Resettlement Due Diligence Report People's Republic of China: Hubei

Resettlement Due Diligence Report

July 2020

People’s Republic of China: Hubei Xiangyang Elderly Care Service Development Project

Resettlement Due Diligence Report for:

(i) Zhumeng Hengzhuang EC and HC (EC1 and HC1) (ii) South Jianshe Road EC Facility (EC 8)

Prepared by Xiangyang Municipal Government for the Asian Development Bank.

CURRENCY EQUIVALENTS (as of 22 June 2020)

Currency unit – yuan (CNY) CNY1.00 = $0.1414 $1.00 = CNY7.0710

ABBREVIATIONS

AAOV – average annual output value ADB – Asian Development Bank AH – affected household AP – affected person DDR – due diligence report DH – displaced household DMS – detailed measurement survey DP – displaced person FGD – focus group discussion LA – land acquisition LAR – land acquisition and resettlement LEF – land expropriated farmers PRC – People's Republic of China XMG – Xiangyang Municipal Government XPMO – Xiangyang project management office ha – hectare (1 ha = 15 mu) mu – Chinese unit of measurement (1 mu = 666.667 square meters)

NOTE

In this report, "$" refers to United States dollars.

This resettlement due diligence report is a document of the borrower. The views expressed herein do not necessarily represent those of ADB's Board of Directors, Management, or staff, and may be preliminary in nature. Your attention is directed to the “terms of use” section of this website.

In preparing any country program or strategy, financing any project, or by making any designation of or reference to a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.

TABLE OF CONTENTS Endorsement Letter ...... ii 1. BACKGROUND ...... 1 2 LAR DUE DILIGENCE ON THE ZHUMENG HENGZHUANG EC AND HC ...... 5 A. Basic information of the facilities ...... 5 B. Current status of project site ...... 6 C. Land acquisition review ...... 7 D. Conclusion ...... 13 3 RESETTLEMENT DUE DILIGENCE REPORT ON THE SOUTH JIANSHE ROAD EC FACILITY ...... 17 A. Basic information of the Facility ...... 17 B. Current status of project site ...... 17 C. Implementation Agencies ...... 18 D. Resettlement policies and compensation rate ...... 20 E. House Demolition Impact Analysis and Implementation ...... 22 F. Public Participation and Grievance Redress ...... 25 G. Conclusion ...... 26 ANNEX 1 PHOTOS OF PROJECT FACILITIES AND RELATED DOCUMENTS OF LAND USE APPROVALS ...... 28 ANNEX 2 EXPLANATION AND CONFIRMATION LETTER ...... 37

1. BACKGROUND

1. The Project consists of 5 outputs: (i) Output 1: Institutional scheme and capacity in the provision of integrated elderly care services strengthened; (ii) Output 2: Public–private partnership subproject for elderly care service provision developed; (iii) Output 3: Capacity in the provision of geriatric acute care and rehabilitation strengthened; (iv) Output 4: Support service and capacity for elderly care services strengthened; and (v) Output 5: Policy and Management capacity in elderly care system strengthened.

2. Project outputs will require civil works (hard components) except for output 5. There are 11 facilities included in the Project which will be built at 8 project sites include six elderly care facilities in output 1, two elderly care facilities under a PPP modality in output 2, two G2 hospitals with geriatric acute care and rehabilitation in output 3, and one training facility at the Hubei University of Arts and Science in Xiangyang Municipality under output 4. The 11 facilities are located in 4 districts of Xiangyang City -- Xiangcheng District, Fancheng District, Dongjin New District, and High-tech development zone.

3. Among them, three facilities (EC3, EC4 and EC5) in two project sites will be conducted through retrofitting existed buildings without land occupation, the other eight facilities will be newly built in six project sites which totally acquires 140.63 mu of land, of which 88.35 mu (62.82%) are rural collective land, and 52.28mu (37.18%)1 are state-owned land.2 The newly acquisition of rural collective land for EC2, EC6, EC7 and HC2 facilities will affect 65 households with 307 persons in 3 village communities in Xiangcheng District and Dongjin New District. The construction of EC1 and HC1 facilities in Hengzhuang community in Fancheng District will use 38.6 mu of state-owned land acquired by the local government in 2013 for another project, and not in anticipation of this ADB project3. As of the project resettlement impact survey by the end of 2019, there are six residential houses with total house area of 2,170m2 in the project site and will be demolished by the Project, which will affect six households with 49 persons in Hengzhuang Community. Two project sites (EC8 and HUAS Training Base) will be located in state-owned land. A resettlement due diligence report on land acquisition and resettlement was carried out to confirm that there are no previous or present concerns related to land acquisition, compensation, and relocation. The XMG is responsible for paying compensation and assisting the project-affected persons before the land acquisition and relocation activities start.

