrian space, and a large pedestrian platform over the Abu Ali River and a covered area would be built to host the market, complete with appropriate water and sanitary facilities and waste collection devices. This new municipal facility, in view of its location, will also help to reconnect the Bab El Tebbaneh neighborhood with the rest of the historic city, in the proximity of the Khan el Askar and Al Taweb Mosque. The traditional granaries street souq will be rehabilitated and the adjacent building elevations will be renovated, including shop entrances and overhangs, shutters and building elevations. The Khan El Aarsat, belonging to the Wakf, will be renovated and a social center will be created in addition to the current commercial usage in its currently unoccupied Eastern wing, to cater to

- 65 - the pressing community needs of this underserved neighborhood.

4.8. Improved access to the Moulawwyia bridge: Vehicular access to the historic city will be improved by enabling access to the Moulawwyia bridge to the Northem traffic coming from Zghorta; this will entail the re-construction of access and exit ramps on the Eastern side of the river. The street connecting the bridge to Fakhreddine Street will be upgraded as it will accommodate dual sense traffic, as well as its final intersection in the proximity of the Citadel.

4.9. Support to housing rehabilitation: A pilot housing rehabilitation operation will be conducted in the block at the comer of Fakhreddine St. and Souq Al Najjarine that contains the recently restored Al Ouwaysiya Mosque, very visibly located in the proximity of Al Bourtassi Sq. The project will support the rehabilitation of about X housing units by providing professional expertise, administrative services, and financial contributions for the maintenance of the communal parts of the buildings, such as external and courtyard elevations, roofs, and stairs, for up to 50% of total rehabilitation costs. The operation will also include the infill re-construction of housing units by the Wakf, and an hotel and restaurant complex by an investor, for which the project would only provide technical and administrative expertise. Based on the results of the pilot operation, the rehabilitation of the communal parts of buildings will be replicated to other blocks of the historic city, and a total of approximately 300 units are expected to benefit from this activity.

4.10. Study for urban redevelopment of the Northern Zone: Situated in the proximity of the Khan el Askar and with its front on the Rachid Karame Corniche, a large tract of urban land resulting from the alignment of the river after the flood from the '50 could be the object of a major urban re-development operation. The public domain resulting from the original surface occupied by the river and some municipal parcels account for 44 percent of the area. The Municipality could therefore promote a re-assembly of the largely unoccupied land jointly with the other owners, and promote the redevelopment of the area. This could provide much needed space for public and community facilities, as well as apartment blocks and a commercial center on the Northern side of Tripoli. The feasibility study will explore the potential of the site in technical, financial and administrative terms, and provide the municipality with the required tool to pursue the operation beside the scope of this project.

4.11. Study for traffic management and parking in the historic city: Further adjustments will be required to the circulation plans and to the parking provisions for residents and visitors in order to ensure that the introduction on pedestrian areas and the decrease of vehicular traffic within the historic city will have overall positive impacts. The study will also explore the feasibility of creating additional parking areas in the proximity of the historic city, on a profit basis. These scenarios could be then pursued by the municipality or private operators beside the scope of this project.

4.12. Water supply, sanitation and utility connections in the historic city. In those neighborhoods where the project will finance the improvement to public spaces, access to water supply and sanitation by the neighboring buildings will be improved, prior to the paving of the pedestrian areas; based on existing infrastructure schemes, water mains and sewer lines will be upgraded, electric and telephone cables will run underground.

4.13. Support to local economic development ,cultural tourism, private sector participation, and communication: A contribution to the economic development of the old city will be enhanced business skills of small entrepreneurs operating in the visitor services sector (training for local guides, business plan development, management, customer relations etc); support for marketing goods and services for cultural tourism; leveraging credit and grant resources for small projects; organizing information on Tripoli's goods and services for promotional materials (website, brochures, visitor's center, directory of

- 66- businesses & NGOs). The development of cultural tourism will be done in harmony with local values through information campaigns on the expectations of tourists (for residents) and those of the inhabitants (for tourists). The priority social development needs (health, education, skills training & youth) of the inhabitants of the old city will be determined in a participatory manner and reflected in the adaptive uses of the renovated historic buildings (Khan al-Askar and Khan Aarsat). All components of the project including resettlement are implemented in consultation and with the participation of the local community and affected persons.

4.14. Archaeological site of the St. Gilles Citadel: The Citadel is the most visible an d well-known monument in Tripoli, and the main attraction for the visitors to the historic city. A number of conservation measures will be carried out on the Citadel's medieval structures and surfaces, and site accessibility and safety of visitors will be improved with the introduction of hand-rails, signage and other devices. In addition, a central area within the Citadel that has already been partially renovated will be fully equipped in order to become the Tripoli Museum, that will contain local antiquities, panels and artifacts pertaining to the history of the city and of the Citadel itself.

-67 - S. Tyre

Rationale and expected impact Tyre, the main coastal city of Southern Lebanon, is known for its archaeological sites and is on the UNESCO World Heritage list The historical city surrounding the sites and located on the peninsula has been heavily impacted by the civil war, and by the related construction of illegal high-rise buildings, and it is struggling to regain its previous image of picturesque harbor town. The municipality endorses the vision of moving the economy of the historic city away from productive and whole-sale commercial activities, and of investmg in the city's unique cultural resources as a basis for its local economic development, also justified by the expected tourism presence on its un-spoilt Southern beach. This would entail maximizing the attractiveness of the archaeological sites, regaining the quality of public space within the historical center and around the harbor, managing circulation and vehicular access, and enhancing the natural beauty of Tyre by protecting and accessing its coastal zone. The new zoning and building regulations are based on these premises. The project will support such investments, the expected impacts of which would be a considerable improvement to the livability of Tyre to its residents, an increased number of visitors who in turn would generate additional demand for accommodation and for local products and services, and increased opportunities for local low- and middle-income businesses, includcng the boat-building and fishing industries.

5.1. Improvements to the Port waterfront, public spaces and historic buildings: As the key urban function of Tyre that has survived for millennia, the harbor will be thoroughly rehabilitated so as to enhance its traditional fishing-related activities and its attractiveness and use as a public space. Vehicular access will be restricted to residents and to certain times of the day. The basin will be partially reconfigured and regularized so as to increase mooring spaces and a new fishing dock will be added. The main quay will be freed of parking and landscaped as a public square, and the fisherman's syndicate and an intrusive private building will be demolished. The Eastern quay area currently occupied by the Port Authority will be used for an open-air fish market, and the boat-repair facility will be maintained at its current location; the Western quay will be freed of illegal encroachments. Neighboring Menshieh Sq. with its garden and municipal building will fully integrate the public spaces. The remains of a historical building on the harbor front will be donated by its owner, rebuilt and used for the fishermen's syndicate and a Fishing Museum illustrating the history of Tyre and its relation to the sea. The rehabilitation of eight heritage buildings by their owners will be supported with technical and administrative means, and will benefit from up to 50% co-financing of the total costs of the works, in view of their adaptive re-uses related to their prime location on the harbor front.

5.2. Bawabeh Square, parkingand municipalfacilities: The Eastern Fa,ade of the historical entrance to Tyre is currently being rehabilitated by the Municipality. Land reclamation works of the '80s and '90s have created a wide sea-side boulevard that constitutes the main access to Tyre, and that terminates into a very large space, bordering the ancient Bawabeh or entrance to the city. This space, currently occupied by UNIFIL headquarters, a vegetable market and a vast parking lot, will be better structured to offer selective parking options for residents and visitors, bus and taxi stops, a modern vegetable market, and a facility for public entertainment and cultural open-air events. Once the property of the area will be transferred from the Ministry of Public Works to the municipality, the investments will be made and the facilities become the ownership of the municipality, which in turn will establish a business plan to ensure their operation and maintenance and a steady revenue stream.

- 68- 5.3. Hamra Street and Hammam Square, public space and street frontage improvements: This modem street goes from the Western exit of the Al Bass archaeological site to the Hammnam Sq. in the proximity of the entrance to the historical city and to the souq. It will be transformed into a one-way street, carriageway will be consequently reduced, the pavements will be widened and repaired, and appropriate tree planting, street-lighting, and street furniture will help transform it into a pleasant environment. The same interventions will take place in the Hammam Sq. where in addition there will be the landscaping of a green area and the rehabilitation of the ground-floor elevations of the Jaffarieh, a large commercial building belonging to the Wakf.

5.4. The Khans, adaptive re-use of historicalbuildings: In the midst of the historic urban fabric and well located in the vicinity of the souq and of the main access, two historic buildings of the 17th century the Khan el Rabu and the smaller Khan el Askar will be restored and rehabilitated, assuming their private owners agree to their reuse for cultural, tourist and traditional arts and crafts, and to host a socio-cultural and craft center. Financial incentives would be made available to this effect for up to 50% of the rehabilitation costs, as well as technical and administrative assistance, given their historical value and central location.

5.5. "Cultural promenade" at the interface of the archaeological and historical areas: At the interface between the El Mina archaeological area and the historic city, a pedestrian path will link the Hammam Sq. with the Western sea-side water-front. Along this path and overlooking the site, three historical buildings belonging to the Direction General of Antiquities will be restored and rehabilitated, as well as a large administrative complex that also belongs to the DGA. The historical buildings are located on Manara Square, a small pedestrian area; the biggest one will be transformed into the Museum of the History of Tyre, the smallest one into a cafe, and the third into the regional offices of the DGA. The administrative complex will be available to host an educational or cultural facility, that would come into an agreement with the DGA to that effect.

5.6. Coastal zone protection and promenade: The natural beauty of the Tyre site needs to be preserved against encroachments and pollution, but also made more enjoyable to residents and visitors. For this purpose, the coastal zone from the archaeological site of El Mina to the Port will be protected and made accessible: all illegal structures will be removed, an all-weather pedestrian path will be built, limited access to the beaches will be organized and supported with sanitary facilities, a public garden will be upgraded, and public access to the Northern lighthouse in the vicinity of the port will be improved.

5.7. Support to housing rehabilitation: The rehabilitation of traditional housing clusters in the historic city will be supported by providing professional expertise, adrministrative services, and financial contributions for the maintenance of the communal parts of the buildings, such as external and courtyard elevations, roofs, and stairs. The municipality will identify which clusters are of higher priority given the revenue levels of its inhabitants. Within the respect of the zoning and building regulations, infill operations and the reconstruction of housing, commercial and productive units in place of ruined buildings will also be encouraged. It is expected that in support of these investments the municipality will order the demolition of the top floors of the six high-rise buildings illegally built in the proximity of the Port, currently unfinished and unoccupied, as they undermine the overall value of the historic city.

5.8. Support to local economic development, cultural tourism, private sector participation, and communication: The lower-income residents (fishermen, small shopkeepers and restaurant owners) will be assisted through a concerted partnership effort between the residents, the municipality and locally represented NGOs to develop and diversify a greater range of local products and services for visitors. Measures will be investigated with the cooperative and relevant authorities that would increase fishing productivity and returns, including artificial reefs, restocking, marine aquaculture, income support to

- 69 - permit a fallow period for stock recovery from over-fishing, improved enforcement of fish conservation regulations and regulations on fishing methods. Additionally wide range of identified possible opportunities to be researched for demand projections and feasibility exists, including locally produced and processed foods and spices, restaurants, hire of boats and marine leisure equipment, boat trips and marine observation, development of the fishing museum with a systematic contribution from local knowledge, and better facilities for boat building and boat repair and assistance will be given to individuals and groups for micro-finance support. Improved access to affordable health, education, skills for employment and empowerment and other social services will be promoted, based on adapting and scaling up successful local initiatives. Through a regular program of expanded information and consultation, a common vision of the future old city and its residents and workers will be built, focused on a harmonious and participatory development between different groups of residents and stakeholders and the visitor contribution to economic growth, and applying lessons learned from successes and disappointments.

5.9. Research, documentation, conservation and presentation of the El Bass and El Mina archaeologicalsites: The two archaeological sites will be thoroughly researched and documented, filling some important knowledge gaps due to the interruption of the excavations during the civil war. While the two sites will remain physically separate, a unified site management plan will be in place, with some key elements in common, such as the visitor center and site museum and a storage area or lapidarium; a system of accesses, visitor circuits, rest areas and facilities will encompass both sites, and support the presentation to visitors via panels and other information devices. In the Al Bass site the finerary complexes, the Roman arch, the hippodrome, the palaestra of the blue team, and the crusader chapel will be subject to conservation of structures and surfaces; a pedestrian exit will ensure the continuity of the visit by connecting the site to Hamra St. The Hiram fountain site accessible from Hamra St. will be subject to studies, conservation and presentation. In the El Mina site the Egyptian harbor, the hexagonal building, the arena, the baths, the great and small alleys, the palaestra, the residential quarter, the crusader church area, and the crusader tower will be subject to conservation of structures and surfaces.

- 70- Attachment 2: Technical Assistance to the Directorate General of Urban Planning Lebanon: Cultural Heritage and Urban Development Project

Rationale

1. DGU is the national institution in charge of urban planning and of preparing either directly or with the help of consultants the town planning instruments for the country's municipalities. Through its 22 regional delegations and local level sections it also participates in the process of enforcing the town planning regulations and standing building codes, and of authorizing the building permits that are issued by Municipalities.

2. Via the preparation of the Cultural Heritage and Urban Development Project, four secondary cities have been provided with special zoning regulations and building by-laws for their historical urban centers, that cater to their special protection needs. During project implementation, it is proposed to strengthen the capacity of the DGU to enforce such regulations and to enable it to replicate the approach of historic center zoning at a national scale, where needed.

Proposed Technical Assistance activities

3. The proposed activities are:

* Study of the juridical aspects of the protection of historical urban areas in the context of the existing Lebanese legislation and identification of possible amendments aimed at improving their future protection;

* Preparation of a prototype (generic) zoning regulation and building bylaws for historic city centers appropriate to the Lebanese context, and based on the five examples developed under CHUD preparation;

* Cartographic survey of secondary and tertiary urban centers requiring special zoning regulation and building by-laws for historic centers; this will include the updating of the cadastral maps with information from satellite pictures;

* Hands-on training of the staff of the DGU at central level in the development of the above-mentioned task, including consultations with the regional staff for the selection of the centers and the updating of the maps;

* Training workshop(s) for the staff of the regional delegations to present and discuss the results of the work and to orient their future work in the use and adaptation of the prototype zoning regulation and by-laws to the centers;

* Technical assistance to the central staff and to the regional delegations in the preparation, quality control, review and approval of the zoning regulations and building bylaws for the selected secondary and tertiary centers.

- 71 - Attachment 3: Rehabilititaion of the housing stock in Triponl Lebanon: Cultural Heritage and Urban Development Project Backiground

1. The urban studies carried out by the consultants have identified and prepared the key actions that will be implemented under the project in the historical center of Tripoli. These will be concentrated in a general sense in the rehabilitation of public spaces, and in the conservation and adaptive re-use of some key publicly owned buildings and monuments, that will house cultural functions and commercial or productive functions related to the city's cultural heritage.

2. It is assumed that these investments, coupled with some support to the creation or improvement of micro-enterprises located or to be located in the historic city center, will reverse the downward cycle of decay and loss of value of the building stock, that manifests itself through lack of maintenance and the progressive decay of the buildings. The assumption is that the investment in the public spaces, the improved accessibility of the city center, and the future anchors represented by Khan el Askhar and by other key renovated buildings will be sufficient to trigger a process of investment in the private properties.

Rationale for project support to housing rehabiltation

3. Intemational experience shows however that the rehabilitation of the private housing stock will not just happen by itself, given a number of significant constraints that cripple ancient city centers like the one of Tripoli: high levels of poverty of the inhabitants; tenure which is at times uncertain or unclearly recorded; and rental laws that protect the low-income tenants but discourage the owners of the units from any investments in maintenance. In addition, perhaps the most important obstacle is the fragmentation of the property due to inheritance and to partial sales.

4. Were the public investments described above to happen, some individual owners might be indeed encouraged to invest in the renovation of their housing units, assuming they can overcome some or all of the difficulties above described. They would not however be able to intervene on the crucial maintenance issues that affect the housing clusters or blocks as a whole, given their control over a small fraction thereof. Thus, while one can expect a limited number of individual investments, these would only happen in those buildings or housing clusters that are not affected by issues of structural stability, of water damages, or similar ones.

5. The fragmentation of the property thus becomes a major additional disincentive for individual owners to invest in the renovation of their units.

6. In the absence of systematic support by the Municipality to the present owners to rehabilitate their buildings, private investment would only take place in the form of speculative gentrification. In the proximity of the main public-financed interventions, were the market assumptions to be alluring enough, investment companies and wealthy individuals could be buying up entire clusters at present value, evicting tenants, and renovating the clusters so as to put the units back on the market at a significantly higher price for a different income bracket of the Tripoli population. This would satisfy the project's developmental goal of "enhancing local development" , but would have nefarious social consequences that would undermine the overarching poverty reduction goal of the project.

- 72 - Project support to housing rehabilitation

7. It is therefore proposed that the project finance a housing rehabilitation sub-component to be implemented by the Municipality of Tripoli, that would have the dual goal of achieving the conservation of the housing stock while maintaining to a large extent the presence of the current population.

8. The proposed project would finance the investment in the rehabilitation of housing units for up to $1m, according to the modalities described hereunder. While these funds would be disbursed via regular civil works contracts established by CDR with local contractors, there is a significant cost-recovery component that would benefit the Municipality of Tripoli. Such funds would enable the Municipality to replicate the interventions across the historic city in the future, providing it will be able to maintain a high level of financial contribution by the individual owners and to properly manage the complex technical, administrative and tenure issues. Were the MIU to be transformed into a "Cellule de Sauvegarde et Rehabilitation de la Medina de Tripoli", it could provide the future sustainability of housing rehabilitation.

9. To minimize the risks of gentrification, it is proposed that the Municipality play a key role in addressing the blockages caused by the rental freeze, by offering to buy up rented apartments in the blocks slated for rehabilitation from the current owners, and by selling them back to the former tenants, as specified under step 7 hereunder. This will require significant innovations in the financial operations of the Municipality, and will require the technical assistance to be provided by the specialized staff of the Municipal Implementation Unit.

Financing, management and implementation of the housing rehabilitation

10. The key steps are: . o Step 1. The Municipality, with the help of the Municipal Implementation Unit (MIU) identifies the housing cluster or building block to be rehabilitated; it identifies all of the owners, renters and.other inhabitants or users of the space; it formally communicates to them in writing the need to rehabilitate the common elements of the building. o Step 2. The MIU with the help of its own staff and of technical consultants identifies the scope of work to be carried out, that would include interventions on all or some of the following: roofing structure and waterproofing, gutters and waterspouts, bearing walls, floor beams and floors, surfaces of the external and courtyard elevations, entrance doors and hallway and individual access doors, windows and street openings (e.g. store doors and overhangs), common courtyards and passageways, common stairwells and landings, main water, sewerage, and drainage connections, main electrical and telephone connections.

Note: no work that might be needed within the housing units, such as improving bathrooms or kitchens, will be included in the scope of work. o Step 3. The MIU will cost the intervention on the basis of the locally accepted standard construction costs, adapted to the particular nature of the intervention, such as the difficulty of access to the site, characteristics of the housing, etc. These costs will be broken down per each housing or commercial unit according to the ratio of its surface over the total floor surface of the building cluster or block. Correction factors such as commercial vs. residential space will be applied based on a fornula to be determined. The individual cost of the cormnon rehabilitation works will be communicated to each owner in writing, jointly with the options for its financing.

- 73 - o Step 4. The ownership of each unit will be given the following options: - Finance its share with own resources, and to make a series of payments to the Municipality over a given period of time; - To obtain a credit from a commercial bank at terms and conditions that will have been negotiated by the MIU, and using as a guarantee his tenure rights; or - To sell the (residential) unit to the Municipality at its present market value if the apartment is rented under the rental freeze legislation.

Owners of residential units that are rented under the rental freeze legislation and that have opted not to see to the Municipality will be obliged to respect the rental contract in the future, as a condition to partake in the operation. o Step 5. If at least 65 % of owners are committed to contributing their share of the rehabilitation costs, the MIU will proceed with the design, tendering, awarding of the construction contract, implementation and supervision of the works. The remaining amount, of up to or 35% will be subsidized given the public good benefits of the intervention for the city as a whole. However, a lien will be attached to the properties of those owners who have not participated financially to the rehabilitation operation, and the Municipality will recover these amounts in the eventuality and at the time of a future sale of such units. If less than 65% of the construction costs will be underwritten, the operation will be considered not replicable and will not take place. o Step 6. The Municipality will have acquired some of the residential units at step 4 with its own funds, and such transactions will have benefited both owners and tenants (in the case of apartments rented under the rental freeze legislation) in the proportions generally applied by the courts in the case of expropriations (60 percent to the owners, and 40 percent to the renters). The Municipality will then renovate these units with funds provided under the project, and will offer them back in sale to the former renters. These will have been compensated for the termination of the rental contract and will have acquired a lump-sum amount that will be sufficient to represent the down-payment for the acquisition of their unit. A commercial bank would provide them with credit with which to finance the rest of the acquisition. o Step 7. Individual owners might also want to carry out the renovation of their housing or commercial units (intemal spaces). These works would remain their individual responsibility, from their technical definition to their financing, that might require further access to credit to be provided by the same commercial bank. llnitial testing of the methodoDogy proposed

11. With the help of the consulting group in charge of the Tripoli urban studies, the technical, tenure and economic aspects of the possible rehabilitation of a residential block in the proximity of the Al Burtassia Sq. have been explored.

12. Out of a total of about 50 units, about half were found to be unoccupied. Updated cadastral titles were retrieved by the Municipality for all the units, showing an average of three owners per unit, generally considered to be close relatives. In some cases the ownership is the name of the inheritors of a single individual, that might have created a trust managed by the Sunni Wakf, or that might not yet have paid the tax on the inheritance of the property.

- 74 - 13. The rehabilitation of the communal parts of the buildings (roofs, stairs, common passageways, external and courtyard elevations, entrance doors and windows) were estimated at an average of US$ 6,000 per residential or commercial unit. This amount would have to be adjusted according to the surface of the individual unit and to its use (residential or commercial). The amount is assumed in a prelimninary fashion to be affordable to the majority of the owners.

14. Preliminary contacts with a Lebanese non-profit micro-credit association and with a Lebanese commercial bank confirmed their interest in participating in the proposed operation.

15. In the case of the association, the absence of individual guarantees that the low-income residents may incur did not represent an obstacle towards the creation of micro-credit agreements towards the acquisition of housing units or the rehabilitation of the conmmunal parts of the buildings, or of the renovation of the internal spaces. In the case of the conmnercial bank, it was pointed out that while such operations may not be very lucrative, they would help reduce the amount of financial reserves that the bank would otherwise have to deposit with the Central Bank under the banking law, at zero interest. On this basis, it can be assumed that commercial credit for the proposed operation would be readily available.

- 75 - Annex 3: EstimaRed Project Costs LEBMAIESE REPUtBLIC: CULTURAL HERITAGE AED URBAN DEVELOPMEEST

Projact Cwa bli Componnat Locat Foroen USS Totul ______US$ mllion mltion US$ million 1 Rehabilitation of Historic City Centers and Urban Infrastructure Improvements 1.1 Baalbeck 4.077 4.077 8.154 1.2 Byblos 1.372 1.372 2.744 1.3 Saida 1.625 1.625 3.250 1.4 Tripoli 8.594 8.594 17.188 1.5 Tyre 3.312 3.312 6.624 Total Component 1 18.981 18.981 37.962 2 Archaeological Sites Conservation and Mzanagement 2.1 Baalbeck - site of Al-Qalaa 2.971 1.981 4.951 2.2 Tyre - sites of El Mina and El Bass 3.023 1.628 4.650 2.3 Detailed studies and supervision services for Baalbeck and Tyre 0.526 0.789 1.315 Archeological works 2.4.1 Tripoli Citadelle St Gilles 0.211 0.114 0.325 2.4.2 Saida Chateau de la Terre 0.510 0.274 0.784 2.5 Further archaeological studies 0.038 0.113 0.150 Total Component 2 7.278 4.898 12.175 3 Institutional Strengthening and Project Management 3.1 Technical Assistance and Project Management support for the 1.489 0.165 1.654 Municipalities 3.2 Technical Assistance & Capacity Building for the Directorate 0.840 0.452 1.292 General of Antiquities 3.3 T A to the Directorate General of Urban Planning for historical 0.125 0.125 0.250 city centers management 3.4 Project Management by CDR 1.318 0.233 1.550 Total Component 3 3.771 0.975 4.746 Total Base Cost 30.029 24.853 54.883 Physical Contingencies 1 862 1.541 3.404 Price Contingencies 1.802 1.491 3.293 Total Including Contingencies 33.693 27.886 61.579 Front-End Fee 0.000 0.315 0.315 Total Project Cost 33.693 28.201 61.894

-Fso Cot by ce1atrw ToGtl Ui miSllon Works 43..822 Goods 1.127 Services and Training 9.634 Operating Expenditures for Project Management 0.300 Land Acquisition Total Project Cost 61.579 Front-End Fee 0.315 Total Financing Required 61.894

- 76 - Total Est Cost Component Description US$ million Including Contingencies I Rehabilitation of Historic City Centers and Urban Infrastructure Improvements 1.1 Baalbeck: 1.1.1 City entrances and interfaces, new public spaces and parking 2.259 1.1.2 Rehabilitation and revitalization of the historic street pattern 0.516 1.1.3 Rehabilitation of the Ras Al Am Axis 0.903 1.1.4 Redevelopment of the Market Area 0.985 1.1.5 Study for the rehabilitation & re-use of the Gouraud Barracks + Phase I (Mouhafaza) 1.122 1.1.6 Rehabilitation and re-use of individual heritage buildings and complexes 1.500 1.1.7 Support the rehabilitation of rubble stone/mud brick vernacular houses 0.741 1.1.8 Support to cultural tourism, private sector participation and communication 0.224 1.1.9 Detailed Engineering and Supervision services 0.898 Sub-total Baalbeck 9.149 1.2 Byblos: 1.2.1 Improvements to access from highway and parking system 1.357 1.2.2 Rehabilitation of public spaces and monuments in the historic center 1.122 1.2.3 Improvements to the harbor areas and coastal zone 0.337 1.2.4 Support to cultural tourism, private sector participation and communication 0.056 1.2.5 Detailed Engineering and Supervision services 0.208 Sub-total Byblos 3.079 1.3 Saida: 1.3.1 Rehabilitation of Bab el Seray Square 0.281 1.3.2 Rehabilitation of main pedestrian alleys 2.244 1.3.3 Rehabilitation of covered paths 0.224 1.3.4 Support to housing rehabilitation 0.561 1.3.5 Support to cultural tourism, private sector participation and communication 0.056 1.3.6 Detailed Engineering and Supervision services 0.281 Sub-total Saida 3.647 1.4 Tripoli: ____- 1.4.1 Western river-side traffic and parking improvements and landscaping 1.549 1.4.2 Resettlement housing 1.123 1.4.3 Northem neighborhood, Khan el Askar, public space and street frontage 6.346 1.4.4 Central neighborhood, Khan el Saboun, Hammam El Nouri 1.080 1.4.5 Southem neighborhood, pubic space and street frontage 0.699 1.4.6 Circulation and landscaping around St Gilles Citadel 0.412 1.4.7 Eastern river-side, Khan el Aarsat, public space and street frontage 4.488 1.4.8 Intersections improvements and traffic diversion (Operation 8) 0.436 1.4.9 Support to housing rehabilitation 1.234 1.4.10 Study for urban redevelopment of the Northern Zone adjacent to Khan Al-Askar 0.079 1.4.11 Study for the rehabilitation of the El Tabaneh Riverside Facades 0.028 1.4.12 Traffic management and parking in the old town including meters (for all cities) 0.337 1.4.13 Support to cultural tourism, private sector participation and communication 0.281 1.4.14 Operational plans for historic buildings (Khan al Askar etc..) 0.067 1.4.15 Detailed Engineering and Supervision services 1.128 Sub-total Tripoli 19.286

- 77 - Total Est. Cost USS million Including Component Description Contingencies 11.5 XTyre: 1.5.1 Improvements to the Port waterfront, public spaces and historic buildings 2.100 1.5.2 Gateway and Bawabeh Square, commercial and parking facilities (study) 0.843 1.5.3 Hamra Street and Hammam Square, public space and street frontage improvements 1.216 1.5.4 The Khans, adaptive re-use of historical buildmgs 0.331 1.5.5 Cultural promenade at the interface of the archaeological and historical areas 0.800 1.5.6 Coastal protection and promenade 0.539 1.5.7 Support to housing rehabilitation 0.617 1.5.8 Support to cultural tourism, private sector participation and communication 0.224 1.5.9 Operational plans for historic buildings (Khans and Mamelouk palace.) 0.067 1.5.10 Detailed Engineering and Supervision services 0.696 Sub-total Tyr 7.433 Total Component 1 42.594

2 Archaeological Sites Conservation and Management 2.1 Baalbeck - site of AI-Qalias_ 2.1.1 Research and documentation 1.406 2.1.2 Protection of surfaces and structures 2.675 2.1.3 Site presentation to visitors 1.194 2.1.4 Site management 0.281 Sub-totallBaalbec 5.556 2.2 Tyre - sites of El Mina and El Bass 2.2.1 Research and documentation 2.132 2.2.2 Protection of surfaces and structures 0.842 2.2.3 Site presentation to visitors 1.964 2.2.4 Site management 0.281 Sub-total Tyrp 5.217 2.3 Detailed studies and supervision services for Baalbeck and Tyre Archeological works 2.3.1 Detailed studies and supervision services for Baalbeck and Tyre Archeological works 1.475 Sub-totalDetailed studies and site supervisiog 1.475 2.4 Tripoli - (Citadelle St. Gilles) and Saida (Ch8teau de la Terre) 2.4.1 Tripoli Citadelle St Gilles 2.3.1.1 Conservation studies (Tripoli - Citadelle St Gilles) 0.028 2.3.1.2 Tripoli Citadelle St Gilles: Consolidation interventions 0.112 2.3.1.3 Tripoli Citadelle St Gilles: Site presentation to visitors 0.056 2.3.1.4 Tnpoli - Citadelle St Gilles: City museum organization 0.168 Tripoli Citadelle St Gilles 0.365 2.4.2 Saida Chateau de la Terre: Consolidation interventions and site presentation 0.880 Saida Chdteau de la Terre 0.880

_Sub-total Tripoli and Saida 1.244 2.5 Further archaeological studies 2.5.1 Tyre inland areas archaeological mapping 0.112 2.5.2 Byblos archaeological surveys 0.056 Sub-total Fmrtherarchaeological studies 0.168 Total Component 2 13.661

- 78 - Total EsL Cost Component Description US$ million Including Contingencies 3 Institutional Strengthening and Project Management 3.1 Technical Assistance and Project Management support for the Municipalities 3.1.1 Municipal Implementation Units in the five project's municipalities 1.459 3.1.2 Technical assistance, including training services, to the five projecfts municipalities 0.173 3.1.3 Introduction of GIS systems in municipalities 0.224 Sub-total TA to the Municipalities 1.856 3.2 Technical Assistance & Capacity Building for the Directorate General of Antiquities 3.2.1 T.A. for DGA's strengthening (Capacity Building) incl. support to CH reforms 1.000 3.2.2 UNESCO advisory services to DGA for archaeological works 0.279 3.2.3 Equipment for the DGA 0.170 Sub-Total TA -to the DGA 1.449 3.3 T. A to the Directorate General of Urban Planning for historical city centers management 3.3.1 T. A to the Directorate General of Urban Planning for historical city centers management 0.281 Sub-Total TA to the DGC 0.281 3.4 Project Management by CDR 3.4.1 Services for project management 0.898 3.4.2 Services for implementing the Environmental Management Plan (EMP) 0.337 3.4.3 Equipment for project management 0.168 3.4.4 Operating costs for project management 0.337 Sub-Total Project Management by CDR 1.739 Total Component 3 5.325 61.579

Front End Fee 0.315 Total Project Cost 61.894

-79 - Annex 4: Cost !Effectiveness Analysis Summary LEB3ANSE RE2PUBLOC: CULTURAL IERITAGE ANiILO UR[NS DIEVELOPRMvEN5lT

Project Objectives 1. The proposed Cultural Heritage and Urban Development project (CHUD) has two key development objectives: (a) to create the conditions for local economic development and enhanced quality of life in the historic centers of five main secondary cities; and (b) to improve the conservation and management of Lebanon's built cultural heritage. The objectives are quite broad in so far as they aim at directly and indirectly increasing Lebanon's welfare, and alternatives to deliver the expected benefits to the country were carefully analyzed during project preparation.

Benefits of undertaknMg the project 2. The Project will play a key role in preventing further degradation of historical and cultural sites and neighborhoods, thus helping to ensure their preservation for future generations and beneficial use by the present generation. Not undertaking the project would result in: (a) destruction of sensitive and irreproducible cultural sites, landscapes and neighborhoods; (b) environmental degradation and proliferation of brownfields in the city cores: (c) the irretrievable loss of existing capital assets; and (d) forgone tourist revenues. Because the project would be working in environmentally and socially sensitive areas that are susceptible to permanent damage from overuse in addition to occasional destructive behavior, one of the major consequences not undertaking the project would be the slow destruction of the very attributes that made the sites attractive in the first place. The cultural resources the project aims to preserve and improve are subject to rapid deterioration from human contact, automobile pollution, leaking water and sewage, and generally low level of basic infrastructure services and maintenance. Leaving these cultural attractions and neighborhoods unprotected would doom them to rapid extinction.

3. If the sites were allowed to degenerate to the condition that they were no longer special, the neighborhoods would lose all cultural interest and their historic character would be gone forever. Therefore, undertaking planned project activities across the country is a sine qua non condition for arresting such irreversible losses. This project is not sufficient, in itself, to ensure that this scenario does not materialize-many other actions and policies would also have to be implemented: e.g., planning water and wastewater infrastructure, or development of a long-range urban development strategies and increasing resources available to the local communities, to name just a few. However, the project is a necessary component in the country's comprehensive strategy to prevent such a decline and preserve these assets for prosperity. The project supports related policy goals of the Lebanese government, namely: (a) provide the basis for a rational expansion of the tourism industry in an environmentally responsible and sustainable fashion; (b) increase property values and improve functioning of real estate markets; (c) create new jobs, either through construction or new opportunities in the re-generated areas; and (d) achieve an expanded economic base and regionally balanced growth.

Economic Analysis Methodology 4. Cost-benefit analysis (CBA) is not appropriate for this project, as most of its benefits do not lend themselves easily to being assigned a precise monetary value. Increased tourist revenue is only one of potentially measurable benefits of the project. It calls for contingent valuation (CV) of the benefits, however the technique maybe unreliable in the context of the volatile and changing situation of Lebanon on the tourist map. Additionally, many sites targeted by the project currently attract a very low number of tourists and interest despite their high potential (especially historic urban cores), therefore, CV methodology was found further inappropriate. Alternatively, urban regeneration projects can sometimes be evaluated by tracking increased land and/or rental values, increased value of direct and indirect jobs,

- 80- created as a result of the project. However, in the context of Lebanon, the necessary data is not available. Property and transfer taxes are not admninistered well, and the real estate and labor markets in these historical areas are not well documented. Therefore, there is no realistic way to predict the increase in monetary flows as a result of the project. At the same time, it is just as difficult to estimate the decrease in economic activity (over the medium term) if the project is not implemented. For those reasons, a cost effectiveness methodology has been used for the economic analysis.

5. The section below presents the case that the selected investments are the most cost-effective alternatives to meeting the project's objectives. Following that discussion, it is demonstrated that all components arc also appropriate for the public sector to undertake.

Choice of Investments 6. Consistent with a least cost approach to achieving the Development Objectives, the project supports investments that are the most cost effective. In this regard, the project has chosen to invest in best possible locations and at the optimal level of investment. The World Heritages Sites and the major secondary cities have the most cultural, social and tourism potential to be preserved and developed. The investment per site varies significantly and is determined by the site's significance, most urgent needs and development potential: US$19.29 million in urban works in Tripoli; US$3.1 million in Byblos; US$5.56 million in archeological works in Al-Qaala site in Baalbeck; and US$0.37 million in Chateau St.-Gilles in Tripoli. Everywhere, the project primarily finances low cost and simple initiatives, with an emphasis on visible public areas that are frequently used and important for the vitality of the community and the site. 7. In the case of the first and the largest component, approximately 69% percent (US$42.6 million) of the total project cost, the choice of investments is limited to those which represent the backbone or core of the selected area's cultural fabric, and whose improvement will encourage significant investment in adjacent private structures by residents, businesses and/or real estate developers. Most of this investment (about 92.5% of the total) will take place on public land and concerns predominately paving, street lighting, urban furniture and landscaping. The facades and critical infrastructure of selected buildings will also receive basic rehabilitation, but to a much lesser extent (US$ 4.633 million, or about 7.5% percent of total base cost). Access to historical areas will also be made easier and also less taxing on cultural assets and the livability of these areas. These investments would involve more rational traffic routing and improved parking arrangements. Preservation of fragile coastline vegetation, and confined and improved pedestrian routing would be undertaken to decrease the pressures on the fragile sites. 8. Approximately US$13.66 million in Project funds (about 22 % of project total costs) will be used for the most basic and essential required research, conservation, presentation and management for selected archaeological sites. Inventories, measurements, photos, maps and other basic documentation would be produced, often building on existing, but incomplete, records. Conservation measures would be undertaken on a limited number of structures and monuments-both for safety and protection from weather and vandalism. Access to some sites would be improved and the project would also provide for education materials and exhibits to highlight the cultural significance of historical areas in the fabric of modem urban life. 9. Finally, the project provides about US$5.33 million ( 8.6 percent of project total costs) for Institutional Strengthening and Project Management. Included here are measures to modernize the country's cultural heritage regulatory framework, augment potential revenue sources and to improve the efficiency of the Directorate General of Antiquities and the relevant municipal departments. CDR's management of the Project would also be included in this component, but this would amount to an estimated US$1.7 million, or less than 3 percent of total costs.

