A Report on the Status of Inter-Municipal Cooperation Prepared for OSCE Spillover Mission to Skopje By VNG-International James G. Budds Senior Advisor June 1, 2004 Table of Contents I. Introduction ................................................................................................................. 5 II. Overview of the Macedonian Legal Status and Comparative Examples ............... 7 Macedonian Law.......................................................................................................... 7 Comparative National Examples ............................................................................... 8 Sub-National Examples............................................................................................... 9 III. Perceptions of Inter Municipal Cooperation .......................................................... 13 Relationships .............................................................................................................. 13 IV. Current Activities in Inter-Municipal Cooperation............................................... 18 Outside Study Areas.................................................................................................. 18 The Study Areas......................................................................................................... 20 The Eastern Region ................................................................................................... 20 The South Central Region ........................................................................................ 22 V. Obstacles, Opportunities and Conclusions.............................................................. 25 VI. Final Conclusions....................................................................................................... 29 VII. Recommendations...................................................................................................... 30 Annexes A. List of Interviewees B. Bibliography C1. Sample Inter-Municipal Cooperation Agreement/ Orizarska C2. Sample Inter-Municipal Cooperation Agreement/Solid Waste C3. Sample Inter-Municipal Cooperation Agreement/ Vinica-Zrnovci C4. Sample Memo of Agreement between Municipalities C5. The Statute of ProAqua – Joint Municipal Company Attachments 1. Complete report of Inter-Municipal Cooperation in the Netherlands and Hungary 2. Solid Waste Management for South Western Macedonia 3. Extract from Management Guide on Inter Municipal Cooperation in the State of New York, USA 2 Executive Summary The following report is the result of OSCE’s interest in pursuing and understanding the viability, desirability and breadth of potential use of Inter-Municipal Cooperation as a technique for better urban management. “The goal of the assignment is to explore the feasibility of different forms of inter-municipal cooperation…and to determine the extent to which inter municipal cooperation is a viable option for the achievement of a more efficient and effective provision of services and performance improvement at the municipal level, while taking into account existing administrative capacities and the scope and quality of services currently provided by municipalities.”1 Interest in the program was initiated as a result of the extensive work being done by GTZ (the donor with the most apparent experience in the country with this issue) and a desire to determine what other outlets and opportunities existed for such cooperative arrangements. The study first looks at the Macedonian law on the issue of Inter-Municipal Cooperation and finds areas where, for the benefit of all concerned, a more detailed and constructive modification of the current law is desirable. Comparing the law with that of western European countries finds that Macedonian law is as, if not more, permissive in its applications than many of them. However, the law is also virtually bereft of any regulatory or implementing guidelines and leaves the structure open and without any concrete formatting. Though this provides an excellent opportunity for municipalities to be creative, which is positive, it also opens them to potential legal entanglements later on if the partnerships dissolve. Another finding of the study is that the host country, unlike the other European countries that were used to compare systems, does not have an intermediate level of government. The study does not suggest that that the country should or should not pursue such a change in its structure but does point out that such a difference has a substantial impact on Inter-Municipal Cooperation. Frequently, in countries that do have such a system the intermediate level undertakes some of the responsibilities that Macedonian cities are contemplating doing on a bilateral basis. The report finds that the attitudes toward the concept differ somewhat depending on the perspective. There is considerable skepticism among those viewing the process from Skopje, whereas the local officials look at it more as an inevitable evolution of the process and are quite committed to pursuing it. We found some hesitancy on the part of donors to engage directly in programs except closed end projects where there was no ongoing cooperation needed beyond the actual project. (For example infrastructure construction projects with a clear beginning and end). However, the findings show that the municipalities are much more in need and, to a great extent, pursuing on their own, projects of cooperation that require ongoing operational and maintenance arrangements. These are by far the more difficult arrangements as they require cooperation in management structure, personnel appointments and the like. The report concludes that there are numerous cases where this technique is currently being used, but more importantly the need and demand is growing rapidly. A close review of the law on Local Self Government, coming into full effect in January of 2005, indicates that the level of competencies and responsibilities under the purview of the local government will 1 Taken from the OSCE Terms of Reference for “Consultancy to conduct a feasibility study on Inter-Municipal Cooperation 3 change fairly drastically. With such a modification and little change in the overall resources available to deal with the issues, the demand for more and more Inter-Municipal Cooperation is inevitable. It will require much expertise and assistance, from internal as well as externals sources, so that the municipalities can ensure that their constituents are receiving all of the services expected and that the services are performed in as efficient and effective manner as possible. Thus a final conclusion of the report, which can be found in a series of recommendations, is that the help of the donor community, central government, associated agencies and associations are all needed to encourage and help implement this tool as a means toward better local government. 4 I. Introduction The new law on Local Self – Government and, potentially, 42 other defining and regulating laws are due to be implemented on the first of January, 2005. With the changes come many new competencies not previously granted to local government, as well as many new responsibilities, including funding, not previously available to local governments. Municipalities that previously relied on the central government to provide services will find that they are expected to provide the service to their constituents. Since much of the funding will be generated locally, a premium will be placed on efficiency and effectiveness of operations. This will require maximizing of resources. In short, this highlights a substantial change to the current way of conducting local government in the country. One possible tool to be considered in these new conditions is enhanced use of Inter-Municipal Cooperation. With these major changes in mind, OSCE has engaged VNG International to undertake a feasibility study on the issue of inter-municipal cooperation. “The goal of the assignment is to explore the feasibility of different forms of inter-municipal cooperation…and to determine the extent to which inter municipal cooperation is a viable option for the achievement of a more efficient and effective provision of services and performance improvement at the municipal level, while taking into account existing administrative capacities and the scope and quality of services currently provided by municipalities More specifically, the objectives are as follows: - To explore potential areas for inter-municipal cooperation that will improve service delivery and the performance of competencies and to determine whether relevant international experience, such as the Bavarian model, is applicable in The former Yugoslav Republic of Macedonia; - To identify the best form of inter-municipal cooperation on the indicative model provided for by the Law; - To identify existing and potential obstacles and causes that would prevent successful introduction of different forms of inter-municipal cooperation, if inter-municipal cooperation is found to be a viable option; - To recommend a possible way forward and propose actions to be taken to overcome the identified obstacles, if inter-municipal cooperation is found to be non-feasible; and - To assess the international community’s and government’s views on the feasibility of inter-municipal cooperation, given the current state of decentralization in the country”2. One of the package of 42 Laws is the law dealing with Territorial Division, a law that will modify the number of municipalities. Currently,