- 81 - 10. As shown above, the Project's emphasis would be on low cost, simple technology and high visibility projects, all designed to provide a unifying cultural heritage presence that runs through the historical areas. Thus, the investments are selected to increase the sustainable use and livability of the historical cores by encouraging vehicle access to their outer limits, and then pedestrian traffic within them, restrict undesirable modes of access, and provide for increased managerial capacity to manage and improve these areas. The investments are chosen not only to preserve what historical fabric remains, but also to have a multiplier effect by encouraging private investments in non-public assets that make up the majority of these areas.

Publbc v. Private ltssues 11. The project intervenes in archeological sites and in historic urban cores. Private markets have been unable to adequately preserve and develop these areas as well as attend to equitable distribution of benefits from possession of those historic assets. Therefore, there is a strong case for pubic sector intervention to preserve the assets and enhance welfare. Such market failure is due to the public good nature of many physical improvements and services in the cities and a strong presence of externalities and incomplete information in cultural heritage sector.

12. The presence of market failure in the historical centers that the project aims to revitalize warrants government intervention. The historical cores see very little investment taking place. Most public spaces are run down and in need of rehabilitation, and many areas could be put to higher value uses through a change in regulatory measures. Private sector activities would benefit significantly as a result of the upgrading of historic urban cores. Despite that fact, the private sector will not initiate the investments and bear the costs of upgrading the public spaces, as it would be incapable to recover the costs of such upgrading. Public spaces generally belong to the category of non-excludable public goods for use of which it is impossible or difficult to charge.

13. Concerning the project's archaeology investments, the few extemalities that could be intemalized would be difficult to capture under the current legal framework governing the sector, and, thus, are also appropriate for public sector intervention. The list of all public investments was examined during the design phase of the Project the results of this review are shown in Table I below. Over 56 percent of the Project's costs represent an investment in non-excludable public goods, mostly investments in improving urban public spaces, that is, roads, sidewalks, street lighting, public transport areas, etc.

14. Another 27 percent of the Project finances investments with extemalities that , without Government intervention, would result in sub-optimal level of the good provided.. For example, most of these costs are allocated for preservation of publicly accessible archaeological sites and monuments, some subsidies to upgrade communal areas of privately owned buildings, and investments for the provision of low cost parking areas. Selected buildings and associated structures will be resurfaced with indigenous materials and the color schemes to reflect traditional patterns. The critical areas of some buildings (e.g., roof and interior stairwells) will be upgraded in order to re-vitalize their appeal for further private investment. Such investments will help to increase public safety and reduce contingent state liabilities that could come about through injuries or resettlement. Because the private sector would have few, if any, opportunities to charge (or charge enough) for these goods, they would not be interested in providing them and public intervention is, therefore, warranted.

-82 - 15. The remaining 17 percent of the project are split between public goods where exclusion is undesirable (e.g., street lighting), areas where the Government is intervening because of a lack of information (feasibility studies), where there are equity (redistribution) concerns (developing heritage related income opportunities), or investments in an area reserved for the public sector (e.g., state and municipal regulatory functions). Details can be seen in Table 1.

Beneficiaries of the project 16. Beneficiaries of this project include: the towns and municipalities of Baalbeck, Byblos, Saida, Tripoli, and Tyre, the Ministry of Culture (primarily its Directorate General of Antiquities), the Ministry of Public Works and Transport (through its Direction General of Urbanism) and CDR. All these beneficiaries will receive investment funds and technical assistance. In addition, their capacity for better management of cultural heritage will be increased, which should also provide an incentive for implementation. 17. The Project will have a positive impact on poverty. Some residents will also have increased income opportunities through support for productive and commercial activities. To the extent that the poor are involved in selling goods or services to tourists, they are also likely to directly benefit from the expansion in tourism that the project helps to support. A limited number of private citizens will also directly benefit thorough project investments in the communal areas of their residential buildings. All of these groups are likely to support the project and its implementation. 18. However, there are some parties that will likely oppose the Project. The most important of these are private sector groups that wish to increase their activities inside or adjacent to the historical areas without regulatory restriction. Pressure is especially likely to be brought on the Project and its implementing agencies by landowners that wish to destroy their existing historical buildings in the core areas and erect more modem and larger structures for either up-scale residential or commercial uses. This risk has been perceived and mitigated by obtaining municipal resolutions of support for each urban rehabilitation program, and the Higher Planning Council approving of historic zone land use and building regulations in each project city, thereby precluding such developments.

Fiscal Impact 19. Over the 6-year implementation period, the Government will have to provide about US$6.561 million in counterpart funds under the Project, with a maximum of US$2.1 million in FY05. This level of investment is less than 0.1 percent of the country's total annual year 2000 gross domestic investment (about US$3.0 billion) and should not pose any overall fiscal constraint. IBRD finances 50.9% of the project, and the Government 10.6%. Other financiers are Agence francaise de developpement (AfD) with 17.8% of total costs, Government of Italy with 16.2%, Government of France 1.6%, other sources representing 3%. 20. There will be a slight increase in recurrent expenditures resulting from all new or rehabilitated infrastructure under the Project. These are estimated at about US$1 million per year. 21. Repayment of the loan from IBRD (US$31.5.0 million) is the responsibility of the Ministry of Finance [and there will be no pass-through of this obligation to another entity-Mhmd: You need to confirm this]. The fixed-spread loan Fixed-Spread Loan (FSL) with customized repayment terms has a 15.5 year final maturity, including a 6.5 year grace period, and avoids principal repayments up to 2010. The currency of the loan will be denominated in US Dollars. The Borrower chose an FSL for its flexibility and embedded options, which permit the currency and interest rate to be altered, and because it will permit better management of their sovereign debt. There would be a 1.0 percent front-end fee.

- 83 - Md-Term Review 22. The Project's mid-term review is scheduled for the year3 of the implementation period. The mid-term review will be used as a means to adjust project components and reallocate effort and resources as appropriate. In the context of the economic analysis, the following items are scheduled to be addressed and assessed at the mid-term review: - accomplishments for the strengthening and improving of managerial and technical expertise in the affected municipalities, the DGA, DGU and MOT; and - increase in real estate values as a result of the Project's investments.

23. To ensure that the required information will be available, planning for the mid-term review will be discussed in the project launch workshop and then followed up during supervision. Well in advance of the actual date of the mid-term review, the concerned implementing agencies will be asked to provide relevant documentation for prior review and to formulate action plans as required. The Bank will also ensure that staff with the appropriate skill mix will participate in the mission.

Summary of beneflts and costs:

See above Cost Effectiveness Analysis

Main Assumptions:

See above Cost Effectiveness Analysis

Cost-effectiveness indicators:

See above Cost Effectiveness Analysis

- 84 - Table 1: Rationale for Public Sector Involvement by Project Component Market Market Market Market Failure Failure Failure Failure Project Component Public Good Public Good US $Million Externalities Exclusion Exclusion Infonnatlo Redistribution Reserved Difficult Undesirabl Incomplete Function I Rehabilitation of Historic City 42.594 Centers and Urban Infrastructure Improvements L.a Upgrading and Improvements to 27.477 Public Spaces I.b Conservation and Adaptive Reuse 4.303 of Monuments & Historic Buildings I.c Creation, Equipment & Management of Tourism Circuits I.d Support to Cultural Heritage 0.842 Related Productive & Commercial Activities I.e Support to Rehabilitation of 4.623 Historic Housing Stock I.f Provision of City Center Zoning& Building Regulations I g Management of Vehicular Access 1 921 to Historic Centers 1.h Municipal Parking & Commercial 2.471 Facilities I.i Protection & Landscaping of 0.958 Coastal & Green areas 2 Archaeological Sites 13.661 Conservation and Management 2.a Research & Documentation 4.190 2.b Conservation of Surfaces & 5.018 Structures 2.c Site Presentation to Visitors 3.814 2.d. Site Management 0.638 3 Institutional Strengthening and 5.325 Project Management 3 a MOC Reform of Cultural 1.449 Heritage Institutional & Regulatory Framework 3.b Municipal Management of 2.136 Historic Centers 3.c CDR Project Management 1 .739 Total Project Cost 61.579 16.564 34.659 0.000 4.190 0.842 5.325 Percent of Total 100% 26.90% 56.28% 0.00% 6.80% 1.37% 8 65%

-85 - Annen 5: FInancl Summary LE3ANESE REPUB3LIC: CULTURAL HEROTAG4E A1B URBAN1 DEVELOPMENT*1T Years Ending Decermbe 31

Amounts In US5 Mililon

Year I YeGar 2 Year 3 | Ysar 4 Year 5 Year 6 Year 7 Total Financing Required Project Costs Investment Costs 0.5 15.2 19.1 15.3 9.0 2.8 0.0 Recurrent Costs 0.0 0.0 0.0 0.0 0.6 0.9 1.1 Total Project Costs 0.5 15.2 19.1 15.3 9.6 3.7 1.1 Interest during 0.0 0.0 0.0 0.0 0.0 0.0 0.0 construction Total Financing 0.5 15.2 19.1 15.3 9.6 3.7 1.1 Financing IBRD/IDA 0.4 8.4 9.5 6.7 5.0 1.5 0.0 Govemment 0.0 1.7 2.1 1.4 1.6 1.2 1.1 Central 0.0 0.1 0.5 0.3 0.5 0.2 0.3 Provincial 0.0 1.7 1.6 1.1 1.1 0.9 0.8 Co-financiers 0.0 5.1 7.5 7.2 3.1 1.0 0.0 User Fees/Beneficlaries 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Other 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Total Project Financing 0.4 15.2 19.1 15.3 9.7 3.7 1.1

-Year | Year 2 Yser 3 |Year4 | Year5 | Year6 | Year 7 Total Financing Required Project Costs Investment Costs 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Recurrent Costs 1.4 1.4 1.4 1.4 1.4 1.4 1.4 Total Project Costa 1.4 1.4 1.4 1.4 1.4 1.4 1.4 Interest during construction 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Total Financing 1.4 1.4 1.4 1.4 1.4 1.4 1.4 Financing IBRDnIDA 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Government 1.4 1.4 1.4 1.4 1.4 1.4 1.4 Central 0.4 0.4 0.4 0.4 0.4 0.4 0.4 Provincial 1.0 1.0 1.0 1.0 1.0 1.0 1.0 Co-financiers 0.0 0.0 0.0 0.0 0.0 0.0 0.0 User Fees/Beneficlaries 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Other 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Total Project Financing 1.4 1.4 1.4 1.4 1.4 1.4 1.4

-86 - Main assumptions:

For the implementation period, the recurrent costs have been estimated at 1.25% of the total investment costs for Year-5, 1.5% for Year-6 and 1.75% for Year-7 . For the operational period the yearly recurrent costs have been estimated at 2.25% of the total investment costs. The split of the recurrent costs between the central Government and the municipalities is: 25% of the recurrent costs will be financed by the Central Government, and 75% by the municipalities.

- 87 - Annex 6(A): Procurement Arrange[rnents LEBANi!ESE REPUIBLIC: CULTURAL OERITAG[E Ai:ID URI3AM DIEVELOPPIMEIT

Procurement

1. The Council for Development and Reconstruction (CDR) would be responsible for all project-related procurement and disbursement activities. A procurement/construction manager specialist will be recruited at the Project management Unit (PMU) to be responsible for all procurement activities and contract monitoring.

2. The current procurement system in Lebanon is governed by the Public Accounting Law (1963) and the Decree for Public Procurement (1959). The system is heavily centralized whereby procurement for more than LBP 100,000,000 (approximately US$66,000) is carried out through the Board of Tenders (central procurement agency). The Council for Development and Reconstruction (CDR) is a financially autonomous govermment agency with appropriate procurement powers and procedures. For International Competitive Bidding (ICB), CDR follows Bank Guidelines and uses the Bank's Standard Bidding Documents (SBD). For National Competitive Bidding (NCB), CDR will use the SBDs for ICB modified in a forn acceptable to the Bank.

3. The efforts to reform the public procurement system in Lebanon have been ongoing for several years now. Currently, the Government has established a committee to review a draft for a new public procurement law and to provide recommendations on decentralization of public procurement. In the interim, the applicable provisions of the Loan Agreement would govern procurement decisions by CDR under this Project. All procurement under the project will be carried out by CDR according to the Bank Guidelines and Standard Bidding Documents. CDR will facilitate the project's procurement transactions through the implementation of arrangements defined in the Project Implementation Plan.

4. CDR, which is the implementing agency for most Bank-financed projects in Lebanon, has a satisfactory record of project implementation. It is currently upgrading its information systems to integrate all project information and produce comprehensive Project Management Reports. Planning, coordination and monitoring of procurement activities and their linkages with the disbursement function will be the responsibility of the Project Management Unit (PMU) established at CDR. PMU will be responsible for procurement reports and preparing quarterly progress reports.

5. Expenditure categories and procurement methods, summarized in Table A, have been estimated based on the activities to be partially financed by the Bank.

6. Bank-financed civil works, equipment and goods would be procured in accordance with the Bank's Procurement Guidelinesfor Procurement under IBRD Loans and IDA Credits (January 1995, revised in January and August 1996, September 1997, and January 1999). Procurement of consultant services and technical assistance would follow the Bank's Guidelinesfor the Selection and Employment of Consultants by World Bank Borrowers (revised January and September 1997, January 1999, and May 2002).

- 88 - 7. StandardBidding Documents. The following standard documents would be used: - Works: (a) Standard Prequalification Document for Procurement of Works (September 1999, revised March 2000); (b) Procurement of Works Smaller Contracts (January 1995, Revised June 2002), and (c) Standard Bid Evaluation Form for all bid evaluation reports for procurement of goods and works (April 1996). - Goods: (a) Procurement of Goods January 1995 (Revised March 2000, January 2001, and March 2002); and (b) Standard Bid Evaluation Form for all bid evaluation reports for procurement of goods and works (April 1996). - Services: Standard Request For Proposals (1997, revised April 1998 and July 1999), which incorporates Standard and Small Assignment Contracts - Sample Form of Evaluation Report - Selection of Consultants (October 1999).

8. Advertising. A General Procurement Notice (GPN) would be issued in United nations Development Business (UNDB) to advertise for major consulting assignments, works and goods. It would be updated annually with Specific Procurement Notice (SPN) for all outstanding ICB procurement of goods, works, and large consulting contracts. Special Procurement Notices (SPN) and Expressions of Interest (EOI) would also be published in the national press for contracts under NCB. 9. ProcurementPlanning. A procurement plan was prepared during Appraisal and is included in the Project Implementation Plan (available in the Project File). It provides a schedule for each step of the procurement process. It will be updated annually and furnished to the Bank for its review and approval, in accordance with the provisions of paragraph I of Appendix 1 to the Guidelines. All Bank-financed procurement shall be undertaken in accordance with the approved plan. Procurement Methods 10. Works. The works consist of upgrading of roads and parking spaces, amenity buildings, and museum construction. They will be procured according to the following methods: - International Competitive Bidding (ICB) open to prequalified contractors will be used for contracts estimated to cost US$2 million or more. Prequalification opportunities will be advertised in the United Nations Development Business (UNDB) and based entirely on the capabilities and resources of prospective bidders to perform the particular contract satisfactorily. - National competitive bidding (NCB) will be used for contacts estimated to cost less US$2 million with an aggregate amount of US$ 21 million, with the exception of contracts for specialized archeological works which will be awarded through ICB open to prequalified contractors. - Simple works and incidental materials. Contracts for simple works and incidental materials estimated to cost less than US$50,000, up to an aggregate amount not to exceed US$500,000 may be procured under lump-sum, fixed-price contracts awarded on the basis of quotations obtained from at least three (3) qualified domestic contractors in response to a written invitation. The invitation shall include a detailed description of the works, including basic specifications, the required completion date, a basic form of agreement acceptable to the Bank, and relevant drawings, where applicable. Price quotations shall be submitted in sealed envelopes and opened in the presence of contractors who choose to attend, following a written invitation. The award shall be made to the contractor who offers the lowest price quotation for the required work, and who has the experience and resources to complete the contract successfully.

- 89- 11. Goods. The project would finance museum equipment, research and laboratory equipment for heritage conservation, cars, office equipment and computers. It would also finance equipment for handicraft activities.

- InternationalCompetitive Bidding will be used for contracts estimated to cost US$300,000 or more.

- National Competitive Bidding may be used for contracts estimated to cost US$50,000 or more but less than US$300,000 and with an aggregate amount of US$300,000.

- Internationaland National Shopping. For contracts not to exceed US$50,000 and with an aggregate amount of US$200,000, International and National Shopping, may be used, with the choice depending on the availability of at least three capable suppliers in Lebanon. Where there is only one Lebanese supplier, the other two could be from eligible foreign countries.

12. Consultant services. Consultant and training services would be contracted in accordance with the Bank's Guidelines for the Selection and Employment of Consultants by World Bank Borrowers (revised January and September 1997, January 1999, and May 2002). The project would finance consultant services for architecture and engineering studies, urban planning studies, archeological studies, construction supervision and project management, short-term expertise, training and capacity building activities. - Consultant services with an estimated contract amount exceeding US$200,000 will be advertised in the United Nations Development Business periodical and in at least one local newspapers. For such contracts, the Bank's standard Request for Proposals documents will be used and proposals would be requested from three to six short-listed firms according to the clause 2.6 of the Guidelines. For contracts below US$200,000 the short list of consultants may comprise entirely national consultants if a sufficient number of qualified firms are available at competitive costs. The selection method will be based on quality and cost for all contracts above US$100,000 for firms and US$50,000 for individuals. - Below the thresholds of US$100,000 for firms, and with the exception of the employment of consultants through single source for reasons that meet the requirements of paragraphs 3.8 to 3.11 of the Guidelines for the Selection and Employment of Consultants by World Bank Borrowers, the selection method may be on the basis of consultants' qualifications. Consultants' qualifications (CQ) will be based on Terms of reference (TOR), a short list and information on the consultants' experience and competence relative to the assignment. The firm with the most appropriate qualifications and references will be asked to submit a financial proposal and then be invited to negotiate the contract. - For Individual Consultants contracts estimated to cost US$50,000 or less, the selection method would be based on Section V of the Guidelinesfor the Selection and Employment of Consultants by World Bank Borrowers.

-90 - Procurement methods (Table A)

Table A. Project Costs by Procurement Arrangements (US$ million equivalent)

,, , -, ,,, !, "" I , L i- " ' ' .Procurement Method Expenditure Category, ICB - NCB:. Other ' N.B.F. Total Cost 1. Works 8.47 22.46 0.00 18.45 49.38 (6.78) (17.97) (0.00) (0.00) (24.75) 2. Goods 0.00 0.00 0.34 0.86 1.20 (0.00) (0.00) (0.30) (0.00) (0.30) 3. Services 0.11 6.03 0.00 4.53 10.67 (0.11) (5.72) (0.00) (0.00) (5.83) 4. Miscellaneous 0.00 0.00 0.34 0.00 0.34 (0.00) (0.00) (0.30) (0.00) (0.30) 5. Interest during construction 0.00 0.00 0.00 0.00 0.00 (0.00) (0.00) (0.00) (0.00) (0.00) Front-end fee 0.00 0.00 0.32 0.00 0.32 (0.00) (0.00) (0.32) (0.00) (0.32) Total 8.58 28.49 1.00 23.84 61.91 (6.89) (23.69) (0.92) (0.00) (31.50) 11 Figures in parenthesis are the amounts to be financed by the Bank Loan. All costs include contingencies.

2vIncludes civil works and goods to be procured through national shopping, consulting services, services of contracted staff of the project management office, training, technical assistance services, and incremental operating costs related to (i) managing the project, and (ii) re-lending project funds to local govermment units.

-91- Table Al: Consultant Selection Arrangements (optional) (US$ million equivalent)

Selection MGethod Consultant Services Expenditure Category QCBS QBS SF1 LCS CQ Other N.B.F. Total Cost' A. Firms 3.49 0.00 0.00 0.00 0.00 0.00 4.18 7.67 (3.31) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (3.31) B. Individuals 0.00 2.65 0.00 0.00 0.00 0.00 0.35 3.00 (0.00) (2.52) (0.00) (0.00) (0.00) (0.00) (0.00) (2.52) Total 3.49 2.65 0.00 0.00 0.00 0.00 4.53 10.67 (3.31) (2.52) (0.00) (0.00) (0.00) (0.00) (0.00) (5.83) Including contingencies Note: QCBS = Quality- and Cost-Based Selection QBS = Quality-based Selection SFB = Selection under a Fixed Budget LCS = Least-Cost Selection CQ = Selection Based on Consultants' Qualifications Other = Selection of individual consultants (per Section V of Consultants Guidelines), Commercial Practices, etc. N.B.F. = Not Bank-financed Figures in parenthesis are the amounts to be financed by the Bank Loan.

- 92 - Prior review thresholds (Table B)

1. Works and Goods. Would be subject to prior review: (a) all ICB contracts for works, including the prequalification process; (b) all ICB contract for goods; (c) NCB contracts for works with an estimated value above US$0.5 million; and (d)NCB contracts for goods with an estimated contract value of US$150,000 or more. It is estimated that this review would cover about 96 percent of the works contracts and about 53 percent of the goods contracts.

2. Consultancy contracts with an estimated value of US$50,000 and above for both firms and individuals would be subject to pnor review by the Bank. These thresholds would account for about 87 percent of Bank-financed contracts. Terms of reference for all services to be provided would be subject to prior review by the Bank. Contracts under these thresholds (civil works, goods and consultancy) would be subject to selective post-award review during supervision mission, and/or by the auditor (See table B).

3. Single- Source. All single- source selections would require the Bank's prior review and "no-objections". Table B: Thresholds for Procurement Methods and Prior Review'

Contract Value Contracts Subject to .Threshold Procurement Prior Review Expenditure Category (US$'thousands) - -Method (US$ millions) 1. Works >2,000 ICB 7,314 >500 NCB 19,583 2. Goods >300 ICB 0,386 >150 NCB >50 Intemationa Shopping >50 National Shopping 3. Services >I00 with firms QBCS 5.212 >50 with individuals QCBS/QBS >50 with firms CQ <50 with individuals Section V. 1.974 Individual Consultants 4. Miscellaneous 5. Miscellaneous 6. Miscellaneous

Total value of contracts subject to prior review: 34.470 Overall Procurement Risk Assessment: Average Frequency of procurement supervision missions proposed: One every 6 months (includes special procurement supervision for post-review/audits)

Thresholds generally differ by country and project. Consult "Assessment of Agency's Capacity to Implement Procurement" and contact the Regional Procurement Adviser for guidance.

- 93 - Annex 6(B) Financial MUanagement and IDisburszment Arrangements LEBANE$SE REPUBLIC: CULTURAL HEIRlTAGiE D IURBSARI DEVELO SEMT

Financial Management 1. Summary of the Financial Management Assessment Executive Summary and ConclusAon 1. CDR, throughout the project, will be responsible for managing the project funds and all related financial transactions. CDR is a public authority established to be the Government's arm for planning and implementing projects for economic development and for rehabilitation and reconstruction of public infrastructure. To bypass the Government administrative routine, CDR was granted exceptional authority and was exempted from laws and regulations applicable to the public administration. This authority has and is still allowing CDR to implement projects within shorter time frames than other Government agencies and ministries. CDR's financial management arrangements were assessed, based on the Bank's new FMR (Financial Monitoring Reports) Guidelines, to determine whether the financial management arrangements for the project are acceptable to the Bank. A detailed financial management questionnaire is included in the project files. However, the conclusion of the financial management assessment can be summarized by the following:

_Rating Comments 1. Implementing Satisfactory The CDR has already implemented other Bank-financed projects and is well familia Entity with Bank requirements and guidelines. 2. Funds Flow Satisfactory The part of the project funded by the loan will be financed through two sources, IBRD and the Borrower therefore the flow of funds will be simple and straightforward. 3. Staffing Satisfactory Disbursement arrangements will be handled by staff familiar with the Bank disbursement arrangements while the risk of not generating timely project reports would be contained by "ring fencing" a parallel accounting system, which will be operated by a newly recruited financial officer. 4. Accounting Satisfactory Procedures are in place however an annex to CDR financial manual would be needed Policies and with to introduce new financial activities related to the parallel accounting system. Procedures limitations 5. Internal Audit N/A Internal audit is applied by the government comnissionaire to insure that funds have been allocated in the CDR budget and invoices are in order. 6. External Satisfactory CDR, as per its establishment law, has to audit, annually, its financial statements by Audit an independent external auditor. Also, the project will be audited by external auditors acceptable to the Bank. 7. Reporting and Unsatisfactory CDR accounting system is not capable of generating quarterly project reports. To Monitoring contain this risk a parallel accounting system will follow on the project accounts in addition to CDR main accounting system. Financial Monitoring reports (FMR) whose format will be agreed upon with the borrower, will be generated quarterly through the parallel system. 8. Information Has its CDR accounting system uses the signed contracts as cost allocation centers, without Systems limitations any link to the financing source or activity. This limitation does not allow the CDR to generate quarterly project reports through its main accounting system. This risk will be contained by "ring fencing" a parallel accounting system capable to generate quarterly project reports. 9. Risk Satisfactory The project financial management capacity is satisfactory. Risk management would Management be contained by "ring fencing" the accounting arrangements of the project Overall Financial Satisfactory Management

- 94 - 2. This assessment showed that the system in place at CDR is based on principles and procedures defined by the legal framework and operational decrees applicable to CDR. The control environment at CDR was found to be adequate however the financial system lacks the support of a budgeting module and requires enhancement to become capable of generating timely project reports. to avoid the risk of CDR not being able to generate timely reports for project management and monitoring purposes, "ring fencing" accounting arrangements are being implemented to overcome this shortcoming in the system.

CDR Current Financial Management Practices and IT system 3. An effective organization and financial structure characterize the control environment at CDR. Segregation of duties and responsibilities such as invoice processing, accounting duties and issuance of payments is well observed in the day-to-day transactions. CDR records are subject to post audit by the Government Court of Accounts, and an external independent auditor performs the annual audit to its financial statements. CDR's accounting policies follow fund accounting on cash basis principles, and the consolidation of the 7 funds created by CDR generates the Council's financial statements. Bank-financed projects and other international donors are accounted for under funds 1 and 4 being the "Revenues et Comptabilite des Projets" funds. CDR's financial system uses the signed contracts as cost allocation centers, without any link to the financing source or activity. However, and in order to prepare the year-end project financial statements, CDR link manually the expenditures under ongoing contracts to the funding source. For every new project, a separate ledger account is created in order to monitor the source of funds and to reconcile the project SA opened at the Central Bank of Lebanon. All Bank-financed projects implemented by CDR have been based on traditional methods of disbursements using SOEs and direct payments.

4. During 1998, CDR embarked on the implementation of a comprehensive plan to modernize its Financial Management and Contract Monitoring systems and integrate them with project management and other information systems. This plan was supported in part by a Bank IDF grant in the amount of US$150,000. This grant partially financed the strengthening of the management information system to allow an interface between the various information systems of the finance, procurement and project physical progress. Among other outputs, CDR should produce a new chart of accounts that would have allowed adequate financial data for reporting that replies to project management requirements. Presently, CDR is revising the project targets and adjusting the plans for the completion of the tasks in order to bring the upgraded system into operation by end of year 2003. Meanwhile, and until the new system is fully operational, CDR is implementing interim arrangements capable of generating reliable project reports.

CDR's Interim Arrangements 5. CDR's system is capable to follow on financial transactions, however, to avoid the risk of CDR not being able to generate timely reports for project management and monitoring purposes, interim arrangements are being implemented to overcome this shortcoming in the system. Until CDR's upgraded system is fully operational, accounting and reporting activities related to Bank-financed projects and other international donors will be undertaken separately but in conjunction with CDR's control procedures and controls. To that end, CDR has appointed a full time Financial Officer who reports directly to CDR's controller with a specific mandate to establish and operate this interim system. Presently, this officer is assessing the available accounting software's in the Lebanese market, and software's used by other Bank-financed projects implemented by other sector ministries, in order to draft the system TORs and proceed with the installation and configuration. The system should be able to account separately for each of the projects financed by international donors and implemented by CDR. This interim system is expected to be operational by October 2003, or prior to the negotiations of this

- 95 - project, thus CDR will be able to generate, quarterly, the project reports required under the project for monitoring and decision making. However if this target date is not met and given the disbursement level during year one of the project, CDR will use, during this period, spread sheet applications to follow on the project accounts and to generate project reports.

6. As the procedures of the above interim solution are not reflected in CDR's legal framework or operational decrees and in order to ensure the accuracy and completeness of the interim system data, CDR management will introduce a new activity requesting the monthly reconciliation between CDR's main accounting system and the interim one. This will ensure the mirroring of all transactions in both systems.

7. In addition CDR's financial department will prepare an annex to CDR's manual of procedures outlining the interim system and detailing: - the Financial Officer's responsibilities within the financial department; - the chart of account which should reflect the classification of the main chart, where applicable, for easy reconciliation; - the budgeting process; - the reconciliation procedures, timing and output between the two systems; - the document flow; - the frequency and forms of the financial reports; and others.

Flow of Funds and Controls 8. All invoices either for advance payments or for incurred expenses will be subject to CDR controls and procedures, which are considered adequate, and will be honored through payments issued by CDR. CDR's finance department will be responsible for the project funds and for the management of the SA, as is the case in other Bank-financed projects implemented by CDR. CDR will transfer funds from the loan account to the project's SA, opened at the Central Bank. Deposits into and payments out of the SA, to pay contractors/suppliers/consultants, will be made in accordance with the provision of the Loan Agreement.

ocumoanl…--- flo Cah nttow Cash Flow Chart

CDR Project Management Unit

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MonItorIng

SC DPr \X Xy \|P,oi Spnc..t AcCOcor CDR Local Account C..". I B.]kA\ | ....C at Contral Bank \Countorpert,funda)

C Ionberca I Sonptp & C ic . Commercasl& 1 5>pphers CODrrAC¢Or$, ContractoSupplIrs,Aontractors. l -l'.." CDD Consultants

-96- 2. Audit Arrangements

CDR will be responsible for consolidating project accounts for all components. Project's accounts, including Special Account and SOEs, will be subject to external auditing by a qualified independent auditor under terms of reference acceptable to the Bank. All audit reports will be submitted to the Bank, in English, no later than six months after the end of each fiscal year. In addition, the auditor shall prepare a management letter describing the internal control and operating procedures affecting project implementation, and any other matter which should be drawn to management's attention. The auditor would be appointed prior to effectiveness.

3. Disbursement Arrangements

To ensure that funds are readily available for project implementation, a Special Account (SA) in US Dollars will be opened at the Central Bank of Lebanon and will be operated by CDR. Initially, an advance for the equivalent of about six months expenditures will be transferred to the SA upon effectiveness of the Loan and receipt of a signed withdrawal application. The maximum amount of this initial advance is estimated at US$1,000,000 equivalent. Replenishment applications will be prepared and submitted to the Bank by CDR. Authorized signatories, names and corresponding specimens of their signatures will also be submitted to the Bank. The Borrower has opted to replenish the SA using traditional methods of disbursements by means of SOEs and using the SA for those expenditures below the threshold, and direct payments accompanied by supporting documentation for the balance. Retroactive Financing. Payments made by a borrower out of its own resources before the date of a Loan Agreement are normally not eligible for financing under the loan, except that withdrawals, in an aggregate amount not exceeding the equivalent of US$3,150,000, may be made in respect of Categories (1), (2) and (3) on account of payments made for expenditures before that date but after September 1, 2002. Payments must be for expenditures that are eligible under the Loan Agreement. Procedures for procurement and the use of consultants, and processing and clearances are subject to the Bank's Procurement and Consultant Guidelines. Documentation requirements for expenditures claimed under retroactive financing are the same as those for disbursement against payments made after the Loan Agreement is signed. Documentation for Withdrawals. The borrower has indicated that the traditional method of disbursement will be used for this project. This position will be confirmed during negotiation. This method includes the use of Statements of Expenditures (SOEs) and the replenishment of SAs will be based on receipt of appropriate documentation.

- 97 - Allocation of loan proceeds (Table C)

Table C: Allocation of Loan Proceeds

L - ExpendituMe Categorn Amount in U$$million - Financing Percentage (1) Works 22.05 80% (2) Goods, Equipment and Vehicles 0.27 100% of foreign expenditures, 100% of local expenditures (ex-factory cost) and 85% of local expenditures for items procured locally (3) Consultants' Services and Training 5.20 95% of local expenditures for services of consultants domiciled within the territory of the borrower, and 92.5% of foreign expenditures for services of other consultants (4) Incremental Operating Costs* 0.27 100% of all expenditures up to June 30, 2008 and 75% of all expenditures thereafter (5) Front End Fee 0.32 (6) Unallocated 3.39

Total Project Costs 31.50 Interest during construction 0.00

Total 31.50 * the term "incremental operating costs" means expenditures under the Project incurred by the PMU in relation to office support ( secretary and driver), maintenance of vehicles and equipment, fuel, utility charges, office supplies, communications, but excluding salaries of officials of the Borrower.

Use of statements of enpenditures (SOEs): During implementation, SOEs will be used for all expenditures for: (a) works under contracts costing less than US$500,000 equivalent each; (b) goods under contracts costing less than US$150,000; (c) services under consultant firms contracts costing less than US$100,000 equivalent each; (d) services under individual consultant contracts costing less than US$50,000 equivalent each; (e) training under contracts costing less than US$25,000 equivalent each; and (f) incremental operating costs, under such terms and conditions as the Bank shall specify by notice to the Borrower. The supporting documentation would be maintained by CDR and made available for review by Bank supervision missions upon request, documentation relating to SOEs would be retained for up to one year from the date the Bank receives the audit report for the fiscal year in which the last withdrawal from the loan account was made.

-98 - Special account: To facilitate project implementation and make timely payments of the Bank's share of eligible expenditures to contractors, suppliers, consultants and others, CDR will open a US Dollars SA at the Central Bank of Lebanon with authorized allocation of US$3 million and an initial deposit of US$1 million, and the full allocation could be claimed when disbursements reach US$5 million. Replenishment of the SA would follow Bank's procedures, and a Bank's statement of SA transactions would support all replenishment applications. Requests for replenishment of the SA will be submitted on a monthly basis.

The SA would be audited annually by independent auditors acceptable to the Bank and the audit report should be submnitted to the Bank for review no later than six months after the end of each project fiscal year.

Risk Analysis

I. The following summarizes the risk assessment findings for the project:

,- . - < 4.tS- - Risk Comments Inherent Risk I.Country Financial Management Risk N/A No CFAA report for Lebanon 2.Project Financial Management Issues M The CDR is fauhliar with Bank Financial Management requirements 3.Counterpart Funds M The bulk of the govemment contribution is financed through other International Donors (AFD & IG ) Overall Inherent Risk M Control Risk I.Implementing entity M The CDR has adequate experience in implementing Bank-financed projects 2.Funds Flow M The flow of funds is quite simple and CDR has adequate disbursement experience and capacity 3 Staffing M An experienced staff has been hired to follow on the project accounting while CDR finance department will follow on the project disbursements and replenishments 4.Accounting Policies and procedures M Upon finalizing the annex to CDR accounting manual, adequate financial policies and procedures will be in place 5.lnternal Audit N/A 6.External audit M Extemal audit will be carried out by an auditor acceptable to the Bank. 7.Reporting and Monitoring M With the "ring fencing" the project will report on the basis of the FMRs 8.1nformation systems H This risk will be reduced through the installation of an accounting software to follow on the project accounts and transactions Overall Control Risk M Risk Rating: H (high Risk), S (Substantial Risk), M (Modest Risk), N (negligible or Low Risk)

-99 - 2. The strengths that provide basis of reliance on the project financial management system include: o The experience of the CDR financial department with the implementation of Bank financed projects. o The centralization of all payments and the ring fencing for accounting transactions and financial report generating. o The unqualified audit reports issued by CDR external independent auditor for projects presently implemented by the Council.

Bank Supervision

3. The requirements on Bank supervision will initially intensify to ensure that the interim system is implemented and integrated with CDR's financial department. The first supervision mission after effectiveness will then take the form of a launch workshop where a seminar on Bank rules, regulations and guidelines will be presented. The project will be supervised every four months for the first eighteen months, then every six months thereafter. Bank supervision missions will consist of visits to CDR to review financial management practices, procurement methods, payment procedures and documentation, in addition to field visits to the project sites and other agencies concerned.

Financial Monitorlng Reports (IFMR) Quarterly Reports (in the Project File) Table of Contents

Financial Report I-A Project Sources and Uses of Funds 1-B Uses of Funds by Project Activity 1-C Special Account Reconciliation Statement Progress Reports 2-A Output Monitoring Report (Unit of Output by Project Activity) Procurement Reports 3-A Procurement of goods (Not subject to prior review) 3-B Procurement of Works (Not subject to prior review) 3-C Selection of Consultants (Not subject to prior review)

- 100- Annex 7: Project Processing Schedule LEBANESE REPUBLIC: CULTURAL HERITAGE AND URBAN DEVELOPMENT

Project Schedule - Planned Actual Time taken to prepare the project (months) First Bank mission (identification) 10/16/1998 10/16/1998 Appraisal mission departure 05/10/2000 06/30/2002 Negotiations 08/28/2000 01/27/2003 Planned Date of Effectiveness 01/31/2001 10/01/2003

Prepared by:

The Council for Development and Reconstruction (CDR) The Directorate General of Antiquities (DGA), Ministry of Culture The Directorate General of Urban Planning (DGU), Ministry of Public Works and Transport The Municipalities of Baalbeck, Byblos, Saida, Tripoli and Tyre

Preparation assistance:

Government of Italy Government of Japan (PHRD) Agence Francaise de Developpement (AfD) United Nations,Educational Scientific and Cultural Organization (UNESCO)

- 101 - Bank staff who worked on the project included: Name Speciality Task Team

Mohammed Feghoul, MNSIF Senior Municipal Engineer, Task Team Leader Anthony G. Bigio, TUDUR Senior Urban Specialist John Keith Rennie, MNSRE Senior Social Scientist Alexander McPhail, MNSIF Senior Economist Ekaterina Massey, Consultant Urban Specialist Robert Bou Jaoude, MNACS Senior Financial Management Specialist Imad Saleh, MNACS Senior Procurement Specialist Giovanni Boccardi, UNESCO Cultural Heritage Specialist Francesco Scoppola, Consultant Architect, Cultural Resources Management Specialist Meskerem Brhane, Consultant Social Scientist James A. Reichert, MNSIF Financial Analyst Dominique Bichara, LEGMS Senior Counsel Andrina A. Ambrose-Gardiner Senior Financial Officer Issam A. Abousleiman, FPS Senior Financial Officer Eugenia Dennis, MNSIF Program Assistant Thouria T. Nana-Sinkam, MNSIF Language Program Assistant

Quality Control -Peer reviewers:

Sonia Hamman, SASEI Sector Manager Water and Urban Padmanabha Hari Prasad, MNAVP Adviser Geoffrey Read, EASUR Lead Municipal Engineer, Consultant Thomas Blinkhorn, ECSPF Cultural Heritage Adviser, Consultant

- 102 - Annex 8: Documents in the Project File* LEBANESE REPUBLIC: CULTURAL HERITAGE AND URBAN DEVELOPMENT

A Project Implementation Plan Project Implementation Plan, January 2003

B. Bank Staff Assessments Aide-Memoires of Bank Missions Electronic copies of project correspondence Lebanon: The Housing Sector Reports on Lebanon Municipal Sector and Municipal Finance

C. Other Ministere du Tourisme "Plan Directeur de Reconstruction et de Developpement Touristiques", 1995 Information International, "Stakeholder Analysis and Social Assessment for the Proposed Cultural Heritage and Tourism Development Project, Final Report", November 2001; Hariri Foundation/UNESCO, "Saida-Liban: une etude socio-economique", [1995 ]; Tabet et Debs, Architectes, "Rehabilitation et Revitalisation Urbaine de la Ville Ancienne de Tripoli", July 2002; Pierre el-Khoury Architectes, "Urban Conservation and Design Studies for Tyre Old City, 2002

A.A.A. Consultants "Urban Conservation and Design Study for Byblos Old City ", 2002 Dar al-Omran, Social research in preparation of First Phase study for Saida urban master plan, 2001. ARS Progetti Consultants "Baalbeck and Tyre Archeological Study", July 2002; ARS Progetti Consultants "Urban Conservation and Design Study for Baalbeck old City", July 2002; ARS Progetti Consultants "Institutional Assessments of the Department General of Antiquities", December 2002; Environmental Assessment, Dr. Mutasem El-Fadel, November 2002; Social Assessment (November 2001) and Resettlement Action Plan (November 2002), Dr. Maha Yahia; Eric Huybrechts, Isabelle Peillen, Antoine Fichfisch "Practice and legal aspects of heritage preservation in Lebanon", 2001; The Lebanese Center for Policy Studies "Institutional and Fiscal Review of the Municipal Sector in Lebanon, June 1998; USAID, ed. Sateh Arnaout "Local Government in Lebanon", March 1995

*Including electronic files

- 103- Annex 9: Statement of Loanz and Credits LEBANON: CULTURAL HERITAGE AD URBAN DEVELOPMENT 06-Feb-2003 Difference between expected and actual Original Amount in US$ Millions disbursements' Project ID FY Purpose IBRD IDA Cancel Undisb Ong Frrm Rev`d P074042 2002 LB-BAALBECK WATER AND WASTEWATER 43 53 0 00 0 00 43 53 1.83 0 00 P034038 2002 LB-URBAN TRANSPORT DEVELOPMENT PROJE 65 00 0 00 0 00 65 00 0 83 0 00 P071113 2001 LB -Community Development Pnsec 20 00 0 00 0 00 19 80 2 42 0 00 P045174 2000 LB-GENERAL EDUCATION 56 57 0 00 0 00 5519 25 29 0 00 P050544 2000 LB-FIRST MUNICIPAL INFRASTRUCTURE 80 00 0 00 0 00 61.67 23 34 0 00 P038687 1998 LB -VOCATIONAL &TECH.ED 63 00 0 00 34 00 2720 55 40 8.36 P034037 1997 AGRI.INFRA.DEVEL. 31.00 0.00 700 11.90 1890 1190 P038674 1997 LB-NATIONAL ROADS 42 00 0 00 0 00 22 24 22 24 9 97 P034035 1996 LB-ADMIN REHAB 2000 000 000 077 077 -017 P005345 1995 SOLID WASTE/ENVIRONMENT 55 00 0 00 30 00 17 23 47.23 0 63 P034004 1995 HEALTH PROJECT 35.70 0.00 0 00 18 91 18.91 18.71 P005344 1994 LB-IRRIGATION 57.20 00 0 00 11 86 1188 0.00 P005340 1994 LB-TA FOR REVENUE ENHAN 19 90 0.00 0 00 3 69 3 69 018

Total 588 90 0 00 71 00 358 99 232 71 49 58

-104 - LEBANON STATEMENT OF IFC's Held and Disbursed Portfolio Jun 30 - 2002 In Millions US Dollars

Committed Disbursed IFC IFC FY Approval Company Loan Equity Quasi Partic Loan Equity Quasi Partic 1997 ADC 2 92 0.00 0.00 0.00 2.92 0.00 0.00 0.00 1993/96 BBAC 2.50 0.00 0.00 3.10 2.50 0.00 0.00 3.10 Bank of Beirut 5.86 0.00 0.00 0.00 5.86 0.00 0.00 0.00 1997 Banque Saradar 0.00 11.00 0.00 0.00 0.00 11.00 0.00 0.00 1997/99 Byblos Bank 22.83 0.00 0.00 17.74 22.83 0.00 0.00 17.74 1993/96/99 FTML Services 0 00 0.00 10.00 0.00 0.00 0.00 10.00 0.00 1997 Fransabank 2.40 0.00 0.00 2.95 2.40 0.00 0.00 2 95 1993/94/96 Idarat 5.00 1.50 0.00 0 00 5.00 1.50 0.00 0 00 1998 Idarat SHV 2.57 0.00 0.00 0.00 2.57 0.00 0.00 0.00 1998 Leb. Credit Ins. 0.00 0.50 0.00 0.00 0.00 0.50 0.00 0.00 2000 Lebanese Leasing 5.25 0.00 0.00 0.00 5.25 0.00 0.00 0.00 1995/99/01 Libano-Francaise 5.00 0.00 0.00 6.64 5.00 0.00 0.00 6.64 1994/96 MidEast Capital 0.00 3.00 0.00 0.00 0.00 3.00 0.00 0 00 1996 SGLEB 3.75 0.00 0.00 5.09 3.75 0.00 0.00 5.09 1994/96 Uniceramic 0.00 0.00 0.80 0.00 0.00 0.00 0.80 0.00 1993 Total Portfolio: 58.08 16.00 10.80 35.52 58.08 16.00 10.80 35.52

Approvals Pending Comnutment FY Approval Company Loan Equity Quasi Partic 1996 SGLEB Housing CL 2.00 0.00 0.00 0.00 Total Pending Comrmtment: 2.00 0 00 0.00 0.00

-105- Annen 10: CcunQry at a Glance LEBANESE REPUBLIC: CULTURAL H0ERDTAGE A!D URBANI DEVELOPO,EMT M. East Uppor- POVERTY and SOCIAL a North middle- Lebanon Africa Income Dovalopmant dlomond' 2001 Population, mid-year (mIlihons) 4 4 301 504 Life expectancy GNI per capita (Atlas method, US$) 4,000 2,000 4,460 GNI (Atlas method, US$ billions) 176 601 2,248 Average annual growth, 1995-01 Population (%) 1.5 20 13 Laborforce (%) 2.6 29 18 GNI Gross per primary Moot reoant estimate (latest year avallable, 1995-01) capita enrollment Poverty (%of population below national poverty line) Urban poptilation (%of total population) 90 58 77 Life expectanrcy at birth (years) 70 68 71 Infant mortality (per 1,000 live births) 26 43 24 Child malnutntion (%of children under 5) 3 15 9 Access to improved water source Access to an Improved water source (%of populaton) 100 89 87 Illiteracy (%of population age 15+) 14 34 10 Gross pnmary enrollment (%of school-age population) 111 97 127 - Lebanon Male 113 103 128 - Upper-middle-ncome group Female 108 90 126 KEY ECONOMIC RATIOS and LONG-TERM TRENDS 1981 1991 20SD 2001 Economic rotlos- GDP (US$ billions) 4 5 16.5 16.7 Gross domestic investment/GDP .. 19 3 18 1 16 7 Exports of goods and services/GDP 132 130 14 3 Trade Gross domestic savings/GDP . -51 7 -6 7 -12.6 Gross nabonal savings/GDP -0 8 -0 5 -5.9 Current account balance/GDP .. -20 0 -18 6 -22.6 Domestic Interest paymenWGDP . 0.3 Z8 3.9 Investment Total debt/GDP 34 9 59.8 80.5 savings Total debt service/exports .. 3.5 47.8 43 7 Present value of debt/GDP . 64.0 Prsent value of debtlexports 343 2 Indebtedness 1981-91 199141 2000 2001 200145 (average annual growth) GDP 40 -0 5 1.3 26 - Lebanon GDP per capita .. 2.3 -1 8 0.0 14 - Upper-middleincome group Exports of goods andservlces 9.4 118 11.6 81 STRUCTURE of the ECONOMY 1981 1991 200 2001 Growth tof Invostmont and GDP(%) (%of GDP) 4 Agriculture . 11.9 120 Industry . 22.0 21.9 20 Manufacturing , 10.3 10 3 o a Services .. . 66.1 661 Private consumpton . 132.5 87 8 94 3 40 General govemment consumption 19 2 18.9 18.33Got GDP Imports of goods and services .. 842 37 8 43.6

1981-01 1991401 2000 2001 ~rot~rtJithG ofsporto and Imports % (average annual growth) Agnculture 18 0 6 2.6 so - Industry -11 0.6 1.2 40 Manufacturing -3 2 0 6 1.2 Services . 3 6 0.6 1.7 2D Pnvate consumption .. 1.3 -2 9 8.8 o' General govemment consumption 5 8 30 8 -1 7 -20 Gross domestic Investment . 2.1 -16 7 -6 4 Exporbts - Imports Imports of goods and services -0 9 0 2 17.0

Note 2001 data are preliminary estimates. The diamonds show four key indicators In theiacountry Onbold) compared with its Income-group averogo. tf data are missing, the diamond wiltbe Incomplete.

- 106- Lebanon

PRICES and GOVERNMENT FINANCE

Domest/c priees 1981 1991 2000 2001 Inflation (%j (%change) t Consumerprices 51.5 -04 00 10 Implicit GDP deflator 51.5 01 00 s Government finance (%of GDP, includes current grants) 0 95.i 97 98 * Current revenue 15 9 18 7 18 5 -9 Current budget balance -9 1 -19 6 -14 7 GDP deflator CPI Overall surplus/deficdt -13 0 -24 5 -17.6

TRADE

(USS millions) 1981 1991 2000 2001 Export and Import levels (USS mill.) Total exports (fob) . 712 798 1tS00 Livestock, animal, and vegetable products 246 261 Fats and oils 117 129 1000 Manufactures 488 584 7so5 * Total rmports (df) 3,066 6.228 7,290 5 * Food 529 906 980 Fuel and energy 445 1,030 1294 2.5s0 Capital goods 632 1.356 1,720 o 99 Os 97 go 99 00 01 Export pnce index (1995=100) 105 108 importpnceIndex (1995=t00) 107 109 *Exports Mimports Terms of trade (1995=100) 99 99

BALANCE of PAYMENTS

(USS mrilions) 1981 1991 2000 2001 Current account balance to GDP (%) Exports of goods and services 588 2,141 2.390 0 Imports of goods and services 3,749 6.228 7,290 Resource balance -3.161 -4 087 4.900 -10 Net income 374 932 942 -20 1 Net current transfers 1,895 ill " Current account balance . -892 -3,065 -3,775 0 Financing items (net) 1.461 2,775 2,701 to0 Changes in net reserves -569 290 1,074 -so Memo: Reserves induding gold (USS millions) 8.420 6,963 Conversion rate (DEC, locallUS$) 928 2 1.507 5 1,507 5

EXTERNAL DEi3T and RESOURCE FLOWS 1981 1991 2000 2001 (USS millns) Composition of 2001 debt (USS mill.) Total debt outstanding and disbursed 619 1.554 9.856 13.450 IBRD 33 29 248 259 A 259 IDA 0 0 0 0 D 404 Total debt service 101 110 1.469 1.457 IBRD 6 7 31 38 IDA 0 0 0 0

ComposiUon of net resource flows Offidal grafts 383 105 133r . Official creditors 24 -25 52 74 Private creditors 53 6 1,387 2,507 N Foreign direct investment 0 0 298 , F 8,37 Portfolio equity 0 0 4 World Bank program Commitments 0 0 137 20 A-IBRD E-Bilateral Disbursements 10 0 42 48 8- IDA D- Other multilateral F- Private Principal repayments 4 4 17 24 C -IMF G -Short-term Net flws 7 -4 26 24 Interest payments 2 2 14 15 Net transfers 4 -7 12 9 ueveiopmenxr conomics Wi /IUZ

- 107- Additional Annex 11: Environmental WManagement Plan LEBANESE REPUBLIC: CULTURAL HERDTAGiE AHMD URBAN DEVELOPMENT

A. Overview

1. Cultural heritage represents a set of unique assets that Lebanon can leverage to promote national and international cultural tourism. Its cultural heritage assets, as well as good climate and hospitality, are the hallmarks of a land of history and culture. Since the early 1990s, many Lebanese institutions, often in partnership with international organizations, have undertaken significant initiatives to protect, rehabilitate, restore, and revitalize the cultural heritage that suffered from neglect and damage during 16 years of war.

2. The maglitude and importance of Lebanon's cultural heritage and its diversity and presence throughout the country surpass the currently available management capacity and resources. The law that regulates the sector dates back to 1933, human resources are scarce, and budgetary constraints and administrative red tape limit funding for much-needed investments. Some important archaeological sites are currently endangered due to insufficient protection of ancient artifacts within the sites, unreliable boundary enclosures, encroachment of illegal housing, the intrusion of public roads and buildings, and by urban redevelopment plans. These intrusive developments are encouraged by the fact that local residents derive no economic benefit from the sites.

3. Lebanon's main archeological sites and historic urban cores are generally surrounded by modem constructions. Developers often view this heritage as a hindrance; as a consequence, the urban areas surrounding the sites are often fringe and derelict spaces, lacking basic infrastructure. As recognition of the tourism potential grows and the interest in capturing its revenue streams for the local economy is translated into plans, Lebanese cities will have to make the investments needed to provide visitors with comfortable access, parking facilities, pedestrian routes, and a visually improved environment surrounding heritage or natural sites.

4. In areas around archeological sites and old town centers, there is a need to ensure a framework and process for spatial planning and development that will: (a) maintain the integrity of the sites themselves, with provision for their future extension or reintegration where this is feasible; (b) provide for the needs of the tourist industry and urban regeneration in areas adjacent to sites, particularly with regard to facilities and redevelopment of the immediate environment, such as by preserving pedestrian zones, tourist circuits, etc.; (c) respond to the socio-economic characteristics and development needs of the residents; and (d) designate an appropriate location for other developments that may be consistent with the first three objectives.

B3. Cultural Heritage and Urban Development (CHIUD) Project

5. Proposed Project. The strategic rationale for the proposed CHUD project lies in its focus on the area of overlap between the three major essential stakeholder interests: Antiquities, Tourism, and the municipalities and local communities of the secondary cities that are rich in cultural heritage. The project will support participating municipalities and local communities in developing and implementing urban development plans based on the role of unique major cultural heritage sites and resources, and ensuring that the local populations draw economic benefits from these investments. It will also assist the Ministry of Culture and the Directorate-General of Antiquities in the preservation, rehabilitation and presentation of sites of key attraction. Effective management of cultural assets, urban regeneration and

- 108 - enhanced cultural tourism are at the core of the proposed project. Well functioning cities with an enabling environment for private sector investment, enhanced cultural assets and tourism as a basis of their sustainable development are the overarching objectives of a longer term development program for the selected cities. The proposed project would primarily address the most pressing needs in terms of cultural heritage preservation, urban regeneration and tourism site operation, and support necessary institutional development activities. The proposed project has three components: (a) rehabilitation of historic city centers and urban infrastructure improvements; (b) archeological sites conservation and management; and (c) institutional strengthening

C. Environment, Resettlement and Cultural Heritage

6. Complementary Studies. Evaluation of issues concerning environment, cultural heritage, involuntary resettlement and land acquisition has been an integral part of planning and design studies undertaken by the Government of Lebanon to support identification, preparation, implementation and operation of the CHUD project. The CDR, the implementing agency for the CHUD project, has commissioned the preparation of an Environmental Assessment as an element of the project preparatory studies.

7. Policy and Legislative Framework The Environmental Assessment has been prepared in compliance with the requirements of: (a) the Government of Lebanon, including the procedures of the Ministry of Environment; and (b) the procedures of the World Bank, including Operational Directive 4.01, "Environmental Assessment;" Operational Policy Note 11.03, "Management of Cultural Property in Bank-Financed Projects;" and Environmental Assessment Sourcebook Update No. 8, "Cultural Heritage in Environmental Assessment." It should be noted that Lebanon does not have a formnal requirement for the preparation of Enviromnental Assessments for major investment projects; however, they are often prepared for projects that are supported by international financial institutions and donor organizations. While there are currently no approved EIA procedures in Lebanon, efforts are underway at the Ministry of Environment (MoE) to pass an EIA draft decree that defines such procedures. Within the draft decree, these procedures follow to a great extent the guidelines recommnended by the World Bank Operations Directives.

8. Environmental Assessment. A detailed environmental assessment in compliance with the provisions of OP 4.01 for a "Category B" project has been prepared for the Project. It includes an analysis of planning and design alternatives, development of an environmental mitigation and monitoring plans and extensive public consultations. The final environmental assessment, including Executive Summary in Arabic and English, is available at the Info Shop and at CDR's offices in Lebanon for public consultation.

9. Participatory Approach.. The preparation process for the Environmental Assessment included an active public participation program to facilitate a broad based dialogue and allow for transparency in Project development. This process consisted of town meetings called for and held at a location determined by the municipality. In initial consultation meetings, the municipal councils in selected cities that have significant cultural heritage enthusiastically supported the idea of restoring active and productive urban life, conserving cultural heritage, rehabilitating the degraded urban fabric, capitalizing on the tourism potential, and improving the standard of living of local community. They are comrnitted to ensuring that municipal development strategy and initiatives have to be well coordinated with the needs of cultural heritage preservation. They welcomed the proposed project as having significant potential to contribute to national and local economic development, bringing improvements to the quality of life of the residents of the municipalities concerned. Following the initial consultation meetings, town

- 109- meetings were conducted in the cities of Tyre, Tripoli, and Byblos to further discuss various environmental aspects of the proposed project. These meetings solicited stakeholders' feedback concerning the overall scope of the project in general and the potential environmental impacts in particular. Most participants ( 90 %) foresee a positive impact on preservation of the cultural heritage of the city, improvement in the social level of locals, and development of tourism. In Tyre, some were afraid that the transformation of the fishing port to a tourist attraction center would disturb and affect the normal life of fishermen and the fishing industry. Concerns about wastewater management were also expressed. In Tripoli, concerns about the low forecasted increase in the number of tourists were voiced with emphasis on the need for a marketing and advertising strategy to promote tourism. In Byblos, higher awareness and public participation were noticed. Many indicated that the project benefits will be limited to employment in the old souqs, restaurants, handicrafts and artisanal works, commercial spaces, hotels and cafes. Concerns about air quality and wastewater management were also evident. The town meetings have provided feedback concerning the overall scope of the project and the EA process and this feedback has been taken into consideration in the final environmental assessment report and incorporated in the terms of reference of the architecture and engineering design studies of the project components. lD. Environmental Assessment Evaluation of Potential Envirommental JIm pacts. 10. The Environmental Assessment found that the Project would result in an overall improvement in urban enviromnental quality as well as improvements to the quality of life of the residents in the five involved cities as a result of a) rehabilitation of degraded cultural sites and improving public accessibility to these sites; b) improving social life in and around the old city centers; c) improved traffic circulation in city centers; d) conversion of many streets to pedestrian only; and e) complementary improvements in parking management. The primary benefits would come from improved accessibility to quality cultural heritage sites, which is accompanied with socio-economic growth due to increased attraction rates of visitors/tourists, reduced noise and emissions from vehicles along streets converted to pedestrians only, and enhanced access to city centers with cultural heritage sites which is associated with improved social life in these centers. Another significant positive environmental impact relates to the elimination of wastewater discharge into enclosed ports (i.e. the city of Tyre). The Tyre old town wastewater system will be upgraded under a separate parall el project, which implementation schedule is being coordinated with the CHUD.

The primary adverse environmental impacts are associated with the construction period and are discussed in detail below. In addition, there would be temporary impacts associated with the re-routing of traffic around the construction areas during the rehabilitation activities in the various cities. These impacts can be mninimized by careful planning of the staging used for construction and rerouting of traffic, careful supervision of construction activities and use of environmental monitoring to support management decisions by the CDR and other parties.

Potential Environmental Impacts. 11. The Environmental Assessment found that the greatest potential environmental impacts will occur during the construction phase, particularly with respect to dust and noise emissions and from the temporary re-routing of traffic. Impacts include the following:

- Construction Impacts. Temporary impacts from the construction phase of the proposed Project include: (i) noise, dust, vibration and light from rehabilitation and construction activities; (ii) disruption of existing access roads during the construction process including noise and air quality impacts from vehicle emissions; (iii) establishment of temporary construction sites along various roads; (iv) damage to structures from dust and vibrations; and (v) improper disposal of

- 110- construction waste, waste oil and lubricants from construction equipment. Other important impacts are damages to landscaping in public areas and temporary alterations in drainage patterns.

- OperationalImpacts. During the operation phase, since one of the main objectives of the CHUD project is the attraction of a larger number of visitors/tourists, it is expected that increased solid waste and wastewater generation rates will occur. While the additional rates are not significant to cause an environmental impact under normal conditions in a typical city, it should be noted that the existing solid waste and wastewater conditions in all involved cities require better management irrespective of the proposed CHUD project. In this context, various projects/programs are underway across Lebanon in general and in the cities involved in particular. The capacity of these projects/programs once completed will easily accommodate the increased rates associated with the implementation of the CHUD project. In this context, the situation in the old city of Tyre is of most concern since at present, wastewater from the old city is discharged directly into the fishing port which is proposed to be rehabilitated through the proposed CHUD project. The concern is related to the possibility that the CHUD project will be completed prior to the completion of the wastewater treatment plant for the city of Tyre and its surroundings. In the event such a scenario materializes, several mitigation alternatives were considered in the environmental assessment and the associated cost is accounted for within the Environmental Management Plan described below. Another potential negative environmental impact during the operation phase relates to increased vehicle-induced emissions associated with the attraction of larger numbers of visitors/tourists. These emissions are best mitigated through the improved traffic circulation and parking management anticipated through the CHUD project.

12. Given the highly urbanized nature of the cities involved, the CHUD project is not anticipated to have significant environmental impacts from Project-induced growth or land use changes. Most lands in the vicinity of rehabilitated areas has been built and is largely occupied by low and medium-rise commercial and residential buildings.

Analysis of Alternatives. 13. The alternatives or options for intervention in every city were briefly described in the preliminary design studies of each project. The "do nothing" option is not favorable given the general consensus about the degrading quality of the urban fabric around valuable cultural heritage features and since desired urban conservation objectives would not be achieved. Moreover, not undertaking the project will lead to further environmental degradation, destruction and continued deterioration of sensitive cultural sites and landscapes.

14. Concerning the siting of facilities, the project offers limited opportunities for the analysis of alternatives given that the stress is put on certain specific sites whereby rehabilitation or renovation works are required. The remaining options aim at optimizing environmental quality in the urban areas of the various cities. While the cities have similar rehabilitation elements that do not lend themselves into an analysis of alternatives, each city is characterized with peculiar features for which different options were considered and are outlined below by city.

Baalbeck

15. In Baalbeck, the analysis of alternatives focused on traffic circulation, Gouraud Barracks, brick houses, access to Al Qala'a, and upgrading of the market. For the other components, the options were mostly functional and did not entail other choices of intervention.

- i1- Traffic circulation aroundMoutran Square. Two solutions were evaluated to regulate the traffic in Baalbeck, particularly around Moutran Square. Option I proposes Moutran square as an exit from the city center the pedestrian piazza will be adjacent to the building of the Christian Church compound to be rehabilitated. The bus stop and taxi park will also be located on the eastern side and provide an immediate and safe access to schools. In this option, the incoming traffic to the city center is channeled to the road next to the Palmyra hotel. Option 2 was studied after discussions with the DGA and the municipality. The option is to keep Moutran Square as the entrance to the city center and separate the pedestrian piazza from the built front of the Christian Church compound. The bus stop and taxi park will be moved to the western side in order to ensure a smoother traffic flow. In both options, two new passes will cross the square transversally and permit walking from the hill in the archaeological site and vice versa. These will follow two historical traces, those of the ancient city walls and those of the access road to the Christian church compound.

- GouraudBarracks. Two alternatives for the end use of the Gouraud Barracks were considered: either transforming them to a hotel by inviting an international hotel chain to invest at that location or using it as a government administrative office building, or university/research institute. Both alternatives require a change in the character of the site to reinforce the building which is not acceptable to the DGA and both were considered too risky for the preservation of archaeological sites, in particular the Roman/Arab wall, because of potential heavy traffic.

- Brick houses. The choice of residential complexes to be rehabilitated (brick houses) was made based on their accessibility, potential appeal once they are refurbished, functional use, and potential private sector co-investment. The alternative of the type of intervention would be to let the houses collapse or to provide room for the redevelopment of the entire area. Redevelopment is likely to occur along modemized lines, resulting in a further loss of cultural heritage and negative consequences for other parts of the city.

- Access to Al Qala'a. Apart from keeping the access point to al Qala'a at the location where it is today, one alternative was to move it further out, and provide a shuttle bus service. This alternative was rejected because the experience internationally indicates that this is unappealing to tourists, and in many ways logistically complicated. Another altemative was to switch tourist bus arrival to Ras El Ain street and to let tourists walk to the Qala'a through the souq. This option was rejected because it disrupts local life due to both tourist and bus traffic and since the general urban environment is not yet there. The market slaughterhouses and heavy traffic on this path would not serve to present Baalbeck's most attractive side. This sort of intervention could be considered down the line as an additional point of entry to the city once the remaining components, particularly the souq, are complete. The selected alternative was to create parking lots within walking distance, and to improve access to the archaeological site by building sidewalks and rehabilitating the pedestrian path along the road, and downhill toward the Qala'a. Upgrading of the market. The market upgrading had practically no alternative. In addition to the market's important local and regional role for conmmercial activity, it must be upgraded for environnental reasons, in particular to alleviate hygienic problems emanating from the numerous slaughterhouses and to reduce pollution from traffic. As such, the only real alternative to upgrading the market area is unacceptable as it would be to continue to redevelop the area with more high-rise buildings that would attract additional traffic that the city could not absorb. In addition, such a development would hide important heritage buildings as happened in the 1980s and 1990s. The Baalbeck municipality is playing a crucial role in avoiding unplanned

- 112 - development within the market area and is seeking to implement a plan that will stress on low density development within the central area of the city. The overall project seeks to reduce noise and visual pollution through traffic reorganization and reduction, landscape improvement, the removal of non-required components as well as the improvement of public lighting, wiring and signage.

Byblos 16. In Byblos, several pilot projects for intervention regarding the cultural heritage and tourism development in the old city were proposed. Due to budget limitations, not all projects were selected for further development. Selection was based on the importance of the project, and its priority with respect to the municipality, the DGA, and the local residents. The analysis of alternatives focused on three components, namely: the medieval wall promenade, the old harbor, and the pier extension.

- Medieval wall promenade. The medieval wall promenade, one of the most important cultural heritage components of the old city of Byblos, was amongst several minor alternatives that were considered. It consisted of the construction of wooden deck promenades along the wall surrounding the old city. The proposed alternative entails the digging and uncovering of the wall in some parts where it is completely hidden or partly built on (some houses were already constructed on the wall and uncovering it requires the demolition of parts or the whole of these houses). The alternative was rejected since it involves the relocation and resettlement of some people. As a compromise, it was agreed to create the wall promenade on the northern section of the wall only.

- The old harbor. Another proposal related to the improvement of the old harbor was the enlargement of the quay area through extending it by means of wooden decks. This enlargement would help reorganize traffic circulation and pedestrian access to the port. The fishermen rejected this alternative since the extension would reduce the available spaces for their fishing boats. The proposal was thus dismissed since one of the objectives of the project is to preserve the cultural habits on the fishing port and promote the fishing industry.

- Pier extension. This alternative which was considered at the request of the MoPWT, consisted of extending the current pier westward above water level to provide protection for boats parked in the fishing port in order to increase the anchorage capacity of the harbor, and to cater for ferry boats to reach Byblos. This project was incompatible with the DGA plans to build the pier as a submerged reef which at the same time will provide protection to the boats and will not obstruct the sea view of the old city. In addition, the municipality expressed its concern of transforming this pier into a conmmercial port. As such, the MoPWT agreed to rehabilitate the existing pier only by paving it thus reducing environmental stress on the marine environment and diverting the allocated funds elsewhere in the old city.

Tripoli 17. In Tripoli the analysis of alternatives focused on four elements: Khan El Askar Resettlement, relocation of the fruits and vegetables market and traffic management, parking facilities, as well as rehabilitation activities.

- Resettlement - Khan El Askar . With the exception of Khan El-Askar, population resettlement in the entire CHUf project has been kept at a minimum. At Khan El Askar the resettlement is inevitable for the rehabilitation of the old city and the do nothing scenario would certainly not

- 113 - accomplish the much desired objectives of the project. One alternative that was considered by the municipality is to offer compensation through the expropriation committees. These tend to compensate tenants for expropriated properties according to the market price per square meter of occupied land, and according to the yearly income and rent for tenants. This option was deemed inappropriate because the residents of the Khan have only informal tenure and as such do not fall within the compensation criteria of the expropriation committees. Consequently, a re-housing scheme proposed in the CHUD was the only viable alternative, although it faced several reservations at the beginning of the project.

Traffic management and relocation of the vegetable market. The Japanese International Cooperation Agency (JICA) study for the organization of traffic in Tripoli has recommended the transformation of the eastern bank of the Abou Ali River to a four-lane artery (two in each direction) provided that the fresh produce market is removed from its present location to enable the use of the whole passageway in both directions. Currently, the fresh produce market that caters to the population of the area has spilled over on the riverside boulevard causing significant traffic congestion on a main through-traffic artery. The initial option that was considered, stipulated that the market should be moved to the tip of the Abou Ali River on the opposite direction of the Abou Ali roundabout, some 500 m away from its current location. The new location however, was refused since it disrupts the local habits of residents and will have a negative impact on the socio-economic situation of these people, an option not favored by this project. The other alternative was to build a concrete platform on the Abou Ali River, complete with appropriate water and sanitary facilities and waste collection devices, manage the traffic, and relocate the fruits and vegetables market. This new municipal facility, in view of its location, will also help to reconnect the Bab El Tebbaneh neighborhood with the rest of the historic city, in the proximity of the Khan el Askar and Al Tawbeh Mosque.

In this scenario, three different alternatives were considered for traffic management, these include: (a) development of a crossing on grade along with the adoption of traffic management measures; (b) development of an underpass (4.5m vertical clearance) which ensures that vehicular circulation does not interfere with the pedestrian space; and (c) development of an underpass having 3m vertical clearance. The alternative (b) was selected with an underpass to ensure that through traffic would not interfere with the available pedestrian space adequate for the relocation of the vegetable market.

Parking. Several underground and open space parking facilities were proposed to resolve the parking problem around the old city center as a result of restricting most internal streets to pedestrian access only. Two potential underground parking garages were proposed at the base of the Citadel but were rejected by the DGA due to their proximity to the garden of a historic mosque. Alternatively, a large parking, bus and shuttle station was proposed on the northern entrance of the city in the neighborhood of Khan El Askar, on a plot of land owned by the municipality. This option was considered unnecessary at the present time given that it will result in the deterioration of the air quality and increase the noise levels as a result of increased traffic. While this parking has not been approved, it remains a potential option.

Rehabilitationactivities. Originally, the preliminary design considered two scenarios, a strategic large-scale scenario and a limited small-scale scenario. Both scenarios proposed several interventions in various zones of old Tripoli. A series of interventions were selected within the context of the small-scale scenario due primarily to fmancial limitations.

- 114- Tyre 18. In Tyre, 26 pilot projects were identified at the early stages of the CHUD project. Of these, only seven were retained. The other 19 were either repackaged into the retained projects or completely abandoned. Out of the 19 proposed pilot projects, 8 involve the conservation and management of archaeological sites that include the conservation of surfaces and structures of archaeological sites, and the development of sites and environs to enhance the visitor's experience. These proposals were integrated within the project's archaeological site conservation preparation study. The reasons for abandoning the remaining projects were due to budget limitations, the undertaking of some of these projects by the municipality, and the need to relocate houses, school and commercial units, and the need for land expropriation.

19. Wastewater collection and treatment. Wastewater in the old city surfaced out as a peculiar problem in the context of the proposed CHUJD project. At present, wastewater from the old city is discharged directly by means of submerged pipes and channels into the fishing port, which is proposed to be rehabilitated through the project. The concern is related to the possibility that the project will be completed prior to the completion of a wastewater treatment facility planned for the city of Tyre and its surroundings in the nearby Abbasiyeh area.

20. At present, wastewater from the old city is discharged in the fishing harbor through several short and submerged pipes. The proposed CHUD project includes the rehabilitation of the waterfront along the port which means that the old city's wastewater can no longer be discharged into the fishing port and must be diverted to a nearby pumping station. From this station, the wastewater is supposed to be pumped to the planned wastewater treatment plant for the entire area in Abbasiyeh north of Tyre. In the event the Abbasiyeh plant do not come into operation by the time the Tyre component of the CHUD project is completed, the wastewater can be pumped to a surface outfall located to the west of Tyre. If the pumping capacity is exceeded (an event that is currently occurring) due to the additional sources to be linked to the station, the wastewater is discharged into the sea through a surface outfall on the eastside of Tyre not far from the fishing port. In order to resolve this situation, two other alternatives were considered: - Prevent further discharge in the old port and in the eastern outfall, ensure the capacity and operation of the pumping station, elongate the western surface outfall, and continue to discharge until the planned Abbasiyeh facility is operational. To achieve this objective, it is recommended to undertake the following activities: construct Line C (both branches), construct and install pumping station PSL2, repair and operate the pumps at the existing pumping station in the parking area so that all the wastewater will be diverted to the western outfall by pumping, and extend the western sewer outfall into the sea to ensure better wastewater dilution. It will not be necessary at this stage to construct the pumping station PSLI since this station will pump wastewater away from the sea outfall. In this solution, the western outfall will be temporarily receiving the wastewater from the old city of Tyre, new Tyre (through the pumping station next to Elyssar coffee shop that will discharge into the Bass collector) and the flows of the Bass collector. The remaining sea outlets will be used for storm water drainage within the city. Note that a more detailed assessment of the adequacy of the outfall will be required. - Prevent further discharge in the port and in the eastern outfall (by constructing line C and the pumping station PSL2 as described in the first solution, as well as ensuring the capacity and operation of the pumping station PSM3) as well as constructing a temporary treatment plant near the pumping station in order to treat the wastewater and use the effluent for landscaping or discharge to the sea until the planned Abbasiyeh facility is operational. This alternative, which is a significant infrastructure requiring a specific environmental assessment, was disregarded.

- 115- Baalbeck and Tyre archaeologicalsites 21. Two alternative scenarios were considered for the conservation and management of the archaeological sites in Baalbeck and Tyre. These alternatives relate to the enhancement of the visitors' experience, making it unique and memorable through the enhancement of the cultural and educational potential of the sites as well as improving the articulation of their potential significance. These two alternatives are referred as: the aesthetics scenario; and the discovery scenario:

- Aesthetics scenario. In this scenario, the objective of enhancing and enriching the visitors' experience is achieved by emphasizing the aesthetics aspects, provoking deep sensation, concentrating the attention on the most attractive themes and spots. The visitor will be lead to perceive and feel the site rather than to analyze, read and understand the complexity of the site history. The needed measures will be based on developing a presentation of themes mostly related to the Roman period, cleaning and restoring surfaces in order to improve their appearance, adopting intuitive explanations with few analytical details (with emphasis on particular viewpoints from where to observe the monuments through brochures, boards and headphones), organizing exclusive visits for small groups, as well as adopting a landscaping program for the gardens and areas surrounding the monuments.

- Discovery scenario. In this scenario, emphasis will be placed on discovering and understanding history through the visit. The monumentality of the place is put in relation to its history rather than emphasizing on its aesthetics. Focus will be placed on the variety of subjects, presentation themes, sites, historical layers, continuity of history, and the diverse ways to see and understand history on different interpretation angles. In this scenario, more areas will be opened to the visitors along with the various spots scattered outside the core attraction. There will be more thematic paths among which to choose. Each one would be marked with specific signs on the ground and sustained through ad hoc explanations. Explanatory material and communication means will be designed to make the understanding attractive, stimulating and easy. The organization of visitors' paths is more complex in this case, with more resting areas, more points of exit and entrance, more security and safety measures.

22. The retained scenario for both the Baalbeck and Tyre archaeological sites was based mainly on the Discovery scenario, because of its ability to better integrate the local cultural, socio-economic and urban context with the existing archeological sites. The Discovery scenario was also selected for its ability to set shadow on the different historical layers present, its potential of generating better quality tourism, as well as its capability to distribute visitors over large areas.

E. Environmental Ma nagemnent Plan

23. Environmental Management Plan. An Environmental Management Plan (EMP) has been prepared for the CDR by the environmental consultant. Mitigation actions would focus on environmental supervision of the construction contractors and actions to reduce traffic flow problems during the construction phase. The key mitigation activities of the EMP include:

- Construction Phase. Specific measures to reduce potential construction phase impacts will be implemented through provisions in design and construction tenders, consideration of these issues in the construction process and performance monitoring by the environmental consultant. Mitigation measures include rerouting of traffic around sites and extended construction hours; technical interventions to control air quality impacts, especially dust; actions to control noise

- 116- from construction activities and rerouted traffic; provisions for protection of existing vegetation; planting of greenbelts and use of appropriate colors; erosion, surface and marine water management; and clear guidelines for disposal of waste materials.

- Operation Phase. The Project would address operational impacts through a combination of carefully detailed design approaches, solid waste and wastewater management particularly in the old city of Tyre, increased enforcement of noise limits and, over the medium-term, application of vehicle standards, maintenance requirements and routine monitoring.

The elements of the Environmental Mitigation Plan will be provided in the Project Implementation Plan.

24. Measures for Construction Contracts. The EMP includes special measures for construction tenders and contracts:

- Construction Tenders. All construction contracts would include specific provisions concerning environmental, health and safety measures. The EMP includes detailed briefings of potential construction contractors concerning their responsibilities to address these issues during a pre-tender conference. These briefings would outline the specific provisions of the construction tender documents and contracts.

- Pre-TenderConference. All pre-qualified contractors would be called to a pre-tender conference at which environmental, health and safety issues of special interest or concern would be outlined.

- Bid Documents. To support the stipulations of the pre-tender conference, contract bid documents would include specific requirements and procedures concerning environmental, health and safety issues. In addition, the set of final engineering drawings would identify areas that require special measures due to their environmental sensitivity. Provisions would also be included concerning the proper transport and disposal of demolition, excavation and construction wastes at authorized disposal sites.

25. Environmental Monitoring Plan. The Environmental Monitoring Plan of the EMP would be implemented by consultants working under the CDR in coordination with the Ministry of Environment. Environmental monitoring would be undertaken during both the construction and operation phases to check the accuracy of the impact analysis, evaluate effectiveness of mitigation measures, respond to unanticipated environmental impacts and improve environmental control based on monitoring data. This would include provisions for:

- Continuous Monitoring. The monitoring plan would provide for continuous monitoring, during the construction phase, of health and safety conditions at the work sites and along the routes used for moving materials and personnel to and from the construction sites. Measures would also be included to assure that demolition, excavation and construction wastes are being disposed of at authorized sites.

- Quarterly Monitoring. The monitoring plan would provide for air quality, noise, surface and marine water quality measurements, which would be quality-controlled and conducted on a quarterly basis to provide baseline and trend data to support management decisions. It would also include collection of monitoring data on a quarterly basis for traffic, landscape conditions and vehicle and pedestrian accidents at selected traffic access routes as appropriate. Monitoring

- 117 - would be undertaken in and adjacent to equipment and vehicle service areas and fuel storage to reduce soil contamination and water pollution from improper management of waste materials.

- Provisionsfor Site Access. Regular and frequent site inspections would be required to permit effective monitoring of the contractor's performance regarding compliance with applicable environmental, health and safety guidelines, regulations and statutes, and contract specifications. For the proposed EMP to be effective it will be necessary, during the course of construction and operation, for environmental consultants to have guaranteed access to all sites, related to any Project component, at all times. Provisions to allow this access would be included in all contract documents and operating agreements.

The Environmental Monitoring Plan will be included in the Project Implementation Plan.

26. Environmental Monitoring Reports. The consultant would prepare environmental monitoring progress reports on a quarterly basis as an element of the overall reporting used for the Project. Monthly reports on health and safety monitoring, which would be sumnmarized in the quarterly reports, would also be provided. These reports should contain an overview of progress achieved in implementation of the EMP. They should also note any areas of governmental and/or contractor non-compliance with the EMP and provide remarks on the recommended actions to be taken to address these issues. The significance of any non-compliance should also be noted. Copies of these reports should be sent to the CDR, the supervising consultant and the contractors for their action.

27. Estimated Cost and Implementation Schedule for the EMP. The CDR and the environmental consultant have prepared cost estimates for the implementation of the EMP. In addition, the CDR and the environmental consultant are preparing a comprehensive implementation schedule that integrates the activities of the EMP into the overall schedule. The costs for implementation of the environmental elements of the mitigation plan during the design and construction phases have been included in the cost estimates for these activities with the exception of the wastewater mitigation element in the old city of Tyre depending on the final management altemative to be implemented. During the operational phase the costs of the mitigation actions would be assumed by the municipalities in which the investments have been made and would be an element of their operation and maintenance budget. It is currently estimated that the monitoring activities under the EMP for the construction phase would have a cost of about US$80,000 per year, and for the operation phase it would have a cost of US$26,700 per year. The monitoring will be carried out by the environmental consultant, who would be hired by CDR. A budget and schedule will be provided in the Project Implementation Plan.

Summary of the annural environmaental monitoring costs Phase Tripoli 13yblos Saida Tyre BDalbeck Annual Project Program (USD) (USD) (USD) (USD) (USD) Cost Duration Cost (USD) (years) ((ISP) Construction 18,000 15,000 7,000 20,000 20,000 8000oo 5 4"02000

(USD)______Operation 6,000 5,000 2,333 6,667 6,667 26,667 3 8o,0o00 (USD ) ______-_118

-118- F. Training Program

28. Planned Activities. The Project would support a program of Environmental Training that includes a series of sessions targeting the needs of national and local government officials, consulting firms and construction contractors, and local non-governmental organizations. The objective of the training program is to promote environmental awareness, develop knowledge of environmental issues and provide skills for implementation of the EMP. Training sessions would be conducted twice a year for a period of one day (in each city) during the construction phase. Issues to be covered include: environmental legislation, pollution prevention measures, health impacts of environmental pollution, environmental monitoring methods, conservation of cultural heritage, traffic and pedestrian safety issues, wastewater management, solid waste management, etc. These activities would be undertaken by the environmental consultant, who would be hired by CDR. The cost of the planned training activities is included with the environmental monitoring plan.

G Institutional Strengthening

29. In the context of the project, the need for institutional strengthening in environmental management falls within several sectors ranging from archaeology and cultural heritage to solid waste / wastewater management, and water quality. Contractors and consultants who will be involved in the construction and operation of the various components of the proposed project will be required to attend an environmental training course prior to the initiation of project activities. The objective of this training course is to ensure appropriate environmental awareness, knowledge and skills for the implementation of environmental mitigation measures. Environmental training sessions will be conducted annually for a period of two days during the construction phase and for one day during the operation phase for three years.

30. In an effort to strengthen institutional capacity and environmental awareness, training sessions on the proposed CHUD project will be opened for individuals from concerned ministries and agencies. In addition, the scope of the training sessions may not be limited to just issues related to the CHUD. Other environmental management topics can also be addressed in these sessions. Training session, which will address various topics including: environmental laws, regulations, and standards. pollution health impacts, pollution prevention measures, sampling techniques and environmental monitoring guidelines (air, noise, water), protection of archaeological and cultural heritage sites, air quality management, solid waste management, wastewater management, and traffic and pedestrians safety measures

H. Reporting and Supervision

31. Reporting. As an element of Project reporting requirements, the CDR would prepare routine reports concerning progress in implementation of activities related to environmental management included under the EMP and activities about environmental training. The reports should contain information on consultant performance, status of actions, and expenditures, and should identify issues requiring resolution. As necessary, supplemental reports with greater detail than the routine reports also would be prepared on these topics.

32. Project Supervision. The Supervision Plan for the proposed Project would include participation of World Bank environmental and cultural heritage staff, or appropriately qualified consultants, in major missions to review progress in terms of implementation of the EMP. The performance of the CDR, cooperating Government organizations, consultants and contractors in the implementation of these activities under the Project would be a standard element of Project supervision reports and included in

-119- the Mid-Term Review and the Implementation Completion Report.

33. The environmental monitoring and management will be implemented by an entity independent of contractors and consultants involved (see Figure below).

Giovemmrrent of LelbanonWol | Bank |

RMinistries of Council for Development & TGdhnical Culture-DGA, Reconstruction (CDR) LsonUu Pubic Works-DGU, lTourism, Municipalities I I Environment

Supervising Contractor Environmental Consultant Management and IWonitoring consultant

I IkOUI-

- 120 - Environmental Monitoring Plan Summary of proposed elements of the mitigation plan during the design phase

Impact Mitigation measure Responsibility Cost Traffic Public participation CDR/Consultant Included Modification of design to reflect public consultation processes in final Development of re-routing schemes design Assessment of projected increase in traffic vs. congestion and change in circulation pattems Air quality Definition of existing standards and regulations CDR/Consultant Included Assessment of vehicle-induced emissions vs. traffic increase and in final change in circulation pattems design Providing adequate ventilation in underground parking facilities (if adopted in the case of Tripoli at a later stage of CHUD iimplementation) and in the four lane tunnel to be constructed in the Abou Ah area Provide regular monitoring of vehicular induced emissions near the archaeological and heritage sites to meet ambient air quality standards and limit potential decay that may be caused by the formation of acid rain or smog Noise level Definition of existing standards, regulations CDR/Consultant Included Assessment of vehicle noise emissions vs. traffic increase and in final change in circulation pattems design Consideration for porous material, flexible joints and supports Consideration for sound barriers where necessary Landscape and Documentation of existing conditions CDR/Consultant Included visual intrusion Blending color(s) of paint in final Blending exterior construction material design Blending architectural features Provisions for visual screens or greenbelts Waste generation Locate nearby disposal sites and secure permit for waste disposal CDR/Consultant Included Explore waste material recycling or re-use in final Assessment of projected increase in solid waste generation design Assessment of projected increase in wastewater generation Development of solid waste management plan at archaeological sites Water Provisions for proper surface and ground water drainage CDR/Consultant Included quality/supply Use of non-toxic and readily biodegradable chemicals in final Assessment of projected increase in water demand design Health and safety Develop and/or review and update general health and safety plans CDR/Consultant Included Enforce CDR health and safety guidelines on all contractors in final design Archaeological Develop rehabilitation/construction monitoring plans CDR/DGA/ Included and cultural Follow Archaeological Chance Find Procedures Municipality/ infinal heritage M icpit/ design Consultant

- 121 - Summary of proposed elements of the mitigation plan during the design phase (continued)

Impact Mitigation measure Responsibility Cost Socio-economics Eliminate or minimize land acquisition and population resettlement CDR/Consultant Included Ensure community participation in final design Develop proper compensation and resettlernent plans Avoid stringent fast track plan to remove any establishment not conforming with zoning regulations Provision of relocation incentives for the populations to be displaced in the Palestinian refugee camp in Tyre and the residents of Khan El-Askar in Tripoli (65 families or 333 individuals along with 78 existing commercial activities) Avoid gentrification in the case of Khan El-Askar in Tripoli Ensure the development of a mixed socio-economic character to the different rehabilitated sites Protect the interests of tenants who remain and tenants who leave Create conditions for enhancing the income of remaming tenants Provide public private partnership incentives Ensure that the housing project will provide a qualitative improvement in the physical environment of the inhabitants Ensure that each family will be given an apartment commensurate with family size Ensure that residents would be charged affordable rents in a fair and Just manner

- 122- Summary of proposed elements of the mitigation plan during the construction phase Impact Mitigation measure Responsibi Cost lity Traffic Public communication CDR Included in Implementation of re-routing schemes Consultant construction Extended construction hours Contractor Provision of clear and adequate signing at least 500 meters around construction sites Adopting clear delineation and channeling measures at least 500 meters around construction sites Limiting movement of heavy machinery to off-peak hours Providing prior notification about work and heavy equipment movement schedule Re-opening roads adjacent to construction sites as early as possible, even before final readiness of the site Provide close coordination with local traffic control departments in each city Air quality Site and stock pile enclosure CDR Included in Spraying of long term stockpiles with chemical bonding agents Consultant construction On-site mixing in enclosed or shielded areas Contractor Proper unloading operations Water damping of stockpiles when necessary (dry conditions) Sealing of completed earthworks Providing re-vegetation as soon as possible Medium and heavily used haul routes permanently surfaced Damping un-surfaced haul routes Keep hauling routes free of dust and regularly cleaned Maintain low traffic speeds on-site with proper enforcement Maintenance and repair of construction machinery Noise level Construction of site enclosure CDR Included in Control of timing of noise emissions Consultant construction Informing the local people when noisy activities are planned Contractor Proper road maintenance Enforcement of speed limits Employ low noise machinery, or machinery with noise shielding and/or sound absorption materials (e.g. on-site power generator enclosure) Proper maintenance of equipment and machinery

- 123- Summary of proposed elements of the mitigatioun plaen during the construction phase (continued)

Impact Mltigation measure Responsibi Cost

Landscape Preserve existing vegetation when feasible CDR Included in and visual Blending color(s) of paint Consultant construction intrusion Blending exterior construction material Blending architectural features Contractor Provisions of visual screens or greenbelts Implementing appropriate landscaping Confirming to area building codes _ Waste Waste transport and disposal at designated disposal sites CDR/DGA Included in generation Implement solid waste management plan at archaeological sites Consultant construction

Contractor Municipality

Water Proper surface and ground drainage CDR Included in quality Decrease water usage during the construction phase construction supply Minimize soil exposure time during the construction phase Consultant Minimize chemical usage (lubricants, solvents, petroleum products) and use Contractor non-toxic biodegradable products Health and Provide pedestrian walk ways CDR Included in safety Install proper warming signs construction Provide protective clothing and equipment Consultant Create buffer zones around major construction zones Contractor Follow CDR's wntten procedures stipulated in the developed health and safety guidelines Archaeologic Documentation of buried sites and conservation of matenals CDR Included in al and Implementing a documentation operation on all removed stones within the Consultant construction cultural sites and old city centers heritage Avoiding the use of harsh abrasives and toxic chemicals Contractor Encouraging the use of biodegradable, water-based (instead of solvent based), DGA non flammable, fire resistant, non sparking, and breathable materials for rehabilitation works Implementation of Archaeological Chance Find Procedures, if needed Covering abraded areas with low impact temporary installations like wooden platforms Controlling vegetation growth using appropriate biocides after mechanical removal Fixing of loose stone parts by gluing with appropriate resins, injections, insertion of steel and fiberglass bars and clamps Cleaning areas in need of consolidation by mechanical or chemical methods Socio-econ Ensure community participation CDR Included in omics Implementation of the developed resettlement plan during the design phase Consultant construction

Contractor

- 124- Summary of proposed elements of the mitigation plan during the operation phase Impact Mitigation measure Responsibility Cost Traffic Maintenance of traffic signs and parking spaces Government Not directly Maintenance of new parking lots, roads, and underpasses (Tripoli) part of project Relocating the fruits and vegetables market to the slab of the planned tunnel near Abou Ali river Constructing two new passes that will cross the Moutran square transversally to allow for pedestrian movement in Baalbeck Improving access to archaeological site by building sidewalks and rehabilitating pedestrian paths Air quality Maintenance of ventilation in underground parking facilities (if adopted) Municipalities Not directly Implementation of long term strategies (beyond the scope of the CHUDP) Government part of project Noise Sound insulation and pavement maintenance Municipalities Not directly level Limiting vehicle speed Traffic police part of project Implementation of long term strategies (beyond the scope of the CHUDP) Government Landscape Maintenance of exterior material, visual screens or greenbelts Municipalities Not directly and visual Enforcing compliance with building code as well as developed architectural part of project intrusion plans Water Maintenance of surface water drainage Municipalities Not directly quality/ Prohibiting disposal of untreated wastewater in areas with limited flushing part of project supply capabilities (Tyre) Providing incentives for the efficient use of water (beyond the scope of the CHUDP) Initiating a water quality monitoring program (beyond the scope of the CHUDP) Waste Maintenance of waste management system at archaeological sites DGA Not directly generation Municipality part of project CDR Health and Maintenance of signs and warnings Municipalities Not directly safety Mark developed tourist tracks clearly part of project Introduce proper orientation sign posting such as "you are here" panels at parking facilities and along developed tourist tracks Providing appropriate lighting in archaeological sites, tracks, and parking facilities Providing guards and guides during visiting hours at archaeological sites, tracks, parking facilities Providing an emergency medical center or first aid facility in all five cities Eliminating structural situations presenting risks for visitors Archaeolo Routine monitoring and maintenance DGA Not directly gical and Develop visitor's code of behavior at archaeological sites to be printed on the municipality part of project cultural back of the entrance ticket or on the free brochure for the site heritage Controlling vegetation growth using appropriate biocides after mechanical removal Implementing waste collection and management plan at the sites Fixing of loose stone parts by gluing with appropriate resins, injections, insertion of steel and fiberglass bars and clamps Cleaning of areas in need of consolidation by mechanical or chemical methods

- 125- Summary of proposed monftoring plan for the five citdes

Parameter Location Location Location Location Location Samples Frequency Phase Responsibil InTripoli InByblos In Saida in Tyre in Baalbecl ity Traffic At stations At stations At stations At stations At stations Continuous Annually Constnuction CDR / TI, T2, T3 BI, B2, B3 SI, S2, S3 Tyl, Ty2 Bal, Ba2, vehicle / Operation Consultant Ba3 counts for 24 hours Air quality At stations At stations At stafions At stations At stations Four Annually Construction CDR/ (TSP, CO) TI, T2, T3 BI, B2, B3 S1, S2, S3 Tyl, Ty2 Bal, Ba2, samples! / Operation Consultant I______Ba3, Ba4 location Noise (Leq, At stations At stations At stations At stations At stations Four Annually Construction CDR / Lrnin, TI, T2, T3 BI, B2, B3 SI, S2, S3 Tyl, Ty2 Bal, Ba2, samples/ / Operation Consultant Lmnax) Ba3, Ba4 location Landscape At At At At At Visual Annually Construction CDR / intersections intersections intersections mtersections intersections inspection/ / Operation Consultant and along Photographi the Abou Al c River documentati on Seawater NA At stations At stations At stations NA Two Annually Construction CDR/ Quality (pH, B4, B5, B6 S4, S5, S6 Ty4, Ty5, samples! / Operation Consultant BOD, TSS, Ty6 location TC, FC) Water Upstream Upstam Upstream Upsbteam Upstream Two Annually Construction CDR / Quality and and and and and samples! / Operation Consultant (pH, COD, downstream downstream downstream downstream downstream location Pb, Cu, Cr, locations of locations of locations of locations of locations of Zn, TC, FC) line line line line line supplying supplying supplying supplying supplying old city old city old city old city old city center center center center center Archaeology At At At At At Visual Continuous Construction CDR / excavation excavation excavation excavation excavation inspection! Annually / Operation Consultant sites sites sites sites sites Photographi At At At At At c archaeologic archaeologic archaeologic archaeologic archaeologic documentati al sites al sites al sites al sites al sites on Accidents In the old In the old In the old In the old In the old Police/ Annually Construction CDR / (cars/ city and at city and at city and at city and at city and at newspaper / Operation Consultant pedestrans) entrances entrances entrances entrances entrances records Health and Within Within Within Within Within Visual Continuous Construction CDR / safety/ project project project project project inspection / / Operation Consultant Hygiene boundaries boundaries boundaries boundaries boundaries photographi c documentati on

- 126- Summary of proposed monitoring plan for the five cities (Foot notes)

Ti: At the entrance Bl: Facing entrance SI: On the road along Tyl: Facing the Bal: On the road of the proposed of parking on the seafront facing the parking area facing the parking parking facility highway ellipse sea castle and at towards the area towards the T2Aterigestation B2Lwe f intersection of Rue southern entrance of T2: At the bridge B2: Lower end of stationabec crossing Abou Ali Decumanus Maximus S2: At the entrance of Hamra aalbeck River after the road the parking outside Ty2: Along Ba2: Along the main Bortassiah mosque B3: Facing the the eastern perimeter rehabilitation road facing the T3: At one point municipality parking of the old city alongAthe Souq municipality parking theactivities archaeological and inside parkingentrance into Moutranthe along the Souq B4: At 10 m r3: Along sites Square offshore, I m deep activities Ty4: At 10 m Ba3: Along the main B5: At 20 m S4: At 10 m offshore, offshore, I m deep road facing the offshore, I m deep m deep Ty: At 20 m nr of the B6: At 100 m 1ffdepTshoAte20 m de northern parking offshore,0I m deep S5: At 20 m offshore, offshore, m deep a long offshore, I m deep 1 m deep Ty6: At 100 m Hermel-Baalbeck

S6: At 100 m offshore, I m deep road offshore, I m deep Ba4: Inside the archaeological site

-127- Additional Annen 12: Social Issues LEBAMESE REPUBLIC: CULTURAL l=lEROTAGIE AIMID URISAM DEVELOPEMlT

Overview and main conclusions

1. The proposed project's objectives are: (a) to create the conditions for increased local economic development and enhanced quality of life in the historic centers of five main secondary cities; and (b) to improve the conservation and management of Lebanon's built cultural heritage. These objectives imply a socio-economic development outcome, which studies, visits and discussions have helped to define more precisely.

2. The key social development outcome would be that the local population and municipalities would share in the benefits of local economic growth arising from upgrading the sites and tourist attractions, and from the municipal promotion of cultural tourism; and that they would have enhanced appreciation of the value of these sites. This, together with the communications strategy proposed, would serve to reduce the present disconnect between Lebanese society and its physical cultural heritage-in other words, to build social capital in relation to cultural heritage. This present disconnect (social capital deficit) takes three main forms:

(a) the tension between the existence of "very special places" of great intrinsic value and rich historical associations (a concern of the elite), and their physical and social contexts of deprivation and even squalor (the habitations of poor people, a place to escape from by moving up in the world);

(b) the gap between the general value placed on the heritage (particularly by outsiders and visitors) and the obstacles that the regulatory and investment environment imposes to initiatives (particularly by local inhabitants and entrepreneurs) that would realize economic opportunities and meet current socio-economic needs; and

(c) the difficulty (owing to social, institutional and stakeholder obstacles) in translating the high intrinsic existence values of cultural heritage entities into tangible use values that can be harvested and can contribute to their conservation as well as to economic growth.

3. The view that Lebanon's cultural heritage should be managed for the benefit of all, and particularly that its local economic benefits should extend to the poorest and most vulnerable, is widely professed, from high governmental and administrative levels to the local citizenry and NGOs. Some positive initiatives are already apparent. Also, it is accepted that the project should be implemented in a consultative, participatory and culturally sensitive manner, so that citizens should see the project as enhancing, and not as detracting from their physical, economic, social and cultural life. Therefore, the project aims to contribute to a reversal of the present situation: to improve the condition of the sites and their contexts (which is an end in itself); to bridge the physical and economic gap between sites and their contexts; and to enable all Lebanese and particularly the most disadvantaged in the project sites, to identify more closely with, derive more benefits from, and value more highly their physical cultural heritage assets.

4. Overall, a socio-economic analysis of this project-based on a considerable amount of work and documentation by different actors' -indicates that the project has the potential to bring substantial tangible and intangible socio-economic benefits to Lebanese society as a whole, to the municipalities concerned, and in particular to the poor populations living in these municipalities. These benefits include

- 128- improved living conditions and habitat; increased and diversified economic activities related to the cultural heritage; job creation; benefits from enhanced tourism activity; and a greater sense of place, and enriched experience from and identification with an unusually diverse and complex set of layers of history all of which have contributed to the Lebanese national identity.

5. These benefits will not materialize automatically, but will only come from the proper attention to project design and management. Equally, they are not without risks. The project therefore contains provision for two linked functions, both at municipal level: (a) to promote local socio-economic development benefits, and (b) to develop a communications strategy that can buttress these outcomes. These general functions are fine tuned according to the specific mix and character of the issues in each city, as well as the orientation of the municipal government. The municipal level is an appropriate intervention level for this concern because of its mandate and accountability, and because of the opportunity provided by municipal elections.

6. Local economic development benefits. Most cities already have a substantial range of local development initiatives undertaken by NGOs, private sector and individuals for the benefit of and in partnership with the local population. They also have a good range of new initiatives active or in the pipeline and financed by a variety of institutions including the Bank itself. Therefore, there is no great need for this project to finance additional interventions at that level. However, in each city there was expressed a clear need and request for support at the municipal level to alleviate poverty and to revitalize depressed or stagnant inner city economies. A site-based municipal facility would: (a) provide citizens with information and support to access economic and technical resources for small scale business development; (b) link demand to employment and skills training; and (c) assist citizens to access education, health and other social services. It would also provide development agencies with information on community needs and existing or planned initiatives, thereby promoting local-level coordination and discouraging duplication. It would acquire a good understanding of household or community level development strategies, and work with these agencies to design and implement appropriate programs. It would also maintain essential information for monitoring and evaluation. Therefore the project should provide each city with a socio-economic development support function, that is adapted to its specific needs. Summary job descriptions are appended.

7. Communication, participation, trust and cultural sensitivity. Key stakeholders at municipal level are generally well informed about and supportive of the project components. Some municipalities are developing effective communications strategies. However, there are clear information and communication needs for the project as a whole, that have not yet been clearly defined and require clearer articulation and elaboration, according to different stakeholder requirements. The communications needs are (a) in public relations, (b) learning and (c) promotion of cultural tourism.

(a). Public relations and education. The populations in and around the sites need good information about the project, coupled with the assurance that the project will be implemented in their interests. The project should aim to enhance their attachment to the place, increase their appreciation of its value, and motivate them to participate in its implementation. It should also assuage possible fears of cultural invasion or alienation caused by an influx of tourists, so that visitors may be both welcomed and educated. This need is least in cities like Byblos that have a long tradition of visitors and are oriented to them, and greatest in cities like Baalbeck and Tripoli, where visitors have either been absent or insulated from city life, and where appropriate visitor behavior is most likely to be valued.

(b). Listening and learning. The project has to promote systematic listening and learning about local institutions and cultures, and about the processes of project implementation and its outcomes. This

- 129- essential infornation guides project management about local economic opportunities, enables it better to anticipate behaviorl responses, and enables better implementation. For example, there is at present still no good basis for knowing whether, in Tripoli old town, priority should be given to adult literacy, mother and child health care, sports and recreational facilities for the youth, employment skills training, schools upgrading. In the case of support to private housing rehabilitation, at present the level of preparation and justification varies between different sites. Moreover, for purposes of learning about the dynamics of housing upgrading, a key socio-economic need of the project, there will be a well focused supplementary social and institutional analysis of property ownership in the target areas to: (a) identify and quantify needs and priorities of owners and tenants; (b) design a cost sharing scheme and delivery mechanism that is appropriate for each site; (c) identify the expected impacts on tenants; (d) propose mitigatory measures for adverse impacts; and (e) institute a mechanism for systematic learning from this component.

(c). Each city needs to project its identity which consists not only of its physical heritage, but also of the living cultural heritage and creativity of its inhabitants. This effort is needed to bring more visitors, increase their demand for goods and services, and attract investment in cultural tourism. The dissemination of this informnation can be through print, broadcast media, websites, and by trained municipal guides. The project should encourage exchange of information and communications expertise between the five municipalities. Although the living heritage (cuisine, performing arts etc.) and contemporary arts are not addressed directly by the project, the project is expected to promote them indirectly through the enhancement of space and access to clientele. .

8. There is much advantage to be derived from enhancing national pride in what Serageldin calls "very special places", which requires improved understanding, packaging and communication of knowledge. The following approaches are indicated and might form part of the communications component:

- a major emphasis on popular presentation, including educational packages for school children and schoolteachers at different levels;

- increased use of the media (which already gives a commendable amount of space to intelligent publicity)

- greater balance to the different cultural strata as proposed by one consultant: Phoenician, Greek/Macedonian, Roman, Byzantine, Arab, Mamluk, Ottoman, Colonial, to enhance the sense of continuity between past and present.

9. The social development outcome of this communications component should be an increased level of trust and awareness that the project is bringing benefits to local populations, and a demonstration that municipalities can bring together different stakeholders and resources for common good. .

Key social development issues

10. In respect of the above problematic, social aspects occupy three main dimensions: (a) Inhabited traditional urban cores of great historical and cultural interest: Tripoli, Saida, and Tyre The general social development outcome of the project in these situations would be to enhance the quality of life of poor citizens in urban cores through social and economic actions that would enhance the economic values of the site, bring needed social services to the most deprived areas, improve commercial activity, generate some employment opportunities and training and enhance "citoyennete" and sense of historic identity and identification with the place; where gentrification is inevitable, to identify alternative means

- 130- of assisting the most vulnerable populations; (b) Populationsadjacent to but poorly integrated into sites of great archaeologicalvalue: Tyre, Baalbeck and Byblos. The objective of the project would be to enhance the economic benefits from sites and their distribution; and to increase the social, econornic and recreational value of the sites to the local population (better integrated into cities); enhance sense of historic identity. (c) Lebanese public: The project's objective would be to increase pride in and enjoyment of cultural heritage sites, their educational value, and their contribution to national identity, instead of the current tendency to undervalue the assets and to consider them an encumbrance and an obstacle to development. The reevaluation and re-presentation of some sites of classic antiquity as also being sites of multivalent significance (e.g. the Qala'a at Baalbeck, mosque-church linkages) will assist this objective.

Inhabited Urban Cores

11. The key issues in relation to urban cores are well known and are briefly recapitulated here: - Structures are degraded and infrastructure inadequate; - Little direct economic benefit is derived from historic structures (monuments, historic buildings); - The high-density low-rent residential and commercial areas inhabited largely by poor people and low-value businesses strongly contrast with their high social, cultural and tourism value; - The historic areas do not generate significant revenues or incentives for investment in upgrading; - Investment in upgrading property risks displacing poor tenants; - Each site has its own socio-economic characteristics as well as physical ones that detennine the selection, rationale and modality of proposed interventions.

Tripoli Old Town. Key social characteristics and issues: 12. The social, economic and development needs of Tripoli old city have been severely neglected. Social studies (Tabet & Debs) show in detail that Tripoli old city inhabitants (ca. 16,500) are largely of local origin. The inhabitants are much poorer and less educated than the national average. About 2/3 of them are from Tripoli, and almost 90% from North Lebanon including Tripoli. The great majority of workers (96% of souq workers) are Lebanese. The population is stable-over half of them settled before 1975, and only 1/5 since 1995-and is well rooted. Only half of the householders rent properties (rents being exceptionally low), the remainder being owners in whole or part. Three-quarters of all properties are privately owned but Waqfs (mostly familial) own almost a quarter of the properties. In terms of economic activity, three-quarters of those who operate economic activities are Tripoli residents, and 1/6 live in the same quarter. Economic activities have shown little growth over the last 20 years, although there has been some change in emphases (decline in artisanal trades, increase in low-value petty commerce). The souq area is characterized by the high degree of interpenetration with residential status.

13. The stakeholder analysis (SHA) shows in some detail the high number and complex interactions of players with interests in the development plan of the old city. These include in particular the municipality, property owners, tenants, the Sunni Waqf and small business owners. The key issues

- 131 - raised by the SHA are the need to involve the local people in an active process of urban regeneration, and the need to have a strategic vision and clear institutional framework for action.

14. The strategy of intervention in Tripoli is based on a selection of activities that will enhance public spaces and improve access for commerce and tourism, coupled with some public-private partnership to provide incentives for upgrading private property. These would be (to be confirmed): (a) River zone treatment; (b) Northern old town including Khan el Askar, Khan el Khayyatine etc.; (c) the central part of old town (the goldsmiths street, Hamrnam el Nouri, Khan el Saboun, (d) Citadel, (e) southern part (Haddadin)public space on the historic road, Arghoun Shah mosque and infrastructure, water, sewerage, electricity and telephone; and (e) on the East bank, treatment of the public space between the two souqs.

15. Apart from some resettlement, dealt with separately, two main social issues arise in Tripoli:

(a) Community participation. The strong social cohesion, sense of place, community solidarity and rootedness of the population in the historic city center represent a strong non-material cultural asset that is both a challenge and an opportunity to develop a community-based participatory aspect to this project. Focusing on the conversion of Khan al Askar in to a project site, and the conversion of part of Khan el Aarsat to serve better the local community, the project would provide would be a social development and communications sub- component with income generation and skills training, together with promotion of community action on needed issues such as improved schooling, community health, functional literacy and self-help initiatives etc. Already a number of NGOs are involved in this kind of activity. However there is no clear or agreed mechanism for stakeholder coordination. The Municipal Implementation Unit will be located in the renovated Khan el Askar in the old town, serving as a facility for community information, tourist informnation, community upgrading renovation (building codes, permits etc.), employment and business opportunities. Other organizations would be invited to locate there. The project may contribute to community cohesion and quality of life through enhanced public spaces, and through specific promotion of communal action, solidarity and organizations. The sense of place, dense social networks are a strong cultural asset. However, the project social scientist based in this city will have to be prepared to spend considerable time getting to know the area and gaining the confidence of the population. A communications strategy, which includes a significant learning component, is of primary importance in this city.

(b) Economic activities and tourism: employment generation and micro-enterprise promotion. Ample opportunities exist for support to a wide range of artisanal activities that would serve both the needs of historic building restoration, and create products for the tourist and export market. The restoration of historic buildings will increase the demand both for traditional artisanal skills (electricians, builders, joiners and carpenters, plumbers) as well as more specialized skills specific to restoration such as tiling and decoration. The Universite Libanaise de Tripoli has expertise to provide training for specific restoration skills as well as guidelines and codes for treatment. Other institutions mnight provide support to small business development. Existing artisanal activities include soaps (already spontaneously begun), perfumes and essences, textiles and embroidery, metalwork, glass work, leather work. The Khan el Askar is expected to house a facility for the support of such activities and public demonstrations of techniques, which themselves are of touristic and educational value. Support could consist of assistance in the provision of tools and equipment, guidance with business plans and product line development, and marketing as well as provision of rented space.

16. Tripoli municipality shows clear evidence of commitment to using this project to benefit the local population and particularly to upgrade the quality of life of what has for long been not only one of

132 - the most degraded parts of the city but one of the poorest parts of all Lebanon.

Safda Old Town. Key social characteristics and issues:: 17. The main challenges facing the conservation and balanced development of the historic city of Saida have been summarized most recently in the findings of an intemational Seminar in May 2001, and relate to environmental and urban planning issues as well as the conservation and preservation of the material historical record. From the social development point of view, however, the main issues relate to the medina, where similar problems to those of Tripoli old town present themselves. That is, the fabric of the urban core, which collectively is of great historical and architectural interest, is severely degraded both through neglect and trauma, and it is inhabited by the poorest segment of the city's population including the severely economically depressed fishing community.

18. However, certain features also distinguish Saida from Tripoli, as revealed by a brief socio-economic survey of 1336 old town residences conducted in 1995 under the auspices of the Hariri Foundation. Although the majority property ownership is Lebanese, a far smaller proportion than in Tripoli-only 60/%-was owned by the Waqfs, the Jewish being the most significant followed by Christian and then Muslim; a higher proportion-at least 5%, with a significant 20% undeternined-was non-Lebanese, mainly Palestinian; a much higher proportion of residents-almost half-was non-Lebanese, mainly Palestinian; only a quarter of the residents worked in the Medina; only 20% (with another 20% unknown) were owner-occupiers, while just over half were tenants and a significant minority (6%) tenants-at-will. One of the main differences of Saida compared to Tripoli is the much lower rootedness of the population in the medina, evidenced by the reported desire of many inhabitants to move out of the medina should the opportunity arise. The process of economic gentrification is well advanced, giving a strong impression of a decline in population and traditional economic activities that was continuing during project preparation.

19. Also distinguishing Saida from Tripoli is its proximity to Beirut, indicating that its long-term vocation might render it eventually a highly accessible scenic, recreational and touristic destination from Beirut, like Sidi Bou-Said near Tunis.

20. There are several social issues to be taken into account: - The rehabilitation of the Medina is the centerpiece of the reestablishment of the value of the cultural heritage However, private owners, the Hariri Foundation and the Audi family are already prominent in rehabilitation and the central social issue is the imnpact of the socio-economic transformation that is inevitably taking place. - The SHA and other information lead to the conclusion that renovation and upgrading of the Medina, which is already under way, is more likely than in Tripoli to lead to a reduction of the absolute numbers of resident population (perhaps by one third to one half), and that owners, especially those with access to resources, are more likely to take the opportunity to convert buildings to other uses or to introduce a higher class of tenant paying higher rents. This process, which has already started, is to some extent inevitable, and justified to the extent that it enables owners to regain control of property that through various circumstances they have lost over the past quarter century.

21. The Unesco conference formulated recommendations on community participation, implication of NGOs and a proposal to situate a multi-purpose medina renovation office similar to that suggested above for Tripoli. These suggestions appear sound.

- 133- 22. Saida appears to have more opportunity than Tripoli for conversion of use of historic buildings (museums, art galleries, manufacture and retail of artisanal products, small hotels and pensions). However, the Bank's investment in public spaces and reviving the economy would therefore, because of the anticipated social impacts, be negative and neutral, confined to the rehabilitation of the facades of one of the main streets. The socio-economic officer would have as a task the identification of intermediary agencies or projects that could assist the poorest population. Further Bank investments at this stage would not seem to bring significant value added to existing initiatives.

Tyre Old Town. Key social characteristicsand issues: 23. A detailed census of old city inhabitants was conducted by Pierre El-Khoury Architects in June 2001, providing basic information on occupation, demography, education and declared incomes. There are significant socio-economic differences between the two sectors. The Christian sector (Maronite, Greek Catholic, Greek Orthodox, and 12% Muslim) (population 1251) is a little over half what it had been 30 years ago, the decline in population being particularly marked in the under-20 age bracket. Over 90% are from Tyre. The standard of living and education is relatively high and the proportion of economically active (399%) is high. 35% are owners of their residences; 21% of houses are unoccupied. The Muslim sector (2353) (Shiite, Sunni and 6% Christians) has also decreased in the last 30 years by about 1/3 and has a higher proportion of more recent arrivals. Eighty percent are from Tyre. The proportion of economically active is lower (29%) and the same percentage are home owners.

24. The old city's population (around 3,600) consists mostly of poor tenants; the fishing industry has suffered severe decline and is characterized by significant poverty. The focus of economic activity has moved away from the old town. A major NGO has in progress a rehousing project to assist the non-Muslim part of the fishing community, but has not yet been able to identify land for the remainder. Without some economic stimulus in the near future, the authentic social character of the port will have disappeared, replaced eventually by upscale urban modemization behind traditional facades.

25. The interest of Tyre lies as much in its character as a fishing port (where boat-building is being resuscitated) and its potential for recreational tourism as in its archaeological resources; but the city facades would require substantial rehabilitation. In terms of the actual and potential contribution of the archaeological record to Tyre's present, social analysis sounds a note of caution. Despite Tyre's illustrious past, the visible historical record is rather disappointing. The historic port city (El Mina) suffers from chaotic presentation, the result of interrupted excavation; the more dramatic site of El Bass has more presentational potential and presents rather fewer challenges, but needs to take into account the possible recreational uses of the area. Some of the maritime record is under water. The implication is that apart from some urgent rescue work at El Mina, emphasis should focus on El Bass (including the museum) which would produce more cost effective and earlier returns. In terms of buildings, there is an urgent need to expand the housing stock and at least some of this could be done through rehabilitation of structures, which would also create some employment.

26. Tyre appears to offer particularly promising possibilities for collaboration between municipality, DGA, NGOs and citizen groups if with the support of the project the municipality can fix on an agreed agenda with local stakeholder groups and find a suitable middle way between the excessive protectionism of some earlier archaeological studies and the excessive developmentalism of municipal and transport network planning. This middle way should include a clear poverty alleviation agenda..

- 134- 27. Two economic activities that could be developed in parallel to work on the archaeological sites and municipal works, with local participation and links to recreational tourism. These are: - Maritime activities: revival of the fishing industry (income support for closed season; possible aquaculture; development of breeding reserves; enforcement of regulations); in conjunction with local restaurants; and boat building (including historic boat building), with ancillary activities such as scuba diving (including underwater archaeology) and trips; this would emphasize Tyre's maritime history; the proposed fishing museum would draw on and validate local knowledge and could provide a local source; . Current local initiatives are spontaneous, weak and haphazard. - Agro-industrial products, spices and artisanal products; with product development and assistance in marketing. There are NGOs who could assist with this, but some organization (e.g. space for marketing) would assist.

28. Tyre lacks Baalbeck's intrinsic charisma and development potential; from a social development point of view, purely cultural heritage initiatives are inappropriate and the project should place as much emphasis on economic regeneration and poverty alleviation to bring multipurpose recreational visitors as on preserving and protecting the archaeological heritage.

Town vs. Site Issues 29. In Baalbeck, Byblos and Tyre, the social issues have more to do with reducing the disconnect (visual-spatial, social and economic) between the sites of historical/cultural value and the residential and commercial life of the city. Ordinary citizens derive little benefit from the sites, do not feel that the sites belong to the community, and exhibit little pride or awareness of their unique historical value. However, municipal councils have begun to show more awareness of these issues, which has led to their enthusiastic support for the project.

30. In Baalbeck: (a). There is poor integration of the local economy and poor spatial integration with the key heritage sites. At present the large and vague definition of the area of interest acts as an impediment to development planning the unblocking of which must now be a priority. Clear definition of the perimeter(s) to be protected will free up planning decisions, and create greater stakeholder support for protection, development, presentation and maintenance of the sites of prime historic value. (b). The original proposal by Dar Al Handasah for a green zone that would entail removal of the small number of houses near Al Qalaa was found to be socially unsympathetic and historically and aesthetically unnecessary and has now been modified. An alternative proposal that would allow the current residents and most economic activities to remain as a legitimate part of the site has now been accepted. (c). The tourist circuit at present does not incorporate the city market center, which would enable local shops and businesses to benefit from the presence of tourists. Any development of the site which encourages tourists to spend more time in the city and to diversify their activities should be encouraged, as should a design that encourages at least some tourists to enter the city at the eastern end, and approach the monuments through the city (recognizing implicitly the role of the inhabitants) instead of the north or south entrances that encourage the tourists to visit the site directly and bypass the city. (d). The recognition that the site has many historical layers (not just the classical Roman

- 135- heritage), all of which have to be presented to the public and integrated as part of an evolving historical record, is an important part of the project and will greatly assist improvement of the (at present weak) identification of the residents with the site, the place which gives the city its character and identity. The addition of a (Muslim) religious tour circuit in the project is therefore particularly appropriate. (e) A modest local social survey is recommended to better understand the interests of the residents, and the ways in which they could identify with and benefit from the site, and in which community participation and benefits could be enhanced. (f). A local voluntary initiative to prepare a Baalbeck website has collected a significant amount of infornation and this information now needs to be systematized amplified and owned by the municipality as part of its tourism promotion effort.

31. In Tyre, the SHA showed the weak identification of the local citizens with the historical character of the city, owing to several factors. These factors include: the low informational or recreational character of the site; the conflict over historic buildings between DGA and local property owners, the marginalization of the local inhabitants from high-profile intemational efforts to protect Tyre, and the limited economic benefit that the site brings to the city. Individual initiatives to restore and adapt historic buildings (such as the restaurant al-Fanar) have received little official support. .

32. In addition to economic regeneration, therefore, the project would make a valuable contribution to the quality of life of its citizens through the creation of public recreational space - the opening up of the El Bass site as an archeological park, and the improvement of the marine promenade.

33. BybIos. Byblos has come to terms better than most cities with its archaeological and historical heritage, but at a cost that it is now only realizing and which the project can help to rectify. The main residential part of Byblos lies in the east, separated from the historic site by a major busy motorway. The extensive privatization of the historic city's land, coupled with the sterile effect on a large part of its World Heritage status, has meant that its recognized role as a tourist destination is hardly enjoyed by its own citizens. Therefore, project intervention aims to improve public spaces and access to pedestrians, and create an organic link between the residential city and the historic city.

34. BybRos is ahead of other cities in the involvement of the private sector in a municipal strategy, in taking initiatives to market itself and to create an information strategy. This pioneering initiative can be of benefit to other cities through sharing the experience.

Migating the risks

35. The following risks require mitigation: (a). Premature displacement of economic activities. Although there are in all sites certain economic activities that are to some extent incompatible with their historical character-for example, vehicle repair or plastic furniture enterprises in historic medinas-these are almost invariably of a small scale character. A gradualist approach based on education, public awareness, environmental considerations, incentives and assistance to change is greatly preferred to recourse to zoning regulations. (b). Encroachments and squatting on protected areas. This phenomenon, too, is not of a nature that imposes a major and imnmediate challenge (cf. Palestinian encroachments on the edge of El Bass in Tyre). For the present they can be tolerated, and dealt with through incentives.

- 136- (c). Gentrification. This refers to the risk that as historic areas inhabited by the poorest and most vulnerable sections of the population are upgraded, the poor are merely relocated elsewhere, possibly in worse circumstances than before. The SHA clearly identified the desire of (resident and non-resident) landowners to upgrade their properties in order to benefit from higher rents. Revisions to the rent act in 1992 [and 1995?] provide opportunities to do this, weakening the previously almost unassailable position of sitting tenants. A proposed revision to the law would further strengthen the landlord side. It is likely that the gentrification of the area would occur irrespective of this project. Great care will be taken in this project to ensure, through planning and contractual mechanisms, that the living standards of the poor are protected, that as far as possible they are enabled to remain in the improved areas which can and should develop a mixed socio-economic character; and that those who are displaced temporarily (while improvements are being conducted) or permanently have acceptable alternatives. This process is already occurring independently of Bank intervention, but the Bank will take the opportunity to support protection of the interests of the most vulnerable, as a measure to mitigate the social risk of increased gentrification. The project can make three positive specific social contributions: 1) ensure that when owners improve their buildings they conform with building code to preserve cultural character of the place, and enable them to realize increased asset value while contractually protecting the interests both of tenants who remain and tenants who leave; 2) create conditions for enhanced incomes so that there is greater ability to meet increased rents; (see above); and 3) investigate public private partnership incentives that can encourage poor proprietors to invest in upgrading. (d) Elite capture of benefits. The highly politicized nature of municipal government means that cities are often seen as little more than the power base of a national elite. The challenge of this project is to ensure, through communications and transparency, that the expected development benefits and pathways are publicly known and adhered to.

Monitoring and evaluation

36. The rnission proposes that two socio-economic outcome indicators be used to monitor progress in achieving development objectives. The first indicator measures the extent of use by local inhabitants of the MIU socio-economic services ("one-stop shop"). The second indicator would measure the degree of satisfaction, 6fresidents with'the.changes induced by,the project, and the satisfaction of tourists with their experience. The second indicator would require specialized studies to be undertaken during project implementation.

End Note I. lnformation. International (Lebanon), "Stakeholder Analysis and Social Assessment for the Proposed Cultural Heritage and Tourism Development Project", Final Report, November 2001 (275 pp).; Hariri Foundation and UNESCO "Saida Liban une itude socio-economique': [1995]; Tabet and Debs, Architects (Lebanon), "Rehabilitation et Revitalisation Urbaine de la Ville Ancienne de Tripoli", Rapport Pr6liminaire ; September 2001, chapter 4, 5 ; Pierre el-Khoury Architects, Urban Conservation and Design Studies for Tyre Old City: Recensements Draft Final Report, 2001 ; Dar Al Omran, Social research in preparation of First Phase study for Saida Urban Master Plan, 2001.

- 137- Additional Annex 13: Project Safeguard issues Reseftlement Policy Frameworh and Action Plan Social Safeguards (Res2etlement) LEBANESE REPUBLIC: CULTURAL H-IERITAGE AND URBAN DEVELOPP ENT

1. The Resettlement Policy Framework (attachment 1 to Annex 13) has been submitted by the CDR to the Bank and has been disclosed locally and through the Bank Infoshop as was the preceding draft issued before appraisal. 2. The Resettlement Policy Framework clearly defines what is to be done during implementation and the Bank found during appraisal that a) CDR had a good understanding and ownership of the RPF; b) it has the institutional experience and means, having been Lebanon's main expropriating agency in the last few years with its own specialized unit and having developed a practical understanding of Bank policy. The first Resettlement Action Plan, for Khan el Askar (summarized in attachment 2 to Annex 13) and the projected minor resettlement in Byblos were also reviewed in detail with the municipalities concerned, from which the Bank understood that the two municipalities concerned had a good grasp of the issues and adequate capacity to implement them in compliance with Bank policy. This marks a positive evolution in the Bank's safeguards compliance dialogue with Lebanon. The slow anticipated pace of the preparation of future RAPs, the minor nature of all but two sites (not confirmed for inclusion in the project), the existence of a local social scientist specializing in resettlement matters and the liaison function given to the municipal socio-economic officers gives ample comfort that no adverse compliance issues are foreseen. 3. The following potential issues were identified that would be addressed under the framework through the preparation of abbreviated or full Resettlement Action Plans, summarized in the table at the end.

B3anlbeek: 4. In order to better link the archaeological sites with the urban fabric, pedestrian walks will be built and vehicular access will be limited to certain areas. Limiting vehicular access will affect several garages inappropriately located close to the main archaeological sites (four in the Al-Qalaa neighborhood and three in the North Entrance of the Roman Ruins) and will, therefore, be relocated. The municipality is currently weighing different possibilities for relocation which are consistent with the wishes of the garage operators. One possibility is moving the garages to an industrial zone in the north part of the city where an integrated car repair shop with expanded services will be established, improving the business environment of these garages. The second possibility is to establish a public-private partnership where land owned by the Maronite waqf and located on the main street will be leased to the garage owners. An Abbreviated Resettlement Action Plan will be required for this relocation. This is a formal statement of how the relocation will be addressed (including compensation and efforts made for mitigating negative economic impacts). It needs to be prepared by the municipality and submitted to the Bank by CDR prior to the above being effected. 5. GouraudBarracks: This complex located at the north-eastern side of the Al-Qaala neighborhood is currently inhabited by over 300 families displaced by the civil war and is owned by the Ministry of Defense who have an expropriation decree in hand. The families have been promised assistance for relocation by the Ministry of Displaced but have not yet been compensated. Any intervention by the CHUD in this structure would trigger the Bank's Social Safeguards policies therefore require the preparation of a full Resettlement Action Plan with detailed social assessment. The implications are currently being studied.

- 138- Byblos: 6. Two Abbreviated RAPs will be prepared by the Municipality under the RPF and submitted by CDR to the Bank for approval. In order to provide improved access to the historic center and beautify the area, a pedestrian promenade will be built along the old Roman road and will also serve as an introduction to the historic city. This requires the removal or relocation of an inappropriately placed gas station which blocks the view over the cemetery gardens and with the cultural tourism activities of the area. To improve traffic circulation a large parking area for visitors with a shuttle bus to key points in the town is being provided; a small area required for a bus stop and terminus, that requires the expropriation of two commercial buildings whose owners and tenants will be fully compensated.

Saida: 7. In Saida no social safeguards issues were identified.

Tripoli: 8. The draft Resettlement Action Plan (RAP) for Khan al-Askar Phase I was reviewed (attachment 2) and the site visited by Bank social scientists. The general intention, to rehouse the population in nearby social housing, was fully supported by the Bank social scientists as being the best solution for the highly impoverished inhabitants. It was agreed that although generally accurate, some questions remained on the numbers and identities of people currently living in the Khan, and that the original municipal census would be revised by the end of July 2002 to reflect only current occupants. This would be followed by full and open disclosure and discussion, with the announcement that new arrivals or those departing voluntarily would not be eligible for housing benefits. The municipality proposed to negotiate a formal and binding agreement with each affected family. The RAP was revised to incorporate agreed improvements and changes. The Municipality shows in this respect a high degree of social awareness and responsibility. 9. The issue of about 100 temporary marketeers stalls along the river front who would have to move to make way for the road was raised. The Municipality agreed that their original altemative site was neither appropriate nor attractive to the marketers, and that a broad pedestrian way across the river would be a highly attractive altemative and that the municipality would do this in agreement with the marketers.

Tyre: 10. There are three historic buildings that belong to the Directorate of Antiquities on the main archaeological site. One of these buildings, a medium sized building intended for use as the regional offices of the DGA is currently occupied by 2-3 families displaced by the war. Although the Ministry of the Displaced offers financial assistance for resettlement, the allotted sum of $5,000 is inadequate. The CDR and the municipality of Tyre will have to find appropriate solutions for these families and the measures to taken reflected in an abbreviated RAP under the RPF . 11. The privately owned Khan al-Rabu is located in close proximity to the souq and is being considered for possible renovation through a public-private partnership for use as a socio-cultural craft center. The Khan currently serves as an abattoir from which informal indications are that about twenty workers derive economic benefit. The municipality is currently building more appropriate facilities that ensure environmental and sanitary conditions where these activities will be moved. Additionally, informal indications are that about 10 families are currently living as tenants. If this site is included in the project activities, the RPF would apply and the municipality with CDR's assistance would prepare a full RAP under the RPF.

- 139 - 12. A promenade will be built by the project along the coastal zone. Independently of the current project the municipality has been enforcing a long-standing Lebanese law which prohibits the construction of buildings on the seafront which is open public space. About eight informal restaurants are scattered along on the coastline whose pernission to continue operating in their present location requires that they operate seasonally and not be permanent structures. The Bank social scientists found that this was an application of law and municipal policy prior to and independent of the present project, that it was being done through amicable negotiation with the owners with alternative sites to be provided nearby in order to bring them into conformity with Lebanese law, and that the safeguards policy did not apply.

Table of Resettlement Actions required for complanmce

Baalbeck Site Action Required Gouraud arracks Relocation of Garages - RAP Required if this element is retained Abbreviated RAP Required

Tripoli Site Action Required Khan Al Askar Submission of the revised RAP before negotiations

Tyre Site Action Required Khan Al Rabu House in archaeological siteFull RAP Required Abbreviated RAP

]Byblos Site Action Required Gas Station Abbreviated RAP Required Land for Bus stop Abbreviated RAP Required

- 140- Attachment 1: Resettlement Policy Framework

A. INTRODUCTION

1. This Resettlement Policy Framework (RPF) lays out the resettlement principles, organizational arrangements and design criteria for subprojects that the Government of Lebanon will apply during the implementation of Lebanon's Cultural Heritage and Urban Development Project (CHUD) with financial support from the World Bank. This framework applies to any aspect of the project that require expropriation of private land or assets in the public interest, or that requires the involuntary removal of residences or economic activities. Based on Lebanon's law of expropriation, it describes how the Government of Lebanon will identify, mitigate and compensate any adverse impacts on the assets and livelihoods of the people directly affected by such expropriations.

2. The object of the RPF is to ensure that throughout its life, the project fully complies with the principle that any negative impact associated with involuntary loss of assets or relocation of economic activities or residence is minimized and that appropriate protection is provided to the interests of the poor, vulnerable and those without legal title. It lays out the procedures for prior consultation with all affected persons, the assessment of losses and entitlements, handling complaints and disputes, and monitoring the outcomes. Finally, it describes the mechanisms to ensure that outcomes conform to the principles of full and prior compensation for any lost assets and full restoration of standards of living that are directly and adversely affected.

3. In a decentralized project of this nature, the numbers and locations of persons to be displaced and the arrangements for their relocation cannot be determined at this time. The RPF is therefore the instrument that sets out procedures for screening subprojects and where so required, guides the preparation of individual site-specific Resettlement Action Plans (RAPs) or abbreviated RAPs acceptable to the Bank that CDR will submit as and when the project conditions so require. The policy framework guides the degree of detail required and the process for the preparation, approval, implementation, monitoring and evaluation of the RAPs. The RPF will thus ensure that the project fully complies with the Bank's safeguard policy on involuntary resettlement (OP 4.12).

4. The application of the RPF is the responsibility of the Council for Development and Reconstruction (CDR) which will ensure that participating institutions, including the municipalities, the Directorate General of Urban Planning and the Department of Antiquities are adequately informed and equipped. CDR will monitor and report on the progress of the involuntary resettlement activities. CDR's specific role will be specified in the Project Implementation Plan and the Legal Agreement.

B. PROJECT OBJECTIVES AND DESCRIPTION

5. The Lebanon CHUD Project aims to improve the conservation of Lebanon's material cultural heritage and to enhance its contribution to local development and urban life. The project has four main components located in the five cities of Baalbeck, Byblos, Saida, Tripoli and Tyre: (a) the conservation and management of archeological sites, especially the World Heritage sites of Baalbeck, Tyre and Byblos (b) the rehabilitation of historic city centers, including substantially rehabilitating the medinas of Tripoli, Tyre and Saida (c) the improvement of urban infrastructure and (d) the strengthening of institutions, i.e., the Ministry of Culture, Ministry of Tourism, municipal management of historic city centers and the CDR. In implementing the project, the CDR will closely coordinate with the Ministry of Culture, the Directorate General of Archeology (DGA), the Directorate General of Urban Planning (DGU).

- 141 - 6. The project has the potential to bring substantial socioeconomic benefits to Lebanese society as a whole, to the municipalities concerned, and in particular to the poor populations living in these municipalities. A detailed socioeconomic survey and stakeholder analysis have been prepared for the five cities. While every effort has been made to minimize displacement and to upgrade the areas with the populations in situ, some displacement cannot be avoided, especially where the integrity of the site or technical requirements apply. In particular, interventions to improve urban infrastructure and those to rehabilitate historic city centers, especially that of housing clusters and public spaces, may require involuntary resettlement of people and businesses or their temporary displacement. These are almost all small in scale, and all will be dealt with as development interventions.

7. The following subprojects will or may require involuntary resettlement: - Rehabilitation of the medinas of Tripoli, Tyre and Saida (especially the rehabilitation of public spaces and housing clusters, such as the Khan Al-Askar) - Urban infrastructure improvements to manage vehicular access to historic centers, construction of parking and commercial facilities in Baalbeck, Byblos, Saida, Tripoli and Tyre; - The archeological site renovation in Tyre includes the removal and relocation of an illegal construction that is infringing on the site

8. In the case of Tripoli medina, the rehabilitation of the Khan El Askar will require involuntary settlement of up to 60 families. The municipality gave to families who lost their homes in the disastrous 1958 Abu Ali floods temporary shelter in the Khan pending provision of permanent replacement housing, which it never managed to secure. The project provides the municipality with means to fulfill its long standing intention to rehouse the very poor families and businesses in modem affordable social housing immediately nearby, in place of their currently dilapidated and inappropriate lodgings. This will enable the Khan, a building of considerable historical value and intrinsic aesthetic worth, to be converted into a local visitor and commercial center as part of the economic and physical rehabilitation of the medina. Phase I of this sub-project is described in a RAP prepared concurrently with this policy framework.

9. With one possible exception, all other resettlement under this project are expected to be much smaller in scale than that in Tripoli. They would be required for technical reasons of planning or infrastructural design, or during the renovation of public buildings.

C. INSTITUTIONAL AND LEGAL IFRAlfEWO1RX

10. Lebanon's legislation provides the legal framework for the implementation of the entire CHUD project and its related sub-projects. It provides for expropriation only by due legal process and after compensation has been paid for all tangible losses of property and economic prejudice at current market rates or better; and it provides for a mechanism of appeal and review. The principal legal and institutional arrangements are as follows:

11. Expropriation:Lebanese law protects the right of private property, including land. Law No. 58 enacted in 1991 authorizes the expropriation of private property in the public interest but only after fair compensation has been made. The compensation is determined through an assessment by an independent judicial committee and is always a monetary award, comprising two components: (a) indemnification of damage or loss to improvements (buildings, trees, fences etc) and (b) compensation for the value of the land. Under Lebanese Law, the expropriation is considered fmal unless the public interest claim is itself

- 142- challenged by an individual directly affected (an association, municipality, NGO etc does not have the right to appeal).

12. There are detailed procedures for expropriation (Fig. 1). A decree is published in the Journal Officiel (Government Official Gazette) announcing and authorizing the expropriation with a timeline which should not exceed 8 years from the publication of the announcement. Annexed to the decree are the following: a) a sketch of the entire project area proposed; b) a detailed plan of the properties to be expropriated; c) a list showing the registration numbers of each property, its location, the names of all the owners and right holders in the Land Registry; and d) a detailed list of the immovable contents of the property as well as a detailed plan of buildings constructed prior to the date of the decree's publication. The complete document is made available for public access at the government offices. In addition, these documents are posted at the municipalities where the properties to be expropriated are located.

13. Compensation: Compensation is determined by an Expropriation Conmnission set up by a decree in accordance with proposals from the relevant ministers for each Mouhafaza. The members of the commission consist of (a) a chairperson (a judge or a magistrate of at least the 10th degree), (b) an engineer and (c) a property valuator. The higher appeals level of conmnission consists of (a) a chairperson (a magistrate of at least the 6th degree), (b) an engineer and (c) an expert in land law and valuation. Each commission is assigned alternates for each of its members, as well as a clerk and a messenger.

14. The Expropriation Commission determines all compensation for any economic prejudice arising from expropriation, decides on requests by owners for total expropriation and full compensation, determines the value of small portions of land which cannot be used for building and resolves disputes over the division of compensation between shareholders. Its awards are always based on prevailing local market rates.

15. The Expropriating Agencies for the CHUD will be the Directorate-General of Antiquities (DGA) and the five municipalities concerned, with the support of the CDR. These are represented before the commissions by legally qualified representatives, and individual landowners may either represent themselves or be represented by a lawyer. The primary role of the Expropriation Unit at the CDR in relation to this project will be to provide technical assistance to the expropriating agencies, to ensure that they undertake their tasks in accordance with the law of Lebanon and the provisions of this policy, and to monitor and evaluate the outcomes.

16. Land Tenure: In Lebanon there is generally little contestation over ownership, legal rights or boundaries of land because plots are generally well surveyed and title is recorded at an administrative service based in the Ministry of Finance (with the exception of areas affected by uncontrolled movement and settlement due to the civil war). The survey unit also maintains cadastral maps that are regularly updated. Since land ownership is recorded in shares, along with all those whoever held title to it, the exact value of any transaction for an individual owner can be determined. In addition, land laws in Lebanon are gender neutral. However, the situation with regard to historic urban cores is much less clear, with informal land subdivisions not represented in the cadastre, and complex vertical layers that do not always correspond to horizontal boundaries. These features reinforce the need in this project to conduct careful and detailed empirical research in the affected areas, consultation, and to tailor the project actions to the social realities on the ground.

17. Tenancy Laws: A new rent law enacted in 1991 relaxed rent control and gave the landlord the right to repossess the property at the end of the contract. Rent laws prior to 1992, however, permitted

- 143 - tenants automatically to renew their contracts and capped rent increases. Moreover, tenants could sublease the property to third parties with only minor increases in the rent at the signing of each new contract. As a result, rent contracts signed after 1991 favor the landlord and those signed previously favor the tenant. Where expropriation causes loss of tenancy, expropriation commissions divide their awards between landlords and tenants according to the economic value of the tenancy, enabling tenants to secure alternative housing by rental or down payment against purchase. (See also Section H below on Monitoring and Evaluation).

18. Antiquities Laws: According to the Antiquities Law of 1933 historic monuments, even those on the General Inventory List, can be either publicly or privately owned. Although archaeological finds are considered state property, the parcels on which archaeological discoveries are made can remain the property of private individuals or institutions. Under this law, private property owners of listed historical buildings are responsible for the repair and maintenance of the structure. The discovery of irnportant archaeological remains could also lead to the expropriation of private property or to limitations on its use. If a building is placed on the list of classified monuments, the owner receives no compensation for the freezing of development rights. However, if the listing is erroneous the owner may eventually be compensated.

19. Maritime Public Domain. Lebanese Law provides that the entire intertidal shore is public domain. This law has not been fully enforced. In some places, such as at Tyre, a small nurnber of semi-permanent informal business structures have been erected that are inconsistent with the World Heritage character of the site. The owners will be assisted to relocate their businesses to a more suitable site.

20. Lebanese law is fully consistent with the principles of the Bank's OP/BP 4.12 on involuntary resettlement and provides for legal process: (a) expropriation is effected after compensation has been deternined (b) prior warning and public disclosure is made (c) full judicial compensation is independently awarded and (d) citizens have the right to appeal. There are however, several sequencing features of Lebanese procedures which are commonly encountered in many countries that differ slightly from what the Bank documents anticipate. Expropriation is initiated by a ministerial decree and signed by the President with no prior public debate. However, informal public consultations may precede the decree and this has been the case in medinas and detailed specificity about expropriations would not be appropriate to Lebanese conditions. The compensation levels made through an independent judicial process are situation specific and cannot be known at the time of the RAP but may in some cases be estimated on the basis of known precedent.

21. The Lebanese law of expropriation only compensates those with legal rights. However, mechanisms exist that protect various forms of customary rights made on a case by case basis to the expropriation commission. In practice, since squatters cannot be evicted without an order from the governor, resettlement is most often done through amicable negotiation, by agreeing on a level of compensation or inducement that will encourage voluntary departure. Widespread displacement of people during the civil war led to a proliferation of squatting between 1975 and 1991. As part of the reconciliation process a Displaced Peoples Fund (DPF) was established to encourage squatters to return to their villages. However, since many did not wish to return to their respective villages, the DPF provides them with financial support to relocate wherever they choose. This project will follow Lebanese practice of hunane treatment and amicable resolution of cases to avoid hardship where poor residents lack formal legal rights.

- 144- D. PLANNING PROCEDURES AND IDENTIFICATION OF IMPACTS

22. When a sub-project is first identified, the CDR In this paragraph and elsewhere, unless the context forbids it, CDR will prepare a site-specific Land Acquisition Plan which is a pre-feasibility diagnostic tool that predicts the project's social impact from land acquisition or land use conversion (or restoration). The LAP specifies what land is needed and why, describe what portion of it will be obtained through expropriations and assesses the potential involuntary resettlement impacts. The LAP will be based on a prefeasibility technical study which surveys existing structures and uses of the land that would be directly affected by the works. A rapid social appraisal including a site visit should also be undertaken by a social scientist to screen for any resettlement issues, such as whether any persons would be affected, how and how many. CDR will also conduct initial public consultations to evaluate whether this will be a simple or difficult resettlement issue (do people want to move or not? Etc). These consultations are distinct from those to be held during the social assessment.

23. CDR will submit the LAP to the Bank In the event that the proposed sub-project entails no disturbance or any expropriation of occupied or private land, this information shall be officially recorded as a no-objection by the Bank. Otherwise the Bank will advise whether or not the proposed sub-project and the costs associated with implementing the LAP can be financed under the loan (The Bank will not cover the direct costs of purchasing land or any other cash benefits). After receipt of the LAP, the Bank will advise the CDR whether a full or abbreviated Resettlement Action Plan should be prepared and whether or not other remedial actions need to be taken. If a full RAP is required, CDR will arrange for a census, consultations and appropriate Social Assessment with TORs agreed by the Bank. If an Abbreviated RAP is required, only a census and consultations with the affected population are required. No Social Assessments are required, in an Abbreviated RAP although the CDR will have to provide evidence to the Bank of adequate compensation having been made.

24. Procedures for consultation: The concerned municipalities should consult with tenants associations, municipalities, NGOs focusing on Preservation of Cultural Heritage and environment. The consultation process should also be a means for establishing dialogue not only with the stakeholders, but also among them.

25. Census: As soon as possible after the expropriation site has been determined, the concerned municipalities will conduct a nominative census to identify the persons who will be affected by the project in order to establish who will be eligible for assistance and to discourage the arrival of new people in search of assistance.

26. Abbreviated Resettlement Plan Procedures. Some subproject components in this CHUD may only require expropriation of land or assets affecting a small number of people (i.e. less than 200) with relatively minor impacts (e.g., not requiring changes in occupation or relocation of residence). Under such circumstances, an Abbreviated Resettlement Plan will be prepared for each sub-project. Without repeating information in the policy framework, the Abbreviated Resettlement Plan should briefly present the following: - the project activity requiring the acquisition of land or other assets, and the nature and extent of that acquisition, including sketch maps, photographs, cadastral surveys etc; - an officially certified census households and dependants affected , classified by status (property owners, tenants-at-will, tenants and other occupants); and an inventory of impacts for each category of persons; a reference of where the results of this census are kept;

- 145- - an unofficial detailed estimate of compensations expected and verification that resources for compensations are available; - description of measures to protect the interests of low-income tenants of rehabilitated buildings; - the timetable and budget for implementation of the resettlement plan; - institutional responsibility and financial arrangements for implementation; - the consultation arrangements on acceptable alternatives and the grievance procedures open to project-affected persons; mechanisms for informing the public (such as information campaigns) to inform the community on the project and subproject; - arrangements for monitoring and evaluation of the implementation (including measurement of real estate markets before and after project implementation to monitor the real estate market and assess its impacts on poor tenants of rehabilitated buildings).

27. This plan (excluding the amounts of monetary awards) shall be made publicly available in Arabic and French and shall be approved by the Bank prior to the implementation of the resettlement activities.

28. Full Resettlement Action Plan (RAP) P?roceduires. In the event that any project activity will affect more than 200 persons or where impacts are not minor the Government will prepare and submit to the Bank a full Resettlement Action Plan for each individual sub-project. The CDR is responsible for the Social Assessments which will be conducted by a qualified social scientist. The TORs will be prepared by the CDR with oversight from the Bank. The full RAP comprises all the elements of the Abbreviated Resettlement Action Plan, but also includes the findings of a social assessment that examines the nature of the impacts, the socio-economic and cultural setting, local organizations, and social risks. The social assessment should also list the indicators which would show that displaced populations would maintain and preferably improve their former quality of life. If the project activity includes the economic rehabilitation of affected persons, a detailed analysis of the arrangements (e.g., land redistribution, provision of employment, or other alternative measures to restore incomes) must be submitted to the Bank for review. The additional elements of a full RAP include the following: o Description of affected communities including their socio-economic characteristics; their history in the neighborhood and sense of connectedness to it; distinguishing characteristics of the community; a census of the inhabitants (owners, tenants with or without contracts and illegal occupants); any issues of potential conflict should also be signaled. o An analysis of property ownership and occupancy by type, and of the expected impact of relocation on standard of living. Particular attention should be paid to the operation of the rent laws; o Description of the consultative procedures with the displaced (see details in next section). These include: - inform them about their options and rights - offer choices of technically and economically feasible resettlement options - enable them to propose suggestions for their resettlement - propose mechanisms for compensating them for their losses directly linked to the project o Statement of objectives of the resettlement program: counter-risk and safeguard provisions. This includes: - a discussion of how the displaced people will maintain or upgrade their living standards

- 146- - the provision of services which facilitate relocation - services offered after relocation (e.g. employment, running water, housing, transportation etc) based on an assessment of their needs 0 Site selection for new settlement together with relocation risks and reconstruction.

E. DISCLOSURE AND GRIEVANCE PROCEDURES

29. Disclosure and Consultations: The RAP or Abbreviated RAP (excluding individual names and the amounts of monetary awards) shall be made publicly available in appropriate Arabic and French versions and shall be approved by the Bank prior to the implementation of the resettlement activities. Acquisition of land or other assets, and the preparation of resettlement plans, require consultation with the project-affected population. In addition to residents and business owners affected, consultations with associations, NGOs and other representatives of civil society within the affected zone should be carried out. The purpose of these consultations is to also generate partnerships and cooperative engagement among those affected. Many of the old Medinas are inhabited by poor migrants. Following consultations, any remedial plans (e.g. abbreviated RAP; full RAP) will be disseminated to the project-affected persons in a manner accessible to them. Information disseminated to the project-affected persons will include: (a) compensation rates for all categories of affected assets; (b) eligibility criteria for all other forms of assistance that may be provided; and (c) grievance procedures. The resettlement and environment consultation and disclosure requirements will also be harmonized and streamlined as appropriate.

30. Grievance Procedures. The decisions of the Expropriation Commission can be appealed to an Appeals Commission by either the concerned Expropriating Agency (DGA or concerned municipality) or the individual rightholder (but not a corporate entity such as an NGO, municipality etc). The decision of the Appeals Commission is binding and final. Appeals Commissions may make upward or downward adjustments in the level of compensation awarded and have no time limits to reach their decision. Irrespective of who appeals (CDR or owner), the owner is required to vacate the property, with rights of sale but not of development, and with access to 75 percent of the compensation until the Appeals Commission reaches its final decision.

31. If project affected persons are dissatisfied with the proposed resettlement arrangements or with the actual resettlement implementation, they can address their concerns first to the expropriating authority through channels that will be provided in the RAP. If this does not result in a satisfactory resolution, project affected persons may take their grievances further and in writing to both the concerned Expropriating Agency and to CDR in its capacity as the "owner" of the project. CDR has established procedures to assist expropriated persons with the collection of compensation and other matters in respect of implementation. If the grievances cannot be resolved through administrative action, project-affected persons may initiate legal proceedings in accordance with Lebanese laws.

F. INSTITUTIONAL AND IMPLEMENTATION PROCESS

32. The expropriating agencies (DGA and the municipalities concerned) are responsible for implementing the resettlement program in accordance with the RAPs and for ensuring the compliance with the provisions of the RAPs by the second level of implementation that consists of site supervisors, contractors (consulting firms, building contractors etc) employed for specific contractual tasks. If the resettlement activities involve extensive assistance to the affected population, in the form of services etc, the CDR, in partnership with the municipalities and the Ministry of Displaced, may provide additional support under the project to these activities.

- 147- 33. The CDR is responsible for preparing the RAPs in close consultation with the expropriating agencies, for transmitting them to the Bank for approval, and for oversight and monitoring of their implementation.

G. MFNANCl4L COSTS

34. The Government of Lebanon will finance all the costs of compensation in relation to land acquisition and resettlement grants. The EBRD loan may be used to cover all other costs linked to resettlement, such as housing costs, technical assistance, monitoring.

18[. MOMTOREING AND[ EVALUATRON

35. The CDR is responsible for coordinating monitoring and evaluation of the resettlement program. Based on the degree of the complexity of the Resettlement Action Plan, several agencies may also be involved in this process. The Project's Procedures Manual will spell out the RAP monitoring arrangements; more specifically, it will lay down the performance indicators which will be used to monitor this part of the project and the procedures to be used. The impact of increased urban investment on poor residents of the old city centers needs to be regularly monitored in order to evaluate whether any supportive measures are needed. Bank supervision missions which include a qualified social scientist are also a key aspect of monitoring and evaluation. 36. The RAP monitoring indicators will be simple but robust indicators or proxies that should be as far as possible visible and verifiable and that will, according to the nature of the impacts, measure the following key outcomes against the pre-resettlement baseline: - For owners and tenants physically relocated: (i) value, type and key characteristics of the residential accommodation; (ii) its location in relation to the employment and earning requirements of the occupant; and accessibility of key services and amenities for family members (including women, children, the elderly and youth); (iii) key measure (or proxy) of household expenditure-income balance. - For owners of businesses physically relocated: nature of business; location in relation to clientele, suppliers and outlets; turnover. - For owners of residential or business properties that are restructured or partially relocated or whose status or tenure is changed.

37. These indicators will be developed in the first RAPs as baseline indicators and will be reviewed from time to time for effectiveness. 38. Monitoring of outcomes for households physically affected by relocation or expropriation will take place before the move, and one year later. End Notes 1. For the purposes of this framework, "affected persons" are defined as all persons who, as a result of works carried out or to be carried out under the Project, would incur involuntary loss, temporarily or permanently, of land, shelter, productive assets or access to productive assets, or of income or means of livelihood and, as a consequence, would have their living standards or production levels adversely affected. 2. In this paragraph and elsewhere, unless the context forbids it, CDR may assist the expropriating agency, ministry, municipality or consultant to undertake this work, but has responsibility for the document it submits to the Bank.

- 148- Rights Rights Summary of Losses Eligibilityfor Compensation under the terms Other State assistance of existing laws to be determined by Exproprialon Committee Residential Property Owner & Resident Full monetary compensation for loss of Eligible for state assistance for property and disturbance. Sufficient for relocation and other related services. replacement and transition costs

Absentee Owner Full monetary compensation for Not Eligible for services property. Sufficient for replacement. Rented property

Absentee Owner Full monetary compensation for Not eligible for services property, sufficient for replacement. (Squatted Property) Owner regains property.

Contract tenant Full monetary compensation for Eligible for state assistance for property, sufficient for replacement. relocation and other related services Owner regains property.

Tenant at will Compensation for loss of secure Eligible for state assistance for tenancy and disturbance based on length relocation and other related services of tenancy and present rights. (post 1991 contract)

SquatterCom pensation for loss of tenancy Project-specific amicable arrangements will be reached. If entitled, appropriate No legal rights under national law. assistance may be provided through the Compensated for all lost assets, Displaced People's Fund.

- 149- Rights Rights Summary of Losses Eligibilityfor Compensetion under the Other Stats assistance terms of existing laws to be determined by Expropriation Commitbte Business Property Owner & entrepreneur Full monetary compensation for Eligible for state assistance for disturbance, loss of property, assets relocation and other related services. and busmess. Transition costs sufficient for reestablishing a similar business in a similar setting.

Absentee Owner Full monetary compensation for Not eligible for state assistance property. Sufficient for replacement. Rented property

Contract tenant of a business Full monetary compensation for loss Eligible for state assistance for of business, assets, rental location to relocation and other related services permit reestablishment of a similar activity in a similar situation elsewhere.

Tenant at will Compensation for loss of business Eligible for state assistance for and assets to permit reestablishment relocation and other related services of a similar activity elsewhere.

Squatter No legal rights under national law. Project specific assistance will be arranged and specified in the RAP to ensure no loss of assets, livelihood or hardship or diminution of standard o living.

- 150 - EXPROPRIATION PROCEDURES FLOW CHART

Prepare an Expropriation Plan Cadastral map Transcript of land registry of each affected plot Prepaetedb xprpnsofbuidingsnla Limits ofproposed project affected by exprpnation Affected plots

ExprEpnation Decrec by nigned concemced Manristeer PresidentofCouncil ofM inisters Presidentofthe Republic

Expropnation Decree DeerceFm tted to an ExpToprianton publish ed in th e O ffic jal G azenc _eComm ineeoftoeer + anpaspsr FAeld Inuspection engmeern assessorCommittee + checks the status | Expmpnatbon Committee invites of the lot Expmpnaton~ ~ ~eConunhveigts.e ~ ~ he prfrDelorprcarxroraioeschceownersto cownersd a firstmare askedgwetreetingDuignsetoth (lgl+ilglaadsnatr) FSrstExpropriation Meeting presence of renters and Ownersarto rsentreportallwhoe occupants have nghts. Owners are asked whether (legal, hilegal.and squaters), they prefer full or partal expropnationes checked

T popatio omitee A rentermust presentchis Sexcond ExApropnation M eet o wg contrsct and docump nts, Ownersto presentareint inother 3d to siuppottfcaionhdatm contractsNwonkif nVh supportmdng nlec3ric%ity the owner faeled to report and waterbdils dated priorto him expropnatmon decree

| ThComittem cetsto decidc the amountofindemnitybroken down | land + buildings + trees

The Expropnation Committee issues an "assessment report" which decides the amountto bepaid to each ownerorrenter Decisionis notified tothe ExpB pnaeong Administration and to ownersand renters A II partis s have the rightto appealwithin 30 days from theirnotification date

Concenmed partes are nmforned thatthey ositp D cision and deposit o f AAppeal as.indemiidesmn moniescfication in an escro w csme mset-eaccount Expmpnation Appeal + ~~~~~~Committee . . ~~~~~~~~Take-OverDecision signcd by Director Owner must appoint a Lawycr Take-Over decision is notified to the Cadastral G eneralI H ea d o f D epartm cnt o f and p ay s a lu mpsu m fe eo f A dm mis tration ExpTopnating Administmation LL3 5,000 No time lim IttO + reach an Appeal Decision Ind-mnaies ar- p..dI 100% payment forvacant land if Admin. has no appeal and take-over is executed

75%f A m i. h|snaapclbu Appeal D ecisio n

|Take-Over is executed within l5 days of date of | If A dm in. a ppeals, 50%1i s p aid |Notification for Vacant Land and withtin 30 days 25% upon appeal decision | for Lan d a nd Bulddmng () 25% upon take-overand removingl

| Bala nce of Indemn ity le xtra 'S")| (') mmry of De fenDsec n ta ke-over befo re willw b e p aid accord ing to Appeal | pa ymc nt of de mn ita lDecision

-151 - Attachment 2: Resettlement Actionm PRn Tor Xhan ER Askzir (Tripoli)

1. The treatment of Khan el Askar requires the resettlement of a small number of families and businesses (initially about 28) in and around the area. CDR has submitted a detailed Resettlement Action Plan to the Bank for appraisal. The proposal to upgrade this structure is highly justified, as the Khan is the center-point of the northern "gate" to the old town, a historically and architecturally significant and strategically placed building owned by the municipality and situated on municipal land. It is the keystone to the rehabilitation of the old town.

2. The inhabitants who were originally settled in the Khan as a short term expedient after the 1958 floods, pending provision of alternative housing, would all benefit from secure tenancy in affordable social housing to be constructed by the municipality on an adjacent plot that it owns. The building would also house commercial premises that would be displaced, except for rooms used purely for storage that would be relocated to a refurbished municipal storehouse unit also on the adjacent plot.

3. The resettlement plan would be implemented in close consultation with the affected persons, and institutional arrangements made for the handling of grievances.

4. Subsequent phases of resettlement and other scattered instances would be covered at the appropriate time by RAPs to be submitted to the Bank.

- 152- Additional Annex 14: Municipal Sector LEBANESE REPUBLIC: CULTURAL HERITAGE AND URBAN DEVELOPMENT

1. The project is intervening in 5 municipalities of Lebanon: Baalbeck, Byblos, Saida, Tripoli, and Tyre, 3 of which are also the seat of the federation of municipalities (Byblos, Saida and Tripoli). At present in Lebanon, there are 711 municipalities and 13 municipal federations.

Current Administrative Structure

2. There is a strong tradition in Lebanon of local self government dating back to Ottoman times. The 1877 Ottoman Municipal Law created a system of municipal councils. As early as 1887 self rule was established in every village and town.

3. This tradition of separating the central and local systems of governance was interrupted in the times of the French Mandate ( 1918-1943), which introduced a highly centralized system of government. A 1922 law established centralized control through a provision that allowed citizens to elect councilors to a municipal council, but required that the president of the council be appointed from among the councilors by the central government for a one-year tern.

4. A post independence (1943) and post-war (1990) era is characterized by the concern to restructure the intergovernmental framework to reaffirm a key role of local self government. The concept of an independent municipal sector was confirmed in the Municipal Law of 1977 and then reaffirmed in the Charter of National Reconciliation (Taif Accord approved by Parliament in 1990).

5. The Accord added a new preamble to the Constitution endorsing administrative decentralization of the central government combined with strengthening of municipal powers and responsibilities.

6. Municipal bodies are the only form of administrative decentralization in Lebanon. They enjoy moral personality and administrative and financial autonomy within the limits defined by law. The main laws governing municipalities in Lebanon are: a) the Municipal Law; b) Distribution of the Independent Municipal Fund Law; c) Accounting Principles for the Municipalities and the Federation of Municipalities Law; d) Municipal Taxes and Fees Law.

. Law and Decrees Name or the Law and Decrees Key Feaitres of the Law and Decrees Decree Law 118/1977 Decree on Municipalities General rules governing municipalities. Decree Law 1917, Basis for the Distribution of the Provides the rules for distributing the April 6, 1979 Independent Municipal Fund IMF. Decree Law 5595, Accounting Principles for the Decree 5595 on Accounting Principles September 22, 1982 Municipalities and the Federation for the Municipalities and the of Municipalities Federation of Municipalities Law 60/1988 Law on Municipal Taxes and Fees Defines Municipal Fees and Taxes collected directly by the municipality or by the state

7. There are two levels of deconcentration in Lebanon: admninistrative regions, or mohafazat (6). Each mohafaza, in turn, is subdivided into caza, that total 26. The mohafaza does not enjoy any legal personality or independent authority. It is an administrative subdivision formed by the central government and headed by a chief administrator, or mohaflz, appointed by the Council of Ministers upon the recommendation of the Minister of Interior and Municipalities (MOIM).

- 153 - 8. The duties of the mohafiz involve local implementation of policies established by the central government. The mohaflz represents all the ministries except for the Ministry of Justice and the Ministry of Defense.

9. Like the mohafaza, the caza is a geographical subdivision and enjoys neither legal personality nor financial autonomy. Of the 26 caza, 5 are administered directly by the mohaflz because they are capitals of their respective muhafazat. The remaining caza are administered by a qaimmaqan, equally appointed by the Council of Ministers upon recommendation of the Minister of Interior and Municipalities. The qaimmaqan performs in his caza the functions similar to those performed by the mohafiz, except that he does not represent the various rninistries of the central government

10. Every city, town and village in Lebanon is allowed a municipal authority provided that its population exceeds 300 persons and its annual revenues exceed LL 10, 000 ( US$ 6.67). Municipal authorities consist of two major bodies: a decision making body, represented by the Municipal Council (MC), and an executive authority embodied in the MC President.

Responsibilities of the Municipal Counci

11. The 1977 law gives a broad delineation of the role of municipalities. It stipulates that any work having a public character or utility within the area of the municipality falls under the jurisdiction of the MC. The MC is elected directly (without regard to confessional voting), and its members serve six-year terms. The size of the MC varies by population and includes a president (mayor) and vice president, elected by the councilors from among their membership ( the draft law of municipalities proposes direct elections for the mayor). Local elections, for the first time since 1963, were held in May and June 1998. Beirut is an exception: of its 24 MCs, 16 are elected and 8 appointed (by the Council of Ministers). Furthermore, the president of the Beirut Municipal Council does not enjoy executive powers, which are vested in the muhafiz.

12. The MC may be dissolved if it loses three-fourths of its members. Once dissolved, the municipality is administered by the mofafiz or qaimmaqam (or his representative). This representative may be, but need not necessarily be, elected by the Council .

13. Articles 47 to 52 of the legislative decree 118 of 1977 list, among many, the following responsibilities of the MC: - Formulation and adoption of the municipality's annual budget; - Determination of taxes and fees to be collected as allowed by law; - Management of municipal funds; - Public health and safety: establishing slaughterhouses, fire-fighting and rescue services; - Town planning: roads, public parks, etc.; - Infrastructure development: sewage systems, streets and roads, power and street lighting; - Services: public transportation, infirmaries and hospitals, other social services; - Education: establishing or helping public schools, extra-curricular learning, etc.; - Environmental: developing and using the municipality's natural resources.

14. These are some of the most important municipal responsibilities. The municipality could take on additional responsibilities such as establishing museums, theatres, and markets, and providing low-cost housing. Few municipalities in Lebanon, however, have the means and capacity to perform even a fraction of these responsibilities.

- 154- 15. Presently, the overall level of capacity and participatory decision-making of the municipal councils is low. Around 50% of municipal councils do not form any specialized commissions to deliberate on a wide range of their responsibilities. Among most common commissions that are formed are those dealing with public works and infrastructure ( 57% of total number across the country), acquisitions ( 25%) and environmental issues ( 27%). Tourism, youth and heritage commissions appear in 3% of the municipalities. Most commissions that do exist consist exclusively of council members and do not involve other representatives.

The role of the Municipal Council President

16. The Municipal Council President performs, according to articles 74 to 78 of the legislative decree 118 of 1977, the following functions: - Managing and supervising the municipality; - Preparing the municipality's budget; - Controlling the municipality's treasury, including its income; - Controlling the municipality's assets, especially real estate (rents, sales, purchases); - Auditing the municipality's accounts; - Representing the municipality before the courts; - Providing social assistance.

17. To execute the decisions of the MC, the President of the MC has administrative, security and technical staff, resorts to the staff in caza, and hires contractual employees. Salaries of municipal employees are pegged to central govemment salary schedules, generally at the low end of the range. At present, there is a centrally imposed freeze on local hiring, resulting in low levels of staffing and organizational structures that are out of date.

18. On average 96% of municipal staff are men. The majority, or 66% of municipal staff, occupies administrative positions (secretaries, accountants, tax-collectors, heads of administrative and financial sections), 31% are security staff (policemen, guards), and only 3:3% represent technical staff ( inspectors of public works, public health inspectors, medical personnel, lawyers). For example, the municipality of Baalbeck employs 64 administrative staff, 27 security staff and 3 technical staff ( one head of the technical unit, one public works inspector and one public health inspector). Total technical staff for the whole caza of Baalbeck is 7 people, including one lawyer.

Municipal Federations

19. Municipal federations which enjoy moral personality and financial autonomy have been established among interested municipalities within contiguous areas to consolidate municipal capacities in provision of services that enjoy the economies of scale, for example solid waste disposal. A federation of municipalities is created or abolished by a decree from the Council of Ministers either through an initiative from the Minister of Interior and Municipalities or upon the request of municipalities. There are currently 13 such federations, including: Al-Faiha' (comprises Tripoli), Sidon-Zahrani (comprises Saida), Caza Jbayl (comprises Byblos).

20. The federation funds are derived from the following sources: a) 10 % of the actual revenue of the constituent municipalities for the previous year; b) an additional percentage from the budget of the municipalities which benefit from a specific project of common benefit, c) to be determined by the federation and approved by the Minister of Interior and Municipalities; d) aids and loans; e) a share from the Independent Municipal Fund for the federation; f) a State contribution to the federation budget

- 155- (Funds are distributed between federations by a decision from the Minister of Interior and Municipalities); h) Grants and bequests.

Authorities and Control

21. Despite its moral personality and administrative and financial autonomy, the government exercises both administrative and financial control over the municipalities through various ministries and agencies. (a) Ministry of Interior and Municipalities (MOIM): Responsible for planning, budgeting, and spending municipalities' revenues as well as for providing technical and financial support to municipalities when needed. More specifically, MOIM, through its Chief Controller (CC), exercises its control over the following: control of the budget and its adjustments; control of expenditures contracts; control of revenues; control of financial operations and transactions; control of infringement or violation; financial audits; control over the settlement of accounts of the budget. In so far as the Ministry of Interior it is also responsible for organizing and supervising municipal elections, for providing internal security. (b) Civil Service Board (CSB): Responsible for overseeing all municipal decisions related to employees, administrative organization, and salaries in large municipalities. (c) Bureau of Accounts (BOA): Responsible for financial control over large municipalities, including pre- and post-audits. The central government may appoint a Chief Controller to act as financial controller over municipalities. All large municipalities have a CC. The Bureau of Accounts is an administrative court, responsible for the financial jurisdiction, and the supervision of the public funds and the fimds deposited in the treasury. With respect to revenues, the Chief Controller who settles the municipal transactions, transfers the transaction to the Bureau of Accounts for administrative pre-auditing. This generally includes either transaction of revenue concession when the value exceeds LL 5 million or transaction of real estate sale when the value exceeds LL 5 million. With respect to expenditures, the Chief Controller transfers the municipal transaction to the Book of Accounts for prior approval. These include: - Transactions of equipment and affairs which exceeds LL 75 million. - Services transactions which exceed LL 5 million. - Consent agreements (incl. rental contracts) which exceed LL 50 million. - Transactions of equipment and affairs which exceed LL 75 million. - Grant and Aid transactions which exceed LL 15 million. - Amicable conciliation of settlement of disputes and allegations which exceed LL 15 rnillion. (d) General Directorate of Urbanism (GDU): A unit of the Ministry of Public Works, is responsible for urban planning. Its authorization is required for any real estate or infrastructure development. (e) Central Inspection Agency (CIA): Although article 137 of decree 118 excludes the legislative and executive powers in municipalities from the control of the CIA, this does not prevent MOIM from delegating the CIA to inspect the municipality. 69 Ministry of Justice: The control of the Ministry of Justice is restricted to a single issue in financial control that is Conciliation, unlike the financial control exercised by the General Controller or Bureau of Accounts.

- 156- Framework for Expenditure Assignment

22. According to the 1977 law, all works having a public character or utility within the boundary of the municipality falls under the jurisdiction of the Municipal Council. The expenditure assignments include the following: Table 1: Expenditures assignment

,.,;, ~t-i, -~By-Law - In- realityt a -. Si "- - Street cleaning, garbage collection; - Street cleaning; - Ensuring public health and safety; - Road asphalting; - Establishing slaughterhouses; - Street lighting; - Providing fire-fighting and rescue services, etc.; - Setting up road signs - Town planning: roads, public parks, etc.; - Rehabilitating and extending the sewage - Infrastructure provision: sewage systems, and water drainage systems; streets and roads, power and street lighting; - Assisting local cultural, handicapped, and - Provision of public transportation, infirmaries civic associations. and hospitals, other social services, - Establishing and supporting educational institutions i.e. extra-curricular learning, etc.; - Developing and using natural resources

23. Many of the expenditure assignments prescribed by law overlap with activities of the central government ministries and agencies. The law does not provide a clear delineation of what central government agencies/ministries can and should do, and what municipalities can and should do.

24. In reality, expenditure assignments of the municipalities in Lebanon are predominantly limited to the maintenance of streets and some aids to the local associations. In the case of some of the larger municipalities, there is also spending on solid waste landfills, opening secondary roads; public parks; forestation; municipal sport arenas.

25. The chief controller is appointed by MOIM, but receives his salary from the municipalities that he audits. The Chief Controller approves all expenditures to be incurred by the mayor, monitors any adjustment of fees imposed, tax schedules, tax collection, and endorses the next year's budget.

26. According to the law, the expenditures of a municipality consist of six sections: (a) Administrative Expenses - this includes salaries, compensation, telephone, clothing, rent, office supplies. (b) Equipment and Maintenance - Office cleaning, fuirniture, municipal equipment (vehicles, etc.), garbage collection, pest control, fuel, transportation, daily wage workers, road lighting maintenance, utility bills, road maintenance, water network maintenance, etc. (c) Development Projects (capital investments): new buildings and structures, new road lighting; new sewage networks, water drainage, sidewalks, roads, canals, gardens, playgrounds, etc. Studies, compensation for expropriation, and purchase of real estate and buildings. (d) Services and Assistance: health assistance, help to the needy, charitable organizations, cultural, sport, social, labor, and educational activities, and scholarships, help to schools and libraries, help to projects undertaken by other agencies and/or ministries.

- 157- (e) Miscellaneous: receptions and festivals, legal expenses, share in federation budget, loan service, other. 69 Contingency Reserves.

27. There is a wide gap between what the municipalities are allowed and expected to deliver by law, and what they are actually able to do. Most development projects are being undertaken not by the municipality, but by MOIM and/or CDR, using funds from the Independent Municipal Fund, or grants and loans that have been secured by central government agencies or ministries.

28. In addition, many projects within the territory of the municipalities, are conducted by other line ministries (e.g. Health, Education, Public Works, Social Affairs, Ministry of Interior, Energy and Water Resources, Agriculture, Environment, etc.). In these cases, the relevant ministry generally coordinates the project with the municipality, but it is the Ministry that bears implementation responsibility.

29. In the expenditure process there are a number of bottlenecks emanating from the several layers of financial control and oversight that affect the municipalities. For current expenses, as noted above, the oversight mechanism includes the Chief Controller (all expenditures) and the mohafiz (LL 350,000 and above). The 55 largest municipalities, that are also under the supervision of the Bureau of Accounts, need to gain the approval of that Bureau for all expenditures above LL 75 million.

Table 2: Procurement approval thresholds

LL I - LL 350,000 - mayor - Chief Controller LL 350,000 - LL 75,000,000 - mayor - Chief Controller - Mohafiz > LL 75,000,000 - mayor - Chief Controller - Mohaftz - Court of Accounts

Framework for sub-natnional revenue

30. Municipal functions are primarily financed from seven sources of revenue: (a) Municipal taxes and fees collected directly by the Municipality from the taxpayers; (b) Municipal taxes and fees collected by the State or public institutions, on behalf of the municipalities, and which are to be distributed directly to each municipality; (c) Surtaxes collected by the State on behalf of all municipalities; (d) Transfers and Loans; (e) Yield from municipal properties, including the yield from land owned by the municipalities. (f) Fines; (g) Grants and bequests.

- 158- Municipal taxes and fees collected directly by the Municipality

31. In the first category of revenue, among the taxes and fees collected directly by the municipality, tax on the rental value of built residential and non-residential real estate, surtax on development and maintenance of sewage system and pavements, and fees from construction and rehabilitationpermits are the most important.

Table 3: Municipal Taxes and fees collected directly by the Municipalities

Tax/Fee Base of Tax/fee Tax/Fee - Exetnpflon. i aB.sseiment Tax on the rental value of built - registered - 5% for housing units - Govermment and public real estate contract - 7% for commercial agencies - assessment by units - Property used for religious Articles 3 - 18 rental value purposes committee - Property used by embassies and consulates - Property used by UN - Property used by NGO with an order from CM Surcharge on development and - Sales value in m2 - 1/1000 for new property UN maintenance of sewage system - 1.5% for occupiers and pavements Article 78 - 80 Fees on construction permits - Sales value of - 1.5% for I m2 =< Articles 69 - 80 the real estate in 25,000 LL m2 - 2% for I m2 between 25,000 LL to 100,000 LL - I% for I m2 > 100,000 LL In addition, 5% for using public property, and 10% to be spent as follows: If in Beirut, 5% goes to Beirut Museum, and another 5% goes to public restrooms and gardens. Anywhere else, 10% goes to schools, public housing, clinics, libraries

Municipal taxes

32. All rental contracts must be registered in the municipality. A rental value committee is formed to assess the property in four cases: (a) there is no rental contract; (b) the rental value is in question; (c) the property is used by the owner; and (d) the property is used by another party for free or for a low rent. The rental value committee is formed by the mayor. It is usually headed by a member of the MC and includes an official representing the MOF, a local expert on contracts in the area or an engineer from the GDU, a reporter who is a municipality employee. It is the duty of the committee to inspect the property by evaluating it within the context of the neighborhood and with neighboring property which is being

- 159 - rented under similar conditions, and to specify the criteria used for the valuation. On the grounds that there is no lease rent being generated, vacant properties are tax exempt or pro-rated as appropriate for partial year vacancies.

33. In well-run and smaller communities, compliance with the registration requirement is said to be high. In larger communities, however, there is a great deal of leakage, particularly in the lower-income, lower property-valued sections of the jurisdiction, due in large part to the lack of personnel to carry out the assessment process and/or municipal discretion to grant an additional exempt status.

34. Until recently, lifetime leases based on nominal amounts at the time of the initial lease were common. Current law still recognizes old leases in place for tax purposes which hold until the death of the tenant or the ability of the landlord to vacate the tenant from an undervalued property, and for new leases, a three-year contract. In any given year, adjustments may be made subject to strict rent control guidelines. Rents may increase by an amount equal to the percentage increase of change in the nation's minimum wage. For property tax purposes, increases in taxable rental values are limited to 50 percent of the percentage change in the minimum wage. Thus, the system combines strict rent control with a cumulative wedge between lease values and taxable values.

35. For estimating fees on constructions permits, the sales value of the real estate is determined by a committee formed by the mayor. It is generally headed by a member of the MC, an engineer from the municipality or an engineer from the GDU, and an employee from MOIM.

36. The rate and the base of the taxes/fees are deternined by the Central government and the municipality has only the right to collect them.

37. Generally, the appropriate department in the municipality prepares tax schedules for the current year, including the fines. The tax schedules are prepared yearly specifying the fee or the tax, its value, and the due amount as of December 31 of last year. The municipality is permitted by law to collect the taxes/fees that have not been charged for up to 4 years of the date. Usually, the municipality must publish the tax collection period in an official newspaper, two daily newspapers, to announce it on the radio for two consecutive days, and to distribute notices. Tax collection initially begins two months from the date of announcement. Any amount that has not been paid after its due date is subject to a 2% fine for every month until it is paid. A warning is published in two daily newspapers and in some cases it is announced on the radio and a grace period of 15 days is given. After that date, the municipality is (by Iaw) able to confiscate personal and non-personal property and auction it.

38. For the complete list of local taxes and fees see below the budget tables for the 5 project municipalities.

Municipasl taxes and Tees collected by the State or publi and private institutions

39. The second major source of municipal revenue consists of revenues collected by the state or public administration. These surtaxes include the following: - 3% surtax on built real estate tax; - 10% surtax on telephone subscription and phone calls. It is collected by the Telephone Administration; - 10% surtax on electricity consumption fees. It is collected by Electricite du Liban; - 10% surtax on the fees on value of water usage. It is collected by the water authority.

- 160- 40. The transfer of the amount collected by the different public administrations takes place directly between each municipality and the agency.

41. Concerning the revenues collected by the private institutions, these include: - Fees on insurance premiums, except for life insurance, collected by the insurance companies; - 10% municipal tax on cellular telephone use from gross revenue.

Surtaxes collected by the State on behalf of all municipalities 42. On behalf of all the municipalities and the municipal federations, the state collects 13 surtaxes and fees in a fund known as the "Independent Municipal Fund (IMF) to be later distributed to the municipalities according to a formula. 43. The IMF account is in the Treasury unit of MOF and deposited in the Central Bank. Any use of the money in the I1vMF account requires the approval of both the MOF and MOIM for each withdrawal. To facilitate matters, the MOF has opened another account under MOIM's name in the Central Bank. The treasurers of MOF and the General Customs Directorate are expected, according to article 3, to deposit monthly all the surtaxes and fees collected on behalf of all the municipalities in the IMF and forward a copy of the deposits to MOIM. 44. No more than 25% of the IMF is channeled to Municipal Federations and at least 75% must be channeled to all Municipalities. The 25% is to be allocated for the federations in the following way: 25% of the 25% is proportionally distributed to all federations according to population to support the budget of the Federations. Then, 75% of the 25% is set aside for development projects within the jurisdictions of the federations. Consideration is given to the development needs of the area and priority is given as well for studies and for projects with completed feasibility studies. 45. On the other hand the 75% allocated to the municipalities are divided, according to the law, in the following way: 70% of the 75% are distributed to the municipalities to support their budgets according to the following formula: 60% is distributed according to population (estimates of 1979) and 40% according to the revenues collected directly by the municipality in the last two years. The other 30% is devoted to development projects. 46. However, despite the above, in reality, the IMF is actually distributed according to the following formula:

Amount in the Independent Municipal Fund

I Deduct salaries and Public Works

75% 25% for Municipalities for Development and Federations of Projects Municipalities

- 161 - 47. Although there is accounting for the sums delivered from the IMF to federations and municipalities (the 25% indicated above), there are no figures available for the other 75% devoted to development projects.

48. Although, according to the laws, there should be a high level of intergovernmental transfer; in practice, most municipalities are surviving on local resources with only a minor contribution from the national government, that are still sorting out the issues of arrears and cross-exposures, accumulated during the time when the IMF distributions were withheld.

49. Decree 7425 of 1995 allows the Council of Ministers to entrust the CDR, the Beirut Council for Large Projects (CEGPVB), and other agencies with development projects that benefit all the municipalities to be financed from the IMF. In effect, MOIM has been using this development project fund to finance development projects in the municipalities via the CDR or other independent contractors.

50. It is important to note, however, that many of the development projects that are being implemented in municipal areas, however, come from outside the municipal budget-either directly from MOIM and the IMF, or through other ministry and national agency projects.

51. The bulk of Lebanon's central revenues (data from 2001) is derived from excise and VAT taxes (24%), customs duties and levies ( 20%), and tax on income, profits, and capital gains (15%).

52. The impetus for central tax reform and VAT introduction in December 2001 was driven in large part by the heavy reliance on customs duties. Although the average tariff rate tends to be low by both regional and developing country standards, duties are prodigious revenue producers owing to Lebanon's large import base (66 percent of GDP, compared to exports of only 9 percent of GDP). But in the long term, these customs duties are going down: Lebanon has become a signatory to the European Union's New Mediterranean Policy (1995), which is designed to increase EU-Mediterranean economic, political, and cultural ties. The Euro-Med agreement has had a direct impact on the structure of Lebanese municipal finances due to the fact that customs levies account for the bulk of the central government's revenues earmarked for the central-local fiscal transfer through the IMF and other projects.

53. At present, local governments are not allowed to borrow. If a municipality ends its fiscal year in deficit, the MOF will negotiate an advance to the local government, and then reduce the IMF distribution to the municipality in the subsequent year. There is, however, room for MOF and the municipality to negotiate the amount and debt payoff.

54. Conversely, when municipalities show surpluses they must place them in the Central bank, which pays zero interest on the surplus accumulation. Prior to 1996 the Banque du Liban paid 2 percent interest on such surplus amounts; but this practice was suspended in 1996.

System of Financial Accounts

55. The budget is planned for a fiscal year running from January 1st until December 31st. But since revenues and expenditures are recorded on a cash basis where revenues are entered when cash is received and expenditures are recorded when cash is paid, the fiscal year is in practice terminated on January 31st of that year to take into consideration the receipts and payments that fall after December 31 st.

56. The budget is prepared by the President of the Municipal Council based on the estimate before the month of July of every year. The budget must be accompanied by a report explaining the basis of the estimates as well as the actual revenues and expenditures of the last year. The budget is submitted to the

- 162- Municipal Council which has until the month of September to approve it and then it is passed on to MOIM to give its final approval by the end of November of that year.

57. The financial data for municipalities are maintained on a single entry basis. The municipalities do not produce a balance sheet and are not required to do so by law.

58. The decree defines current and capital expenditures respectively and municipalities do report their budgets with distinctions between current and capital expenditures, even if imperfectly.

59. Only a handful of municipalities manage their finances by computer, the rest manage by hand. MOIM is investigating the development of common financial management software that could be used in municipalities, and that would also facilitate MOIM's supervision of municipal budgeting processes.

Critical Issues of Municipal Sector

60. During the period of civil war much of the country's infrastructure and productive assets were destroyed. Lebanon's human resource base was devastated not only by the loss of life and war-inflicted disabilities, but also by dislocation of 800, 000 and emigration of about 200, 000 people, or about a quarter of today's population.

61. The lack of recent census (the last census dates back to 1932), combined with the distortion of domicile by registration rather than by residence, has important implications for the fiscal structure and intergovernmental reform: there is a mismatch between voters and beneficiaries of municipal services and any attempts to design equalizing grants are made more difficult by lack of accurate population numbers.

62. The urgency of Lebanon's reconstruction programs drives its economic and fiscal policy. The central government is largely focused on the country's macroeconomic situation with large fiscal deficit and public debt, and problems of external and internal balance. The macroeconomic situation is reducing the attention given to sorting out the intergovernmental administration and fmnance system, mostly to the disadvantage of the municipalities, who can not perform the responsibilities they have according to the law. At the same time, increasing the local capacity and the local revenue collection could not only contribute to the self-sufficiency of the municipalities, but also increase overall mobilization of public revenues, and significantly relieve the need for central spending on infrastructure and social safety net. The issue of municipal access to credit is also becoming increasingly important, particularly in case of larger municipalities.

63. There is a fundamental need for clarification of the roles and responsibilities between the central and local governments in the delivery of services, and streamlining the complex system of ex ante control and oversight by central bodies over decisions. While local governments can provide a broad range of services, in practice most investments in service are undertaken by central authorities. This situation reduces allocation efficiency and makes local governments largely reliant on central expenditures for public services, in the time of heavy deficits.

64. The main issues in the municipal sector can be, therefore, summarized as follows:

o Limited decision-making autonomy of municipalities. Too many agencies and authorities providing oversight function over the municipalities. These agencies and authorities include: the Chief Controller, the qaimmaqam and mohafiz, Bureau of Accounts, Civil Service Board, Central Inspection Agency, Ministry of Justice, Ministry of Finance.

- 163- Expenditure and revenue are controlled in detail by oversight authorities. This virtually eliminates the autonomy that municipalities are supposed to enjoy by law, and that is necessary for efficient municipal administration and for public accountability.

O Too many administrative tiers and excessive territorialfragmentation. Four tiers of administration-municipality, casa, Mohafaza, national level-are excessive in a small country such as Lebanon and cause unnecessary administrative delays. At the same time, the large number of municipalities (711) in such a small country means that many of these municipalities are tiny and do not have the resources to be sustainable and effective. More federations and other modes of cooperation among small municipalities should be encouraged.

O Young municipal councils with insufficient executive support. Municipal councils were elected for the first time in 1998 after a long hiatus (since 1963) in local elections. They are facing a heavy backlog of local development issues, while their modus operandi are not efficient. Municipalities are generally understaffed and under-equipped, especially in the technical departments.

o Inefficient local revenue structure and low collection rates. The municipal taxes and fees are numerous. The large number of taxes and fees makes collection complicated and difficult; tax evasion is common. Additionally, many of these taxes and fees are outdated or outmoded.

o Low autonomy in adaptingrevenue collection to local conditions. The margins set by the municipal tax and fee law specifying the minimum and maximum within which municipalities can set their taxes and fees are generally quite narrow. This reduces the autonomy and accountability of the municipality, and reduces its ability to adapt to local conditions.

o Distortions in government transfers mechanism. The original objectives under which the IMF was established was to support the municipal budgets; in practice, this has now been overtaken by support for particular projects. There is a growing gap between the original IMF legislation current practice. Government transfers are irregular and unpredictable that prevents proper programnuing and budgeting by the municipalities.

O Low control over revenues from utility surcharges. Revenues from utility surcharges (electricity, water, telephone) are relatively unpredictable and discretionary from the perspective of the municipalities (they do not know exactly what is due to them and whether the right amount is being remitted to them). This means that the municipalities are not able to plan for this income in their budgets.

O Central-local overlap in expenditure assignments. Expenditure assignments between local and national administrations are not well-defined. The municipality, by law, has responsibilities over all types of public projects within its territory, from solid waste management, to health, environment, sport, education, etc. The same responsibilities are also assigned to the various national line ministries and agencies. Overlapping responsibilities, limited and erratic revenue base, combined with expenditure controls prevent proper planning and delivery of municipal services, the cost recovery for which is also very low.

- 164- o Outdated modes of accounting. Current accounting systems are cash based, and not accrual based. They are also single-entry and not double-entry. This is not an accurate measure of net income and expenditure for the year and is an improper mode of financial accounting.

o Low level of computerization and database management. There is a lack of data and infornation regarding the municipal sector in Lebanon as a whole, and a total absence of automated procedures in the daily activities of municipalities.

Statistical Tables

Table 1. Administrative status of the 5 project municipalities Date of Municipality Caza Muhafaza - Federation Number of members establishment - in municipal. council 1898 Baalbeck Baalbeck Bekaa 21 1913 Jbayl Jbayl Mount-Lebanon Jbayl (1981) 15 (13 municipalities with seat in Jbayl) 1875 Saida Saida South Lebanon Saida -Zaharani (1978) 21 (capital) (12 municipahties with seat in Saida) 1877 Tripoli Tripoli North Lebanon Al Fayha (1982) 24 (capital) (3 municipalities with seat in ______~~~~Tripoli) 1880 Tyre Tyre South Lebanon 21

- 165- Table 2.1 Baslbeck Municipal Budget (amounts in LL million)

Baalbeck 1999 1999 2000 2000 2001 2001 projected actual proJecd actual proJeCted actual Revenues Total Revenues Collected by Municipality 1,101.66 757.41 1,287.87 831.43 1,243.37 659.18 Total Revenues Collected by Gvt. Agencies, 24.0 24.02 0.00 0.00 457.87 457.87 Ministries & Public Utilities . Govermment Transfers 900.0( 900.00 2,318.90 2,318.90 1,044.00 1,044.00 Total Vanous and non-ordinary revenues 552.95 426.43 1,369.80 1,252.61 2,860.50 2,716.03 .... retained earnings 379.23 379.23 1,181.85 1,181.85 2,658.41 2,658.41 Total Revenue 2,578.63 2,107.86 4,976.57 4,402.95 5,605.74 4,877.08 Expenditures I Total wages and administrative compensation 675.00 445.90 750.00 546.25 875.00 717.14 Total rent and operating costs 300.00 431.21 400.00 918.66 873.00 1,290.02 Total other current expenditures mc. slaughterhouse 0.0( 0.00 0.00 0.00 0.00 0.00 Total current expenditure 975.00 877.11 1,150.00 1,464.91 1,74S.00 2,007.15 Total Capital Expenditure 300.00 78.53 690.00 173.39 1,042.00 332.27 Miscellaneous Expenditures 19.0( 51.19 148.00 101.18 395.00 180.13 previous years expenditure 10.0 1.56 0.00 0.00 0.00 0.00 Reserves 350.00 0.00 500.00 0.00 800.00 0.00 Total Expenditure 1,754.00 1,008.40 2,488.00 1,739.47 3,985.00 2,519.55

Budget Deficit/Surplus 824.63 1,099.46 2,488.57 2,663.47 1,620.74 2,357.53

Share of Property Tax in locally collected revenues 7.8% 9.6% 15.3% Share of Property Tax in total revenues 2.8% 1.8% 2.1% Collection rate of property tax assumpton n/a n/a n/a 15% Share of entry fees to tounst site in locally collected 59.10/ 85.9% 33.8% 52.3% 38.6% 72.8% revenue Share of locally collected revenue in total revenue 35.90/ 18.90/ 13.5%

Wages, salaries and comnpensation in total current 630/ 45% 58% 32% 41% 29% exp. Total current exp in total exp 56% 87% 46% 84% 44% 80% Maintenance in total exp 120/ 38% 12% 48% 19% 41% Maintenance to capital exp 710/ 484% 43% 482% 72% 312% Total capital exp in total exp 17Y 8% 28% 10% 26% 13% Actual maintenance to projected mnaintenance 179% 280% 138%

- 166 - Table 2.2 Byblos Municipal Budget (amnounts in LL million)

Byblos 1999 1999 2000 2000 2001 2001 projected actual projected actual projected actual Revenues Total Revenues Collected by Municipality 838.5 452.15 806.17 391.44 831.24 412.28 Total Revenues Collected by Gvt Agencies, 424.65 424.65 520.67 520.67 633.11 633.11 Ministries & Public Utilities Government Transfers 260.0( 260.00 556.07 556.07 267.00 267.00 Total Varnous and non-ordinary revenues 1,905.11 616.15 1,967.43 453.69 2,203.31 406.58 ...previous years revenues 1,469.80 180.84 1,675.37 161.63 1,928.46 131.72 ...retained earnings 397.85 397.85 275.34 275.34 252.23 252 23 Total Revenue 3,428.31 1,752.95 3,850.33 1,921.88 3,934.67 1,718.97 Expenditures Total wages and administrative compensation 760.0( 571.15 635.00 410.27 667.00 518.76 Total rent and operating costs 1,485.0 662.33 1,780.00 937.94 1,565.00 770.68 Total other current expenditures inc. slaughterhouse 0.0 0.00 0.00 0.00 0.00 0.00 Total current expenditure 2,245.0 1,233.47 2,415.00 1,348.21 2,232.00 1,289.44 Total Capital Expenditure 795.00 82.17 760.00 121.51 Miscellaneous Expenditures 555.0( 168.45 675.00 238.28 676.00 260 92 previous years expenditure 0.0o 0.00 0.00 0.00 0.00 0.00 Reserves 75.0( 215.0C 332.00 Total Expenditure 2,875.0 1,401.93 4,100.00 1,668.65 4,000.00 1,671.86 1~~~~~~~~~~~~~~~~~~~ Budget Deflcit/Surplus 55331 351.02 -249.67 253.23 -65.33 47.11

Share of Property Tax in locally collected revenues 59.1/ 34.5% 65.1% 41.4% 64.8% 37.7% Share of Property Tax in total revenues 11.70/ 7.3% 11.0% 6.8% 11.1% 7.4% Collection rate of property tax 31.4% 30.9% 28.9% Share of entry fees to tounst site in locally collected 41.3% 40.3% 29.7% revenue Share of locally collected revenue in total revenue 25.8/ _ 20.40% 24.0%

Wages, salaries and compensation in total current 190/ 33% 11% 17% 13% 20% exp. Total current exp in total exp 78/ 88% 59% 81% 56% 77% Maintenance in total exp 350/ 40% 32% 48% 28% 39% Maintenance to capital exp n/ n/a 167% 968% 146% 533% Total capital exp in total exp n/ n/a 19% 5% 19% 7% Actual maintenance to projected maintenance 56% _ 60%WI 58%

-167- Table 2.3 Saida Municipal Budget (amounts in LL million)

Saida 1999 1999 2000 2000 2001 2001 projected actual projected actual projocted actual Revenues Municipal share of real estate tax 15.00 15.00 0.00 0.00 0.00 0.00 Municipal share of common fees 1,800.00 1,800.00 2,752.04 2,752.04 2,333.00 2,333.00 1,815.0G 1,815.00 2,752.04 2,752.04 2,333.00 2,333.00 Total Revenues Collected by Municipality 3,242.35 2,165.45 3,146.81 1,845.24 3,148.55 1,683.82 Total Revenues Collected by Gvt. Agencies, 331.01 331.01 133.57 131.57 1,265.89 1,265.89 Ministries & Public Utilities Total Vanous and non-ordinary revenues 394.2 394.23 1,312.18 1,312.18 411.23 411.23 .... retatned earnings 0.00 0.00 355.13 355.13 210.13 210.13 Total Revenue 5,782.55 4,705.68 7,344.61 6,041.04 7,158.66 5,693.93 Expenditures Total wages and administrative compensation 3,939.25 3,845.26 4,584.60 4,254.80 4,207.35 3,549.18 Total rent and operating costs 1,325.00 610.08 1,470.00 663.34 1,402.00 892.11 Total other current expenditures inc. slaughterhouse 648.5( 255.62 270.00 193.03 220.00 193.77 Total current expenditure 5,912.7' 4,710.96 6,324.60 5,111.16 5,829.35 4,635.07 Total Capital Expendcture 968.00 286.35 835.00 201.46 1,035.00 339.37 Miscellaneous Expenditures 215.00 41.25 305.00 62.13 394.95 159.77 previous years expenditure 23.00 22.80 0.00 0.00 212.30 212.30 Reserves 422.7 0.00 80.40 0.00 126.70 0.00 Total Expenditure 7,541.50 5,061.37 7,545.00 5,374.76 7,598.30 5,346.51

Budget Deficit/Surplus -1,758.91 -355.69 -200.39 666.28 -439.64 347A2

Share of Property Tax in locally collected revenues 63.3/ _ 70.0/% 69.1% Share of Property Tax m total revenues 25.5° 20.00/ 20.2% Collection rate of property tax 52.7° 48.1/° 43.9% Share of entry fees to tounst site in locally collected 2.3° 2.10/ 2.2% revenue Share of locally collected revenue in total revenue 46.00/ 30.50/ 29.6%

Wages, salaries and compensation in total curmnt 63.80/ 79.3% 58.4% 66.9% 60.0% 62.6% exp. Total current exp in total exp 76.40/ 93.1% 83.8% 95.1% 76.7% 86.7% Maintenance in total exp 12.90/ 9.0% 13.6% 10.1% 13.3% 12.4% Maintenance to capital exp 8.3Y/c 0.6% 9.3% 1.1% 7.5% 0.7% Total capital exp in total exp 12.50/ 5.7% 11.1% 3.7% 13.6% 6.3% Actual maintenance to projected maintenance 0.0% 77.6% 0.0%/e 81.3% 0.0% 64.3%

-168 - Table 2.4 Tripoli Municipal Budget (amounts in LL million)

Tripoli 1999 1999 2000 2000 2001 2001 projected actual projected actual projected actual Revenues Total Revenues Collected by Municipality 23,225.43 8,168 58 20,457.20 3,965.17 27,522.94 5,149.54 Total Revenues Collected by Gvt. Agencies, 6,548.5 6,548.56 6,548.56 6,548.56 6,548.56 6,548.56 Ministres & Public Utilities Total Income from Municipal Properties 1,117.06 105.02 1,405.89 183.72 1,449.27 1,366.08 Government Transfers Total Various and non-ordinary revenues 35,084.3 19,888.53 37,072.94 19,836.18 33,596.02 9,294.79 .... retained earnings 9,454.61 9,454.61 3,501.79 3,501.79 6,263.39 6,263.39 Total Revenue 65,975.3' 34,710.69 65,484.58 30,533.64 69,116.79 22,358.96 Expenditures I Total wages and admiistrative compensation 12,278.62 8,470.63 11,904.10 11,368.90 14,483.00 10,358.99 ...General inspector compensation 6.50 5.89 8.00 5.83 2,600.00 2,319.58 ...wages, salanes, and compensation-permanent 2,600.00 2,469.67 2,600.00 2,324.97 5,000.00 4,546.84 staff . ...Retirees compensation 100.01 86 12 100.00 85.32 3,000.00 1,589.73 ...Family compensation 1,600.0( 1,281.13 1,300.00 1,949.91 1,300.00 1,208.29

Total rent and operating costs 1,400.7 919.76 2,535.00 1,916.91 2,431.68 1,168.19 Total current expenditure 13,679.3 9,390.38 14,439.10 13,285.81 16,914.68 11,527.18 Total Capital Expenditure 7,844.0 366.18 8,26871 185.27 7,663.23 218.19 Miscellaneous Expenditures 6,905.3 2,093.17 8,153.27 2,250.94 8,462.52 1,586.91 previous years expenditure I Reserves 50.81 168.04 27.21 Total Expenditure 28,479.55 11,849.73 31,029.12 15,722.02 33,067.64 13,332.27

Budget Deficit/Surplus 37,495.8 22,860.96 34,455.46 14,811.62 36,049.15 9,026.69

Share of Property Tax in locally collected revenues 74.2% 70.7% _ _70.2% Share of Property Tax in total revenues 17.5% 9.2%0o 16.2% Collection rate of property tax 29.60/ 15.1%/ 14.6% Share of entry fees to tourist site in locally collected 0.5% 0.5% 0.6% revenue Share of localy collected revenue in total revenue 23.50/ 13.00/° _ 23.0%

Wages and salaries in total current exp. 53O/ 72% . 57% 60% 48% 55% Total current exp in total exp 48.00/ 79.2% 46.5% 84.5% 51.2% 86.5% Maintenance in total exp 5.00/c 5.7% 6.0% 2.2% 4.00/o 3.00/o Maintenance to capital exp 192.80/ 2750.0% 185.6% 7244.3% 232.6% 5361.8% Total capital exp in total exp 27.50/ 3.1% 26.6% 1.2% 23.2% 1.6% Actual maintenance to projected maintenance 61.6% 67.9% 44.1%

- 169- Table 2.5 Tyre Municipal Budget (amounts in LL million)

Tyre 1999 1999 2000 2000 2001 2001 projectod actunl projoctod cctua r projected actual Revenues Total Revenues Collected by Municipality 1,698.00 581.99 1,687.20 532.90 1,378.00 558.83 ....Fees on advertisement and publishing 480.00 310.12 300.00 372.73 350.00 402.27 Total Revenues Collected by Gvt. Agencies, 2,398.00 581.99 2,387.20 532.90 1,778.00 558.83

Ministries & Public Utilities I_I _I Govemment Transfers 1.00 900.00 900.00 2,051.76 1,000.00 1,059 00 Total Various and non-ordinary revenues 1,000.0( 504.12 1,200.00 1,108.05 2,220.00 2,287.65 .... retamed earnings 100.0( 189.48 480.00 904.22 1,700 00 2,109.06

Total Revenue 5,097.5 2,58.09 6,174.40 4,225.60 6,376.00 4,464.30 Expenditures Total wages and administrative compensation 1,000.01 536.30 1,650.00 982.63 1,840.00 936.97 Total rent and operating costs 960.00 464.51 900.00 518.92 1,343.00 992.78 Total other current expenditures inc. slaughterhouse 0.01 0.00 0.00 0.00 0.00 0.00 Total current expenditure 1,960.0/ 1,000.01 2,550.00 1,501.56 3,183.00 1,929.75 Total Capital Expenditure 1,100.0( 4.58 1,375.00 46 63 1,390.00 221.89 Miscellaneous Expenditures 240.0( 136.05 375.00 157.62 417.00 261.55 previous years expenditure 20.00 5 53 25.00 1 85 o1000 5.31 Reserves 180.01 0.00 175.00 0.00 0.00 0.00 Total Expeniditure 3,500.0 1,146.96 4,500.00 1,707.66 5,000.00 2,418.50

Budget Deficit/Surplus 1,597.01 1,421.13 1,674.40 2,517.95 1,376.00 2,045.81

Share of Property Tax in locally collected revenues 15.4% 13.5% 13.3% Share of Property Tax in total revenues 4.4% 1.9% 1.7% Collection rate of property tax 18.(0/4 12.3% 15.7% Share of entry fees to tourist site in locally collected 16.7% 6.8% 10.4% revenue Share of locally collected revenue in total revenue 28.40 14.30 14.2%

Wages, salaries and compensation in total current 32.20/ 35.8% 43.00/o 45.6% 36.1% 27.9% exp. Total current exp in total exp 56.00/ 87.3% 56.7% 87.9% 63.7% 79.8% Maintenance in total exp 17.40/ 29.2% 12.6% 23.00% 14.3% 24.7% Maintenance to capital exp 55.5V/ 7321.0% 41.1% 843.7% 51.3% 269.60/o Total capital exp in total exp 31.40% 0.4% 30.6% 2.7% 27.8% 9.2% Actual maintenance to projected maintenance 54.9% 69.6% 83.90/o

- 170 - 1. The property tax (including the surcharge on drainage and pavements maintenance) is a significant line of local revenues, with the exception of Baalbeck and Tyre, where entrance fees to the archaeological site and fees on advertising and publishing, respectively, are the highest earners. While the property tax is based on rental, or imputed rental value of the residential and commercial property, assessment of which is subject to distortions of rental laws, it nevertheless, captures the increase in real estate values due to urban improvements. Collection rates of it are still low, due to many factors outlined in the text. Table 3.1. Share of property tax in total locally collected rev enue (in %) _ _ __1999 ______-; .2000-. - - 2001 Baalbeck 7.8 9.6 15.5 Byblos 34.5 41.4 37.7 Saida 63.3 70.0 69.1 Tripoli 74.3 70.7 70.2 Tyre 15.4 13.5 13.3 Property tax is calculated as a sum of "fee on rental value of residential real estate", "fee on rental value of non-residential real estate", surcharge fee on new development of sewage and pavement", and "surcharge on maintenance of pavement and sewage". For Baalbeck, actual property tax collected is not reported in the budget table, imputed values are used based on the assumption of 15% collection rate.

Table 3.2. Collection rates of property tax (in %)

. - .'199. -2810 - . . 2001 Baalbeck Assumption = 15% __ Byblos 31.4 30.9 28.9 Saida 52.7 48.1 43.9 Tripoli 29.6 15.1 14 6 Tyre 18 12.3 15.7 Collection rate is calculated as actually collected property tax as a share of projected. As actually collected property tax is not available for Baalbeck, a bold assumption was made that the collection rates are similar to those in Tyre, that is around 15%.

2. As can be seen from the table below, entrance fees from tourist sites (municipalities' share is 50% of the total fees received by the Ministry of Finance), are a significant share of locally collected revenue, especially in the case of Baalbeck and to a lesser extent, but still significant, in Byblos. In both Byblos and Tyre, the property tax contribution and the entrance fees revenue in the total locally collected revenue are of similar importance ( around 30-40% in Byblos and around 10-15 % in Tyre, allowing for data inaccuracy).

Table 3.3. Share of entrance fees to tourist sites in total locally collected revenue (in %)

- , :1-..4999---t; -20- 2000. i . 1 Baalbeck 85.0 52.3 72.8 Byblos 41.3 40.3 29.7 Saida 2.3 2.1 2.2 Tripoli 0.5 0.5 0.6 Tyre 16.7 6.8 10.4

- 171 - Table 3.4. Share of property tax in total revenue (in %) _M5__22 _ 2002 Baalbeck 2.8 1.8 2.1 Byblos 7.3 6.8 7.4 Saida 25.6 20.2 20.0 Tripoli 17.5 9.2 16.2 Tyre 4.4 1.9 1.9

3. If looked in proportion to total revenue, property tax is not playing a very important role in the resources of the 5 project municipalities, with some minor exception of Saida where its share hovers at around a fifth. It is a highly under-exploited resource, and simultaneously reflects many problems: low tax collection rates, low public service provision, poor state of public infrastructure and few municipal infrastructure improvements.

4. The share of local revenue in total revenue in the last three years stayed within 13-46.1 percent range in the five municipalities. A large number of off budget development project financing in parallel or in some combination with the IHF dues is complicating the analysis of the implementation of local budgets and local self-sufficiency. The overall sense is, however, of insufficiency of local revenues, dependency on the public utilities and agencies returning the taxes and fees they are collecting on the behalf of the municipalities, the amount of which is not fully known and controlled by the municipalities, and the availability of central government transfers through the IMF.

Table 3.5. Share of local revenue in total revenue (in %)

______2 9 9 2 0 2 20211 Baalbeck 35.9 18.9 13.5 Byblos 25.8 20.4 24.0 Saida 46.1 30.8 29.4 Tripoli 23.5 13.0 23.0 Tyre 28.4 14.3 14.2

5. Administrative expenditure weighs heavily on the municipal budgets, despite generally low staffing. Only wages, salaries and compensation can reach up to 80 % of the current expenditure.

Table 4.1. Share of wages, salaries and compensation in total current expenditure (in %)

[ 2999 200 2002 Baalbeck . 45 32 29 Byblos 33 17 20 Saida 80 67 63 Tripoli 72 60 55 Tyre 36 46 28

Table 4.2. Share of total current expenditure in total expenditure (in %) U1999 222 2012D Baalbeck 87 84 80 Byblos 88 81 77 Saida 92 94 86 Tripoli 79 85 86 Tyre 87 88 80

-172- 6. As the table 4.2 shows, current expenditure hovers around 80-90 percent uniformly across cities, with budgeted municipal capital expenditure playing a very minor role. Table 4.3. Ratio of capital expenditure to total expenditure (in %)

______-. i 1999 . 2000 `2001 Baalbeck 7.8 10 13 Byblos N/a 4.9 7 Saida 5.7 3.7 6.3 Tripoli 3.1 1.2 1.6 Tyre 0.4 2.7 9

7. Given the fact that in most cases, the broad list of the expenditure assignments is reduced to projects of road pavement, cleaning, drainage, street lighting and extending sewage networks, there is generally an overlap in reporting maintenance costs (current expenditure) and new projects (capital investment) for this reduced list of activities. Budget terninology across cities can be confusing as well. The modes of financing and implementation agencies responsible for different projects further complicate the analysis of the amount of resources that is allocated to routine maintenance of existing assets. Based on the reading and interpretation of the available information, the following ballpark figures appeared for the weight of maintenance expenditures in total municipal expenditures. The numbers should be treated with caution.

Table 4.4. Share of maintenance expenditure in total expenditure (in %) '1999 2000 - 2001 Baalbeck 38 48 41 Byblos 40 48 39 Saida 9 10 12- Tripoli 5.7 2.2 3 Tyre 29 23 25 Maintenance expenditure includes the following line items: building and public garden maintenance and cemetery, cleaning and pest control, public lighting maintenance, road, sewage and pavement.-

Table 4.5. Ratio of actual maintenance expenditure to projected maintenance expenditure (in %)

. ______., p 1-l999~. ' . 2000 2001 Baalbeck 179 280 138 Byblos 56 60 58 Saida 78 81 64 Tripoli 55 7 22 Tyre 55 70 84

8. The numbers for Baalbeck reflect higher than projected spending on the item "cleaning and pest control". The numbers should be viewed with caution, as it is unclear at this point what assumptions go into the budgeting of maintenance needs. It is most probable that what is budgeted is already extremely low and does not capture proper maintenance needs, especially of the new projects.

- 173- Additional Annex 15: Directorate General of Antiquities - Capacity B1uDiding LEBANIESE REPUBLIC: CULTURAL HIE1RDMAG[E ANED UR[BAN DEV!ELOPMIENT

A detailed study of the evolution of the legal and regulatory framework of heritage protection, administrative structure and practices of responsible agencies in Lebanon was conducted by international experts under project preparation and is available in the project files. The note below summarizes the main findings of the study and outlines the recommended assistance and capacity building program.

A. The existing legal framewoerk

1. Already during the Ottoman rule, Lebanon had the following Laws regulating its archeological wealth and excavations'. During the French Mandate, the Ottoman laws were replaced by the laws in their majority still in force today. The Law of 1933 remains the basis of the legal framework for Lebanon Heritage protection. It defines the concept of movable and immovable protected heritage, that also includes archives and natural and panoramic sites and forests; specifies the respective roles and obligations of the state, communities and private owners in protecting historic properties. It sets the procedures for excavations and commerce of antique objects.

2. During Independence and prior to the civil war (1943-1975) there was a number of additional legal steps taken to protect heritage objects from thefts and illegal trafficking, organization of excavations and use of archeological finds.

3. The war period (1975-1991) is characterized by a legislative slowdown, except for some urgent measures to prevent most serious violations ( e.g. plundering of antiquities).

4. Rapid urbanization of Lebanon coupled with postwar reconstruction reveal the disconnect of heritage protection framework from the municipal, urban planning, environmental and construction reality and laws.

5. Realizing that the legal framework is outdated and no longer reflects the development of post-war Lebanon, the Government of Lebanon is undertaking efforts to modernize the framework of heritage protection and management.

Summary of the current legal framework in the heritage sector

6. The key Legislative texts concerning different components of heritage are: - movable and immovable properties: the Law 166/L.R. of November 7, 1933; - archives: executive decree 6 of February 3 1979; - natural and panoramic sites: the Law of July 8, 1939; - forests and natural reserves: the Law of January 1 1949, law/decree 43 of June 17, 1983, executive decree 49/1 of April 29, 1991, law 85 of September 7 1991, law, law 588 of July 24 1996 and law/decree 141 of December 31 1977.

7. The main text on protection of movable and immovable historic properties is the Decree/Law 166/L.R. of November 7, 1933 . The law defines the concept of antiquities and declares protection over historic monuments dating prior to 1700 ("anciennes antiquites"), and listed historic monuments dating after 1700 ("antiquites").

- 174- - It includes protection of natural sites where historic traces of human activities can be found. - It states that all anciennes antiquites are the property of the State. The State has a right to register an ancienne antiquite in the individual or Waqf property on the General List of Historic Monuments (GLHM). The State also has a right to expropriate movable or immovable historic property compensating the owner. Chance finds antiquities or those, uncovered outside of * authorized excavations, are to be declared. Antiquities are under protection from any action that may damage them. Unauthorized sales are prohibited. - The law vests the State antiquities authority, the Directorate General of Antiquities (DGA), with the responsibility to control all urban expansion plans'. The law establishes the General List of Historic Monuments and describes the modalities of listing public, communal and private property by decree, and respective obligations of the owners. It defines the general rules of cost sharing for upkeep of listed' property and the obligation of the municipalities in case of the owner default '. It describes the procedures for determining the level of compensation for private owners of listed property, and states that confessional property is not to be compensated. The listing of the monument should appear on the cadastral register. - The last two sections of the law refer to the organization of archaeological excavations and regulation of trade of antiquities. It grants the exclusive right to conduct archaeological excavations to scientist and researchers.

8. Other laws and decrees addressing specific aspects of heritage protection and management are: (a) Protection - Decree/Law 255/L.R. of September 28, 1934- describes measures in case of violations of the status of antiquities and historic monuments; - Decree 17548 of September 16, 1964, prohibits celebrations, festivals and expositions inside the historic monuments; - Decree 1 748 of May 8, 1965, prohibits trading antiquities in the neighborhoods of Tyre; - Decree 56 of March 30, 1971, allows and specifies the rules for organizing festivals on historic sites; - Decree 8 of February 6, 1988, prohibits export of antiquities; - Decree 14 of May 8, 1988, specifies the rules for authorized commercialization and export of antiquities. (b) Management The laws and decrees referring to the management of "use" aspects of heritage as opposed to protection, are few and do not constitute a real framework: - Decree 7696 of February 5, 1931 organizes access to the site of Baalbeck, defines the responsibilities of the agents in charge of collection of entry fees, upkeep of the ruins, opening ours and security. Decree 4 of June 3 of 1973 modifies the opening hours and access to during the international festivals. The other decrees referring to sites, regulate the opening hours of National Museum, fare exemptions, and opening hours of archaeological sites are: - Decree 434/A.N. of May 28 1942 classifies, among other sites, the historic buildings of Baalbeck as a natural and landscape site that is protected by the Law of July 8, 1939. The latter classifies and establishes a List of Landscapes and Natural Sites, and mentions the

- 175- compensation clause, as it applies to protection of natural sites. - Law 21/66 of March 29 1966, transfers the Directorate General of Antiquities (DGA) from the Ministry of National Education, Youth and Sports to the newly created Ministry of Tourism. - Law 215 ofApril 2 1993, creates the Ministry of Culture and Higher Education, and transfers the DGA to this Ministry from the Ministry of Tourism, creating a new department of operation of museums and archeological sites within the Ministry of Tourism. Since then the Ministry of Culture and Higher Education became the Ministry of Culture.

Related legal framework: Public Works and Municipal Sector

9. The work of aggregating the information on laws and regulations that bear upon the heritage sector has not been done up till now, but in broad terms the following laws seem to be the most relevant and important: - Urban Planning Regulations. The Urban Code of 1962 contains a requirement to elaborate plans and regulations for the historic sites. The current Code of 1983 (Decree/Law 69 of September 1983) preserves this requirement. The articles on the content of the plans and detailed regulations state that plans and detailed regulations should delimit the districts which have to be protected or developed "for aesthetic, historic, or ecological reason"6; their character should be preserved during restoration and construction, and by-laws should be adapted for public well-being, including the embellishment, and specific preservation districts can be inscribed into the zoning, with their respective land use coefficients. In practice, few applications of this requirement exist today, the most notable being the detailed plan prepared for the historic center of Jounieh. - Construction Law. The construction law is important in the preservation context as it regulates appearance and the stability of buildings. If the building is degraded or shows sign of fragility, the owner should fix the problems. If no action is taken, the state has a right, after a legal procedure, to launch the necessary works at the expense of the owner. - Municipal Law. The municipal law (Decree/Law 118 of 1977) gives a lot of rights to the municipalities, including ordering the owners to rehabilitate and restore buildings at owner's expense and collecting dues in case of infringement on regulations. The municipalities collect the property tax and the fees on construction and rehabilitation permits. - Rental Law. Most of historic properties are used as rented residences and/or commercial premises. As most rental contracts are older than 1992, the year of the new rental law that allowed periodic revisions of the rents, most of the rents are fixed at a very low level, and thus discourage rehabilitation initiatives from both, owners and tenants.

13. The iDiirector2te GemneiraR of Antiquities Mission and Structure 10. As stated above, since 1993 the Directorate General of Antiquities (DGA) is part of the Ministry of Culture. Its missions include: - Organization and execution of archeological excavations, upkeep of the historic monuments and discovery of new archeological sites; - Delivery of excavation permits and control of scientific archeological missions performing

- 176- excavations; - Establishment and management of museums, organization of archeological and historic exhibitions; - Control of commerce and export of antique objects; - Enforcement of current laws and regulations.

11. The DGA is composed of three departments (services), and one division (section): - Department of Excavations; - Department of Historic Monuments; - Department of Museums; - Administrative Division.

12. There are now no formal local representations of the DGA. However, there is an informal assignment of archeologists and architects from the center to cover a particular geographical location and/or a site.

13. The organizational structure and the performance of the antiquities' administration reflects a serious mismatch between (a) the outdated and unbalanced list of missions and the real needs of the sector, and (b) the reality of the sector and the departmental structure overwhelmed with responsibilities with extremely limited human resources. In addition, the DGA relies exclusively on shrinking budget allocations that it does not make efficient use of due to constraints in planning and implementing the budget.

Outdated and unbalanced missions

14. The rnissions of the DGA weigh heavily towards planned archeological excavations and control over the sale of antiquities (3 missions out of 5), the fact that reflects the historic reality of the thirties when the missions were defined. The modem requirements for public presentation of archeological sites, accessible by visitors other than researches, require site management expertise and dedicated site management structures at least for major archeological parks. The need for preventive archeological investigations and urgent surveys in the time of rapid urbanization and major national and local infrastructure projects increases the pace and complexity of organizing and supervising scientific archeological missions.

15. On the other hand, the built heritage protection is reflected only in the first mission, and even then, as an upkeep of historic monuments. This also reflects the thinking of the time, when historic monuments preservation in France was mostly limited to restoration of churches. Since then the variety of historic structures considered historic monuments has included many different properties, among them military, industrial, and commercial. It was also accepted that groups of vernacular buildings and neighborhoods preserving a certain unity and retaining the spirit of the time are to be protected as a historic area or urban ensemble. If these living urban areas are to stay alive they can not be preserved by being turned into open air museums. Urban heritage preservation, therefore, approached urban rehabilitation and urban revival that is the operational prerogative of local and urban planning authorities.

16. Finally, the mission of establishing museums and organizing exhibitions is a heavy one, as museums are evolving away from simple premises, displaying objects towards more interactive and polyvalent community centers, complete with cinema and conference facilities, research programs, publication departments, and integrated commercial facilities.

- 177- Overwhelmed and understaffed organizational structure

17. As it follows from the discussion above, the missions of the DGA are disconnected from the present day reality of the sector. The organizational structure, designed in line with the stated missions, reflects this disconnect by attempting to informally adapt to the demands of the sector and finding the tasks overwhelming. There is currently only one Directorate responsible for all archeological, built and movable heritage. It is supposed to be fully self-sufficient in financial, legal, fT, and external relations aspects of its work. It is charged with responsibilities which are too heavy: museums and exhibitions and require staff with a different set of professional skills. In the meantime, it finds itself shifting scarce resources to respond to the modern day sector demands, resources for which are not allocated at all in the organization structure. There is presently a much higher need to be present on the ground than in earlier days: during urban rehabilitation and infrastructure projects, on construction sites, and on archeological sites open to visits and public events.

18. Currently, the Directorate is organized in three Departments and one Division and has only one Director General, no Department managers, and no Division level managers except for the 2 Division chiefs in the Administrative Division:

Department of Excavations is in charge of all management, procedural, supervisory, and research, (including publications of Revue Baal) activities related to DGA excavations responsibility (missions 1 and 2). Despite the grid posts allocation there is no permanent professional staff, and the work is being performed by 9 archeologists and 1 architect, hired on a contractual basis.

Department Chief 1 0 Division Chief 1 0 Operations officer I 0 Archeologist 4 0 Clerk 5 3 Secretary l l Handicraft Specialist 2 0 Skilled workman 2 0 Service 10 0 Sub - total 27 4

Archaeologist 9 Architect 1 Sub -total 110 Total 27 R4

- Department of Museums is in charge of fulfilling mission 3. It is also responsible of publications and dissemination of knowledge, providing scientific expertise on antiquities, organization of a library, archives, restoration laboratories and workshops for archaeological objects and their conservation. This department employs 20 people, 14 staff (13 janitors and a clerk), and 6 people under contract ( 4 archeologists, I engineer and a lab assistant).

- Department of Historic Monuments is in charge of the conservation of monuments, their restoration, protection and use, of identifying and inscribing the historic monuments on the National List. It is also supposed to work on the master plans of cities and archaeological site

- 178- management plans, and manage relevant research and administrative publications. The department employs 14 people (18 janitors and a clerk) and appears to share contractual professional staff with other departments.

- Administrative Division is in charge of the administrative, financial, and legal issues, and staffing.

Department Chief Il Division Chief 2 2 Archaeologist I 0 Clerk 4 2 AccountantETheeisasoaou 100 telmprie benl mploedonsecficwrsadmitnnea Secretary 2 ServiceV 34 Total 15 7 There is also about a 100 temporaries being employed on specific works and maintenance at an average rate of LL 17, 000 a day. The general staff remuneration levels are as follows:

Grade I 1 6001 Grade II 1 070 0 Grade III 575 2 Grade IV 365 8 Grade V 265 34 Total 45 Contractuals 595 16 Temporaries 235 100

Exclusive reliance on shrinking Budget allocations

19. The DGA total annual budget (current and capital expenditures) is around LL 7.5 billion, or US$5 million. DGA, as a directorate of the Ministry of Culture currently does not have any independent revenue sources. While it can apply and receive grants and technical assistance from the local and international academic community, as well as benefit from ad hoc operations financed by public and private sponsors (e.g. the National Museum), it does not dispose of any legal channel to continuously raise eartnarked or general revenue to complement its diminishing budget allocations.

Current and Capital Expenditure Assignments (in thousandLL)

Salaries and benefits 2 009 2 213 2 152 Contractuals and temps 1 424 1 025 970 Total current expenditures 2 842 3 316 3 128 Acquisitions 1 500 2 000 1 913 Total Capital expenditures 4 527 4 400 3 455

Share of salaries in total expenditures 27% 29% 33% Share of salaries of contractuals and temporaries in total expenditures 19% 13% 15% Ratio of land acquisitions to total capital expenditures 33% 45% 55%

- 179 - 20. For the year 2001 the budget of the DGA represented 31% of the budget of the MOC, and 35% in the year 2002. DGA current expenditures in 2001 represented 16% of the MOC total current expenditures and 20.6% in 2002. However, while the share of DGA is growing, the total budget allocation of the MOC is shrinking. The share of Ministry of Culture in the GOL budget was 0.25% in 2001 and 0.2% in 2002. In the budget law for 2002, the Governmnent is planning to reduce the overall State budget deficit by around 6 percentage points of the GDP by decreasing expenditures and expanding revenues. The MOC total expenditures are expected to go down by 26%. The table shows that the DGA expenditures are to go down by at least 15%.

DGA Budget Preparation Process

21. The various ministries/agencies of the Lebanese government develop their own internal procedures for budget preparation. Specifically, in the DGA, budget preparation remains a manual and routine exercise, handled primarily by one accountant in the Diwan division, who has been occupying this position for the past thirty years. The accountant prepares budget estimates for the coming year, based primarily on an extrapolation from the budget of the previous year, a subjective estimation of future needs, and some consultation with the Director General. These budget estimates are submitted by the end of May to the Ministry of Finance for review. They are then discussed and negotiated in July with a controller of the Ministry of Finance, in the presence of the Director General, in an attempt to justify the figures and reach a compromise on the government's appropriations for the coming year.

22. A closer examination of the DGA budgets over the past 5 years reveals no discemible systematic trend of budget estimation / appropriation. As illustrated below, the initial government budget appropriations were highest in 1998, reaching their lowest level in 2002, with an average of around 7,503,000 thousand LBP per year in budgeted appropriations. This 2002 noticeable decrease in appropriations can be partly attributed to the government's 2002 policy of rationalizing expenditures across all ministries/public agencies. Total 10.000,000 8,950,635

7,500,000 - 6,894.351 7,3 68,920 7,715,776

5,000,000 -

2,500,000

1998 1999 2000 2001 2002 Y ear Evolution of DGA Budget Appropriations

23. A discernible trend is observed on the other hand when examining Part I (current) and Part II (capital) budget appropriations, whereby, percentage wise, total budget appropriations in part I have been increasing, and total budget appropriations in part II have been decreasing, most noticeably over the past two years. These trends are mainly attributed to the fact that the government has been gradually reducing its appropriations for DGA capital expenditures, because the DGA has not been making use of its appropriations to undertake work related to restoration and conservation.

- 180- 100%

80%

60% -Part -- Part II11

40%

20%

0% 1998 1999 2000 2001 2002 Years

24. A detailed examination of Part I budget appropriations for the years 2000 and 2001 reveals that the bulk of the appropriations (more than 60%) is allocated to benefits, salaries and allowances, while the bulk of the appropriations for capital expenditures is allocated for expropriation and maintenance, respectively. Appropriations for expropriation were higher in 2001, because the processing of the expropriation decree was not completed in time for budget preparation in 2000.

25. When comparing the initial total appropriations and the total DGA liquidations for the year 2000 budget, part II, we notice that actual spending constitutes only 44% of the initial appropriations. The discrepancy between appropriations and liquidations becomes more evident if we account for the default part I carry-over appropriations, which are added to the initial appropriations and reflected in the final appropriations figure. In fact, the total capital expenditure accounts for only 16% of total 2000 final appropriations. The accumulation of a total amount of 7,648,737 thousand LBP in carry-over appropriations in the year 2000 suggests that the DGA has consistently been unable to make use of its part I appropriations.

26. This situation of limited spending from the part I appropriations can be attributed to the lack of clear DGA work priorities coupled with obvious shortages of human resources. It also has been aggravated following the events of 1999, and the imprisonment of the previous Director General, Mr. Kamil Asmar, in January 1999, charged with the misuse of public funds. These events and the intense scrutinizing by Lebanese authorities have created a culture of prudence and weariness in the DGA and a restriction of financing urgently needed maintenance and conservation.

27. The Lebanese budgetary process is bureaucratic in nature. A thorough understanding of these bureaucratic budgetary procedures however still leaves some room for financial manoeuvre by the various ministries and public agencies, provided that they proactively engage in the systematic identification of work priorities to precisely define and justify their needs for the coming budgetary cycle. The DGA does not have a systematic budget estimation process, which is clearly reflected by the discrepancies observed between government appropriations and actual expenditures. Moreover, the DGA does not seem to be adjusting its budget estimations based on an analysis of actual needs, work priorities, and patterns of expenditure. Indeed, although the DGA has accumulated significant amounts of carry over appropriations for capital expenditures, it is still presenting inflated budget estimates in part II and hardly being able to make use of half of its initial Part II appropriations. This in turn is reinforcing the carryover accumulation cycle. The problem lies in limited DGA absorptive capacity, and limited ability

- 181 - to make use and effectively deploy already available resources for purposes of cultural heritage conservation.

28. Expert analysis of the current budgeting practices at the DGA has indicated that a results-oriented system is urgently needed. Such a system would combine strategic planning and perforTnance budgeting. Given the scarcity of budget resources, the system will be used to make appropriation and expenditure decisions based on a precise identification of needs and goals. The components of such a system that are currently totally lacking, have been identified as: - strategic planning: developing a three-year strategic plan, identifying precise goals, needs, priorities and projects; - budget development: preparing appropriations requests, which include requested amounts and description of the goals, objectives and strategies to be addressed by this funding; - budget implementation: preparing operating budgets and setting up systems to allocate expenditures and collect performance data; - performance monitoring: comparing actual expenditures to appropriations and performance targets. Assessment of performance data and explanations of variance. This may include preparing a perfornance tracking report to track progress towards goals and objectives.

Operational rules and practices

29. It appears that while there are some established procedures of conducting daily activities of the DGA there are few written operational rules, which in part is a consequence of slow legislative activity in relation to the sector in the recent years.

30. The spectrum of currently performed operations of the DGA, irrespective of departrnental assignments can be categorized as follows:

- Routine and repetitive in-house activities, such as archiving objects, images and documents, maintaining databases and maps, managing and updating project files, conducting lab restorations, publishing studies and excavations results. Currently, these functions are barely performed as they require dedicated staff, facilities and level of computerization that DGA does not have. The backlog of objects, images and documents in Beirut and in the main storages around the country (Anjar, Baalbeck, Beirut, Byblos, Saida, Tripoli, and Tyre) that needs to be archived and put into databases still needs to be assessed.

- Regulatory functions, shared with other public authorities, such as providing inputs during elaboration and approval of urban development plans for areas with archeological and historic potential, giving non-objection on the delivery of construction and rehabilitation permits, resolving issues regarding the special regime of historic properties on the General National Heritage List. DGA plays an advisory role in Higher Planning Council that approves all urban master plans. There appears to be no precise procedural guidelines, strict decision making criteria, and document formats for all these activities. Currently, DGA is only in a position to provide a reactive safeguarding service, as it is not equipped with the means to be proactive and while it is attempting to influence the design of the infrastructure projects upstream, its preventive capacity is limited. In addition, most issues are commonly resolved on a case by case basis. This situation contributes to generating delays and contested decisions. DGA lacks specific tools to limit the prescriptive nature of its decisions and, instead, provide an incentive based regulation. For example, substantial subsidies (up to US$15,000) available for historic building rehabilitation were discontinued in 1999. Besides

-182- shortage of public funds, lack of strict eligibility criteria and quality control mechanisms are quoted among primary reasons for the loss of this tool.

- Archeological soundings and surveys. By law, the DGA is required to give its clearance for infrastructure and construction projects in archeological zones, or in case of chance finds. The ability to deliver these services efficiently is important for reducing delays in implementation of state, municipal, and private construction projects, gaining acceptance with the developers, and ultimately for safeguarding underground and underwater archeological remains. Having updated and detailed archeological maps, indication of archeologically sensitive zones on urban and infrastructure plans, established legal procedures and clear deadlines for delivery of clearances, as well as modem equipment (handheld computers, GPS, total stations, etc.) is critical to the efficiency of such activities. DGA is not properly equipped, despite the small size of the country, to complete these operations quickly and record data efficiently. DGA is taking steps to address some of this issues and has applied for a Japanese Government Grant (estimated amount US$ 423, 000) to purchase a set of geophysical equipment and training to conduct the archeological survey of the area of Tyre. SpeciSc ProjectActivities, such as: - partnerships for archeological excavations, surveys and studies together with UNESCO, universities and research centers, municipalities, international donors and other sponsors; - procuring and supervising rehabilitation and restoration work.

31. DGA has a long record of working with the experts of UNESCO in Beirut and on the World Heritage Sites. It has been in the spotlight in the last 10 years in relation to the excavations of Beirut and reconstruction of the SOLIDERE area.

32. Depending on the nature and the scale of the project, DGA's involvement extends form project execution, to being a client, to being a beneficiary. In some cases uses DGA uses its own staff and contractual employees, as well as temporaries and hourly workrnen, and in others is playing a supervisory role. For example, the bronze age vestiges, discovered recently on the site of the ancient site of Saida, are being excavated on the 1,500 sq.m by the Lebanese students, among them 90 volunteers. The DGA is supervising the work. The project is sponsored by the British Museum, Hariri Foundation, Byblos Bank, and Nokia (Finnish mobile phone company).

33. Given the limited funds and capacity of the DGA and the increasing backlog of archeological and urban rehabilitation activities, there is a clear need to contract more work out and enter in partnerships with public and private sector while reinforcing the supervisory and expert quality control functions. While each excavation and each project are different, there should be contractual and safeguard policy guidelines to implementing such work under partnership agreements. For restoration works, there is a lack of procurement guidelines for specialized works and services, standard terms of references, bidding document formats, and conservation guidelines and manuals that could be made available, besides subcontractors, to individual private owners willing to rehabilitate their properties.

34. As it is obvious from the staff and budget numbers cited earlier, the DGA is understaffed and is struggling to respond even to the most pressing and recurrent among existent missions. The resources to finance streamlining daily practices, prepare operational guidelines, strategize and program are rarely available. The DGA is seeking to initiate the inventory of the assets in the direct ownership of the DGA or under its protection: Archeological Map of Lebanon and the proper cataloguing of the properties on

- 183- the GLHM. In addition, having these databases ready would be very important for their consistent integration into the planned Urban Master Plan for the whole of Lebanon, and in interacting with land and real estate developers and delivering clearance in municipal and infrastructure projects in the archeological sensitive or protected zones.

35. The three of DGA's most recurrent activities are a) urgent archeological soundings, 2) clearance for the construction permits affecting the historic monuments and sites, and 3) clearance for urban master plans and detailed plans for historic zones. Besides the workload that those activities represent by themselves, they are generators of an ever increasing DGA regulatory mandate. In addition, DGA continues to expand its own asset portfolio through expropriations of land containing valuable archeological remains. Expropriations represent around half of its yearly capital expenditures.

36. Even if the budget and staff allocations were to be dramatically increased, the regulatory public authority, as it is happening all over the world, would still need to change its modus operandi and cost sharing practices in relation to public and private land developers for what is increasingly becoming "urban archeology", and enter in regular partnerships with other public and private sponsors. As the volume of work continues to increase, it will find itself conducting more archeological research and providing consulting, advisory and practical services to the property developers, strengthening its planning, asset management, and project supervision capacity, while contracting out more and more packages of work.

General List of Historic Monuments

37. If approached from the asset management perspective, the activity of DGA consists of managing the heritage that is the property of the State and is under its direct control, such as archeology, and of the properties that are listed on the General List of Historic Monuments, but can be in private, communal or religious property.

38. The DGA is responsible for protecting the historic monuments in private or communal property that are being listed on the General List of Historic Monuments since the date it was instituted by the law, that is in 1933. Since then 486 buildings and sites were listed either by decree (class&s), or by an executive decree (inscrits). Only one list is maintained for both types of monuments, while the legal implications are different depending on the procedure of listing.

39. In the first case, the owner is not allowed to destroy or restore the building without the approval of the DGA, and is entitled to compensation due to diminished building rights. There is a restriction on building activities in the vicinity of the monument. As groups of building and historic zones (e.g. souqs) are started to be listed, the tool needs to be revised to deal with multiple ownership and large scale building rights changes.

40. In the second case (monuments inscrits), the owner is obliged to inform the DGA of all modifications to the property and be supervised by the DGA during authorized rehabilitation work. Transfer of property has to be made known to the DGA.

- 184 - General List of Historic Monuments

1930-1939 24 l 1993 14 1940-1949 17 1994 28 1950-1959 35 1995 27 1960-1969 III 1996 22 1970-1979 88 1997 25 1980-1989 51 1998 18 1990 1 1999 5 1991 4 2000 6 1992 4 2001 4 2002 (31/03) 2 ______Total__ _ _ 486

41. Currently, the GLHM is not properly maintained and not used in daily operations. There is no consolidated information on the physical condition, ownership status, use, etc. of the monuments. Therefore, it can not be used to assess the needs and program the preservation activities of this critical group of heritage assets under DGA jurisdiction. It is can not be made easily available to property developers that are planning projects that would have a strong impact on the listed monuments. Inventorying, properly documenting, and prioritizing the most urgent actions for preservation of this heritage is an absolute prerequisite for any measure that could follow later, e.g. carrying out a comprehensive national survey of built heritage.

42. At this stage, it seems that if properly designed, the GIS and the DMS systems accessible both by the staff in the center and in the regions would be a major improvement in the organization of routine daily management. While, a special GIS application can be easily integrated to manage the GLHM, the OMSAR project at this stage however, is not expected at this stage to address inventorying the built heritage, establishing the proper management of the GLHM and its integration into the proposed GIS'0.

Eguipment and facilities

43. DGA has 21 computers, a small intranet network in the Department of Museums, a few software packages File Maker Pro for maintaining a list of 20 000 archaeological objects established on the basis of descriptive files. As mentioned above, the DGA is applying for a Grant of the Japanese Government to receive a set of geophysical survey equipment and appropriate training for a geophysical survey in the area of Tyre. The equipment, if received is expected to be cover the needs in other parts of Lebanon. At the same time, OMSAR administrative reform project is expected to cover the needs of the DGA in the hardware and software for GIS and DMS, with a few core applications. Any other equipment economical to be owned by the DGA should be investigated further.

44. There are now limited existing restoration facilities and labs, but they are not fully functioning. Storage facilities are insufficient and substandard.

- 185- Summary of Main Issues

45. The main issues outlined above can be summarized as follows:

- Outdated legalframework. The legal framework of heritage protection and use has not been comprehensively updated since the thirties and does not reflect a) the reality of present day Lebanon; 2) the internationally validated notions of heritage, and respective roles of the state, research community, cultural institutions, and the private sector in its preservation.

- Disconnect from other sectors. In the meantime, Lebanon has been rapidly urbanizing and the legal frameworks of local government, urban planning, and infrastructure sectors have been evolving towards decentralization and privatization. The reforn of heritage legislation in its present form does not integrate the needs of preservation and management of the historic assets with the needs of territorial development of Lebanon.

- Inadequate administrative structure. The administrative structure of the heritage sector, including missions, organization, local presence, staffing, financial resources and operational mode of the Directorate General of Antiquities, is outdated and inadequate, and does not allow the institution to perform its policy making and regulatory role.

- Lack of strategic planning and proper budgeting. The DGA does not have a systematic budget estimation process, which is clearly reflected by the discrepancies observed between government appropriations and actual expenditures. Moreover, the DGA does not seem to be adjusting its budget estimations based on an analysis of actual needs, work priorities, and patterns of expenditure.

- Unaccountable assets. The wealth of archeological, architectural and urban, among others, heritage assets of Lebanon under direct control and protection of the DGA is poorly accounted for, and the overall assets of the heritage sector are unknown. Lack of the archeological map, and proper inventories limits the ability of the DGA to influence undesirable land and real estate development project designs.

- Lack of incentives to value and use heritage. The missions of protection are not integrated with the missions of use and few legal, fiscal and fimancial incentive are made available to the DGA and other heritage owners to study, preserve, use and present their historic assets.

- Untapped revenue sources. Heritage "financial and fiscal systems" are underdeveloped. Few potential streams of revenue are tapped into, and no mechanisms like National Monument fund or local revolving funds exist to pay for restoration and rehabilitation works.

- Poor technological base. The DGA has limited and ad hoc access to the modern technological tools of archeological research and data management.

- Inability to out-source and sub-contract. The growing scope of activities and responsibilities of the DGA calls for formalizing procurement rules and models of out-sourcing a large number of its operations. Some of them require unique expertise or highly specialized skills, the costs of which should be supported only when needed. For generic civil work standard subcontracting procedures should be elaborated. Some works should be supported by the land developer, while DGA should limit its role to scientific supervision and quality control.

- 186 - - No quality control and supervision procedures. Given the nature of interventions on archeological sites and on historic properties, a set of standard quality control procedures should be elaborated and implemented, e.g. conservation guidelines and manuals, security norms, impact assessment guidelines.

- Low outreach to the local public. Local community public awareness, local resident volunteer programs and educational programs are not developed, even though there is a high number of student volunteers nonnally involved in the activities the archeological sites.

Government Strategv

46. The Government is working on reforming the outdated legislative framework and restructuring the administration of the sector. A set of laws is being elaborated: - Draft Law on Built Heritage; - Draft Law on Cultural Properties; - Draft Law on Organization of the Ministry of Culture.

47. The Government is also preparing a reform of the civil service and of public institutions.

48. The brief summary of the proposed laws below reflects the main aspects of the proposed reform of cultural heritage that is currently under discussion: - Draft Law on Built Heritage Protection. The draft law elaborates the concepts of protection, conservation, and use of monuments, buildings, urban areas and other sites, having a historic, architectural, or scientific value. It establishes the concept of protected zone: a defined area with its own regulations, including floor area ratios. It introduces the concept of air right transfers and zoning bonuses. The draft law elaborates on the compensations due to owners of protected properties, and fiscal incentives. Additionally, a "Higher Cultural Committee" is proposed as an advisory instance called upon to give opinion on the technical aspects of the projects.

- Draft Law on CulturalProperties. The draft law defines the movable and immovable cultural property and procedures of listing and registering individual and groups of property. It establishes the conditions of acquisition of cultural properties by the state, using the right of eminent domain, it elaborates the procedures the state can have recourse to in order to oblige the owner of cultural property undertake its restoration.

- Draft Law on Organization of the Ministry of Culture. The draft law restructures the Ministry of Culture and provides a new framework in which a reformed DGA is going to perform its duties. The proposed structure for the DGA, renamed Directorate General of Archeology and Built Heritage, is as follows: at the central level, Directorate of Archeological Excavations, Directorate of Built Heritage, and Directorate of Archeological. The number of local delegations is being discussed and dedicated delegations for the largest archeological sites (Baalbeck and Tyre) are being proposed. The law creates a separate Museum Administration, thus relieving the DGA of its Museum Departrnent and of its respective mission. It establishes 2 special Treasury accounts: "Independent Fund for Cultural Activities and Production" to support cultural production and "Independent Fund for Archeology and Built Heritage" to support public and private projects that aim at research, excavations, discovery of sites, protection, restoration, and reuse of historic monuments.

- 187- 49. While the reform is urgently need, and the chosen approach is comprehensive enough, according to the experts, the current proposals suffer from major deficiencies: they appear to lack proper coordination between different legal instruments and introduce confusion in relation to the definition of material cultural heritage protection, unified system of property designation and listing, uniformity and consistency of the required protection measures. No operationalization is proposed for the implementation of the international conventions, signed by Lebanon in the recent years. Experts advise returning to the drafting boards and improving the draft laws, the effort that should be headed by a drafting committee under the auspices of an interministerial commission.

50. As far as the third draft law is concerned, it is limited to outlining the general structure of the Ministry of Culture. The details of operation and financing of the new structure will be defined in the executive decrees once the law is passed. This will be a critical step for implementation of the reform as those decrees will equip the sector with the tools and means to deliver on its missions and responsibilities, broadly set in the laws.

51. The main missions defined for the new Directorate General of Archeology and Built Heritage are comprehensive: design and implement policies, plan and program various activities; identify and inventory all cultural properties, organize conferences, workshops, conduct and publish research studies, encourage capacity development in the sector, coordinate and cooperate with other relevant administrations, municipalities, institutions, individuals and NGOs. The mnissions of the 3 new Directorates: Directorate of Built Heritage (DBH), Directorate of Archaeological Excavations (DAE), and Directorate of Archaeological Objects (DAO) are summarized as follows: o Missions of Directorate of Built Heritage: - Surveying sites, monuments, buildings on the Lebanese territory on underwater in its territorial waters; - Propose project laws and regulations; - Archive; - Prepare studies and research, help publish it; - Maintain the properties, including security, operation, maintenance, renovation, propose usage, rehabilitate and equip them for visitors or associated work; - Participate in designing plans and projects that are prepared by various authorities, public institutions and municipalities that are related to organization, expansion, renovation or beautification of all cities and towns, and participate in supervising the execution of such projects in order contribute to preservation of the cultural, historical and archaeological heritage of these cities and towns; - Inspect violations of archaeological sites and historic neighborhoods, monuments and cultural properties and to persecute violators; - Establish partnerships and cooperative relationships, exchange expertise with relevant authorities in accordance with what was established in points 1-6 , including authorities, public institutions, universities, local and international organizations, private institutions, NGOs and individuals in order to fulfill its missions. o Missions of Directorate of Archaeological Excavations: - Research, excavate and uncover archaeological sites or objects, inventory them in order to list them on the General List and register them on one of the two Cultural Possessions Lists and then handed it over to the relevant directorate;

- 188- - Manage archaeological excavation, ensure security, conservation, maintenance and protection; - Organize research and excavation work, program it at the scientific and practical level, study excavation applications submitted by the local or international entities that wish to carry out excavations, and advise on issue or refusal of excavations permits, supervise the work of search and excavation on land and on sea; - Conduct research regarding the archaeological excavations, prepare studies and relevant research publications, prepare for publication; - Participate in execution of planning and studies and execution of related works for large projects - public works, infrastructure, agriculture, quarries and similar projects, present opinion, supervise execution in order to preserve archeology on the site of the construction. - Inspect sites on which buildings are to be constructed in areas and neighborhoods that are classified as archaeological, or heritage, or historical, and provide opinion for delivery of building permits on these sites; - Take over any ground works in case of the existence of archeology in order to conduct archaeological search and excavation works, and take the necessary legal and administrative actions; - Establish cooperation and coordination relationships and exchange of expertise with the relevant authorities, as per points 1-7, including authorities, public institutions, universities, local and intemational organizations, private institutions, NGOs and individuals in order to fulfill its missions o Missions of Directorate of Archaeological Objects:

- Survey above ground and underwater, private or public propose listing on the General List; - Propose project laws, procedures, criteria and specifications that are related to protection of archeology and possessions that are described in point 1; - Archive these possessions so that they are accessible to researchers and scientists; - Prepare studies and research; - Take care of these listed possessions - security, maintenance, preservation, storage; - Supervise the trade of such artifacts; - Give opinion related to submitted applications for the creation of the special archaeological and heritage museums; - Establish cooperation and coordination; - Cooperate with the Public Administration of Museums.

52. The new structure will have I Director General (Grade 1), 3 Directors (Grade II), 4 Experts (Grade I[), as opposed to I Grade I employee now.

53. The list of proposed missions clearly shows the main axes of reform of the DGA that the Govermnent of Lebanon recognizes are of critical importance for the sector. The new structure will take the responsibility for:

- policy malingfunction: proposing policies, plans, program of activities;

- asset managementfunction: inventory and maintain the active database of heritage assets; maintain historic properties from conserving and researching to using and displaying them;

- urban planning function: working as a team with the urban planning authorities, municipalities and public institutions to preserve buried and above ground heritage in

- 189 - urbanized areas"; - development risk management and archaeologicalmitigationfunction: cooperate and control the construction operations, coordinate archaeological impact assessments and preserve archaeological vestiges preferable in situ ; - project execution function: manage, procure, supervise works on archaeological and built heritage sites; - cooperation and public outreach function: enter in partnerships and cooperation agreements with authorities, institutions and individuals.

54. The analysis of the current performance of the DGA above showed that some of these functions are already performed, but the capacity, available tools and financing are extremely limited. Local communities are also highly limited in resources and staff that can be dedicated to heritage management - if any technical staff, municipalities employ engineers, and extremely rarely architects, let alone conservation architects or archeologists. Like Lebanon, many countries in the Mediterranean basin are undergoing a similar policy debate and reforms, especially on the points (c) and (d) - urban planning and archaeological assessments during construction projects. The European Countries have signed a Convention in 1992, and in the particular case of France, a law on preventive archeology has been passed in early 2001, linking archeologists, urban planners, developers and local authorities in a holistic approach to preservation and development.

Objectives of a Capacity ]Bunldirng Pirogram

55. The analysis of the current capacity and performance of the DGA and the summary of the intended reforms make it clear that the Cultural Heritage and Urban Development Project will be implemented in the critical period for the Lebanese Cultural Heritage sector. The Government's commitment to passing the law that will establish the DGABH, and securing the necessary human and financial resources for its effective launching is critical to the project's success.

56. Once established, the DGAH will receive two lines of assistance from the CHUD project: a) through implementation of its archaeological and urban components, the CHUD project will engage the new structure in an intensive period of hands-on learning and in supervising projects that could be later replicated across the country; b) through a parallel capacity building program for the new structure and the sector as a whole, the CHUD project will leverage international assistance and knowledge transfer to help the GOL in implementing the legal and policy framework reform, and begin equipping the realigned and reinforced public administration with the methodology and tools so that it can deliver efficiently the public service according to its stated missions.

57. Among other intemational partners for the UNESCO World Heritage Center will be providing expert quality oversight for the works on and overall preservation of the World Heritage Sites.

58. The Capacity building program for the DGA is designed to accompany the reform in its critical junctions:

- Support to developing a policy making function: Equipping the reformed DGA with an efficient set of regulations and enforcement measures. Formulation of Archeological and Built Heritage Sector Strategy;

- 190 - - Support to developing an asset management function: As was stated above, the archeology and built heritage sector spans heritage underground, underwater, above ground, in situ, in storage, and on display. Documenting and mapping the actual and estimated assets that are to be protected urgently, in the immediate future, or when appropriate methods will be invented, is critical for efficient policy making and regulatory activity. The backlog of archiving of existing documents, and objects is very large and will be covered to a large extent by the OMSAR project. The archaeological mapping of Lebanon is an outstanding project as well, and the project will seek to raise funds for this critical undertaking. In the meantime, the project will address the urgent need to properly inventory, document, and create an operational database for the protected monuments that are currently on the General List of Historic Monuments. Having this inventory completed will allow the Directorate to prioritize their conservation program and estimate the costs of the most urgent rehabilitation activities - that will have to be financed and carried out in partnerships with the local communities, private owners, and other stakeholders.

- Support to urban planning function: Technical assistance will be provided jointly to the reformed DGA, and DGU and municipalities for streamlining the elaboration of the detailed urban planning documents for the areas to be protected and defining the tools (e.g. obligatory archaeological or built heritage assessments separately or as part of the environmental impact assessments) to be applied to land development projects that could affect archaeological or built heritage remains. Assistance will be provided also for further elaborating the legal texts especially in the areas of building rights transfers and owner compensation.

- Support to project execution function: Operational guidelines will be elaborated to streamline budgeting, management, procurement, and supervision of a range of works on archaeological and built heritage sites.

- Support to cooperation and public outreach function. Funding would be leveraged on grant basis for participation in a number of intemational and regional conferences and organization of a series of outreach activities. The program and financing plan for these activities will be determined after the completion of the sector study and the priority action plan.

- Training to staff will be provided for database management and operational use; on heritage protection and urban planning; and project management.

Description of Capacity Building Program

59. Comnonent I - Strengtheninf of the legal framework. The legal framework for Cultural Heritage protection in Lebanon, currently under reform, is weak, fragmentary, outdated and does not allow for any effective protection. Therefore, the first component contains the following priority activities:

* Develonment of legislation - Revision of the Antiquity Law. This action foresees the revision of the Antiquity Law in respect to the following issues: (a) the definition of antiquity is too restrictive and does not reflect the content of Cultural Property as internationally recognized; (b) the law is limited to protection measures, while the modem approach is based on the integration of protection in the cultural, social, economic and physical planning and development; (c) protection measures are full of gaps; (d)

- 191 - punishment measures are outdated and have lost effectiveness; (e) several provisions are not implementable in present conditions; and (f) international context needs to be reflected in the law. - Coordination among different laws. Different definitions of cultural property and different classification systems, lists and inventories contained in various pieces of legislation (including the antiquity law and the new proposed laws on the Ministry of Culture and on the protection and valorization of monuments, historic sites and architectural complexes), as well as different legal protection measures need to be reconciled and harmonized.

D Enforcement of legislation. - Elaboration of executive decrees, which must set rules and procedures for the law application. - Impact assessment procedurefor cultural property. Urbanization and construction activities being one of most serious threats to built heritage in Lebanon, action is required at the legal, financial and administrative level, accompanied by awareness building programs. - Trainingof Police and Custom officers. - Formulationof a GeneralStrategyfor CulturalProperty. It will set policy goals and their translation into clear objectives and implementation strategies.

60. Component 2 - DGA Capacitv Building Action Plan . DGA re-structuring and staffing under the proposed new law on the organization of the Ministry of Culture will be implemented by the Administration. The approval by the council of Ministers of the recruitment of additional staff on a contractual basis has been indicated as a possible approach for resolving the staffing issues in the medium - term.

a Advisory services to MOC in the process of DGA organizational restructuring and human resource management. Human Resource Policy and Management Framework will be prepared to guide personnel selection, motivation, and supervision.

a Inventory of built heritage. The present absence of such an inventory is perceived as a most important weakness preventing any effective conservation and safeguarding program. The task of building an appropriate heritage inventory is huge in scope and could not be undertaken by the DGA alone with its own means. The minimal requirements to build a capacity and a system within the DGA are considered and separate terms of reference will be elaborated. An additional optional Project is foreseen to assist the DGA in building the National Heritage Inventory.

0 Planning Budgeting system. A new planning-budgeting system will be established that is results-oriented and combines strategic planning and performance budgeting. The system will be used to make appropriation and expenditure decisions based on a precise identification of needs and goals. The implementation entails: (a) formulation and organization of the system; (b) development of an associated computerized system; (c) preparation of an operation manual; and (d) training of personnel.

- 192- * Business re-engineering and design of operational manuals. To reinforce service efficiency and quality control functions, procedural guidelines will be compiled in close consultation with the DG and senior DGA personnel. Heritage and management experts will develop at least five procedural manuals containing step by step guidelines on recurrent business practices, such as the following: (a) investigation and control manual; (b) expropriation manual ; (c) inventory, inscription and classification manual; (d) site management and co-ordination of local valorization and tourist activity manual; (e) museums exploitation, administration and management manual; (f) general administration manual; and (g) contracting services manual.

* Valorisation, awareness and outreach. Heritage promotion and public outreach functions will be institutionalized. It will include (a) skills development in sustainable tourist areas development and management; (b) training cultural mediators; (c) preparation of a pilot program of participatory projects in heritage rich local communities and of school volunteer programs supporting documentation, protection and maintenance activity; (d) tailored awareness raising targeting key partners at all levels and, in particular municipality representatives; (e) formulation and wide circulation of selected audio-visual and print information/communication materials.

* Training and human resources development. This subcomponent will support the DGA in mobilizing national and intemational expertise for the formulation of human resources and career development plans, covering a period of five-years and offering a mix of opportunities for fellowships, study tours and workshops. Emphasis will be placed on continuous learning and demand-driven training.

61. Component 3 ( oDtional. currently not financed) - National Heritage Inventory. A separate project is proposed to address the fact that the cultural resources of Lebanon are largely unknown due to the lack of a comprehensive record pertaining to their location and nature. This makes them vulnerable to loss or change through conflicting land use and unsympathetic development. The heritage inventory project, if the financing becomes available, would identify the main cultural resources of the nation, assess their values, identify problems and threats to their preservation and conservation as well as detennine the most adequate management strategies for their comprehensive use. The inventory will therefore help identify options and threats, priorities and plans as well as determine the required human and technical resources for conservation and management.

Summary of technical assistance 62. The following table summaries the components and sub-components of the proposed technical assistance. Estimated cost (US$ million) A|tions, . - t > .', > A - - - . Estimated !'*- ~~~Cost

-~~~~~ -~~~~~ ,. ~~~~~~US$milflon - Strengthening of the legal framework 1.000 - DGA Capacity building - UNESCO advisory services for World Heritage Sites preservation 0.279 - Equipment for the DGA 0.170 Total 1.449

*- 193- End notes 1. Ottoman Archeology Law of 21/02/1884, the Law of Archeological Excavations of 01/04/1916 and the decrees No 387 of 09/05/1919; No 560 of 02/08/1919; No 47 of 24/06/1920.

2. Modified by decree No 196 of 19/12/1933; No 68 of 30/03/1936; No 102 of 07/05/1936 ;No 22 of 26/04/1937 ; No 11 of 13/01/1943; No 40/66 of 22/06/1966; No 14/90 of 20/08/1990. The Decree/Law modified the previous decree No 29/L.R of 16/03/1932, and cancelled the Ottoman Archeology Law of 21/02/1884, the Law of Archeological Excavations of 01/04/1916 and the decrees No 387 of 09/05/1919; No 560 of 02/08/1919; No 47 of 24/06/1920; No 207 of 26/03/1926; No 748 of 31/01/1927; No 749 of 31/01/1927; No 3375 of 17/12/1931.

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4. <>.

5. < Si le proprietaire refuse d'effecteur ces travaux, l'autorite municipale correspondante Ala region, et l'autorite administrative, Adefaut de municipalite, remplace ledit propri6taire d6faillant a son obligation , sur demande du service des anciennes antiquites. L'autorite, qui se substitue au proprietaire defaillant, peut recuperer les frais r6els depens6s en y ajoutant le taux de 25 pour cent, conformement aux lois en vigueur, relatives a la perception des droits municipaux ou des fonds publics )

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7. The estimate for the photo, maps, and document archiving and digitizing has been requested by the Office of the Minister for State Administrative Reform (OMSAR) that will finance archiving, a Document Management System (DMS), and a GIS. The financing comes from the Arab Fund for Social and Economic Development. The exact amount is not known, but it can reach US$ 500 thousand and the tender can be launched within 6 months. The request for assistance was submitted by the DGA in November 2001 and the projects is at the stage of scoping the amount of archiving and document backlog.

8. For example, in 2000/2001, DGA collaborated with universities on 7 excavation sites (Tell Arqua with Paris I Sorbonne, SaYda with the British Museum, grotte de Hourie-Qadisha, Tell Burak with university of Tubingen, Kamed el-Loz with university of Fribourg, Chhim with Warsaw University, Phoenician necropolis of Tyre with Barcelona University, 10 urgent archaeological soundings ( Baalbeck, Manara, Mar Mitr, Chhim, Helaliye, over 18 excavations in the region of Tyre, Beyrouth, Kfarhabou, Tikrit, Bireh, Qannoubine, Hakour, Mejdlaya, Achache, Tbail); over 10 archaeological surveys (Yanouh and the valley of Nahr Ibrahim, Tyre, liberated territories of South Lebanon, Kamed el-Loz, region de Aarsal, a number of geo-archaeological surveys, submarine archaeology in Byblos and in the Egyptian port of Tyre.

9. Improvements in Byblos, Baalbeck, ancien Tell of Beirut, landscaping in Beit eddine, conservation and restoration studies in Chateau de Beaufort, citadelle de Hasbaya,, Faqra, Fontaine de Hiram and Tour de la Mer in Tyre, rehabilitation studies of center of Douma, of ancient Souq of Batroun, etc.

- 194- 10. The needs analysis should be performed by a consultant in order to identify DGA's functional requirements, taking into consideration the new structure and missions of the Directorate, proposed in the draft Law on the MOC reform. See attached Summary TORs for a protocol of a needs analysis.

It. The modem challenge is to integrate decision-making for protection (preferably in situ) of buried or underground vestiges, the above ground monuments and neighborhoods and underwater heritage, into a holistic urban planning approach, that would be sensitive of the priorities established at a local community level, therefore contributing to the livability of the heritage rich communities.

12. The 1992 European Archaeological Heritage Convention (Malta Convention) applied the "polluter pays principle" from environmental science to archaeological preservation. Article 6 "The financing of archaeological research and conservation" states the responsibility of the State: (a) to arrange for public financial support for archaeological research from national, regional -and local authorities in accordance with their respective competence; (b) to increase the material resources for rescue archaeology: by taking suitable measures to ensure that provision is made in major public or private development schemes for covering, from public sector or private sector resources, as appropriate, the total costs of any necessary related archaeological operations; by making provision in the budget relating to these schemes in the same way as for the impact studies necessitated by environmental and regional planning precautions, for preliminary archaeological study and prospect ion, for a scientific summary record as well as for the full publication and recording of the findings. At the same time, providing early information to the developer about the "risks" of planned operation stemming from possible archaeological impact enables public or commercial developers to design sustainable projects by correctly assessing risks of development in archeologically sensitive areas.

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