4. Land for Zhumeng Hengzhuang EC1 and HC1 has been acquired by local government for Hengzhuang Public Security Housing/Affordable Housing project (the “HPSH project”) of Xiangyang City in 2013, and house demolition for South Jianshe Road EC 8 (PPP) was completed by the local government for Old City/Shantytown Renovation Project in Caiyue Area (the “OCR project”) in 2016. Land acquisition and house demolition were not done in anticipation of this

1 A mu is a Chinese unit of land area measurement (1 mu = 666.667 square meters). 2 The state-owned land has been already acquired, and the rural collective land will be newly acquired by the Project. 3 The Project site of EC1 and HC1 facilities in Hengzhuang community located in plot F of the Hengzhuang Public Security Housing project (the “HPSH project”) of Xiangyang City with total land area of 38.6 mu. There are totally 9 plots in the HPSH project with total land area of 610 mu (40.61 ha). Originally, there were six houses and farmland/construction land in the project site (plot F). In 2012, the local government started the land acquisition of 610 mu of land and ground attachment and completed the compensation in 2013. In 2015, the local government started house demolition in phases according to the subproject construction schedule in the area. As of the resettlement survey which was conducted by the end of 2019, the six house demolition of plot F has not started yet as the plot F was just agreed to be used for the ADB project for the construction of Zhumeng Hengzhuang HC and EC in Nov 2019 by Natural Resource and Planning Bureau of Xiangyang City. 2 project. This Resettlement Due Diligence Report (DDR) on HPSH Project and OCR project confirms that there are neither outstanding involuntary resettlement impacts nor impacts on any specific ethnic minority communities that could trigger ADB’s Social Safeguard Policy requirements.

5. Please find the land acquisition and resettlement (LAR) screen table below and the location map of project sites in figure 1-1.

Table 1-1 Project LAR Impact Screen Table Name of the facilities and Type of Footprint HD LA Remarks belonged construction area (mu) district

Output 1

Local government has acquired the land in 2013 and no additional land acquisition is required. The due diligence of the land EC1 (Fancheng: New acquisition carried out for this Zhumeng 38.60 Yes No construction subproject is in Chapter 2 of this Hengzhuang) DDR. For the 6 residential houses, which will be demolished by this project, please find details in the project’s RP.

EC2 (Xiangcheng: New 25.18 No Yes Please find details in the RP. No.4 middle construction school)

The building originally belonged to Food Administration Bureau and abandoned after relocating to new Retrofit of a building, and was transferred to EC3 (Food government- the IA by the government. Please Administration owned office N/A N/A N/A find the copy of meeting minutes Bureau of building into an in Annex 1. No additional land Xiangyang city) elderly care acquisition or house demolition center. will be required for the subproject. No tenants or employees were found to be affected.

EC4 and EC5 Retrofit of two The property rights of the estate of (High tech zone: housings in the Public Rental Housing Community Public rental Community belonged to IA, which has housing N/A N/A N/A owned by the IA obtained land use right in 2016. community in into elderly care Please find the document in Shenzhen center. Annex 1. The community rental Industrial Park) housing was completed in 2019. No additional land acquisition or 3

Name of the facilities and Type of Footprint HD LA Remarks belonged construction area (mu) district

house demolition will be required for the subproject.

EC6 New 12.62 No. Yes Please find details in RP. (Xiangcheng) construction

Output 2

EC7 (Dongjin New New district: 50.55 No Yes Please find details in RP. construction PPP)

Located in the south of Jianshe EC8 (Fancheng: New Road. Land has been acquired by 10.2 No No PPP) construction local government in 2016. Please find in chapter 3 of this DDR.

Output 3

HC1 (Fancheng: New Zhumeng The same as EC1 construction Hengzhuang)

HC2 (Dongjin New The same as EC 7 New District) construction

Output 4

HUAS was established in 2012. The land was acquired 10 years Hubei University before during the construction of of Arts and New the university. The land belonged Science (HUAS) construction in 3.48 No No to Xiangyang Smart Investment training base the southeast Company. It belongs to the same (Xiangcheng corner of HUAS mother company as the IA. Please District) find the state-owned land use right certification in Annex 1.

Source: FSR and XPMO.

Figure 1-1 project sites location map 5

2 LAR DUE DILIGENCE ON THE ZHUMENG HENGZHUANG EC AND HC

A. Basic information of the facilities

6. The project site of Fancheng Zhumeng Hengzhuang EC and HC is located on the south side of Qili River and west side of the Yunxing Road. The shape of the land is relatively regular and flat. The land area is about 25731.88 m2 (about 38.6 mu). A green land in the center separate the plot into the north part and the south part. A seven-floor second-class comprehensive hospital (mainly for geriatric treatment) with 150 beds is designed in the north part of the plot. A six-floor elderly care service building is in the south part with a capacity of 194 beds.

Table 2-1: Key Design Indicators of Zhumeng Hengzhuang EC and HC No. Item Amount 1 Site area 25731.88 m2 2 Floor area 35013.22 m2 Including 2.1 Ground floor area 24149.2 m2 -Hospital 17026.31 m2 -Elderly care building 7123.11 2.2 Underground floor area 10863.8 m2 3 Building coverage 18.81% 4 Floor area ratio 0.94 5 Green land ratio 41.3% 6 Parking 404 Including -Ground 104 -Underground 300

Figure 2-1 The planning graph and layout chart of the project facilities

B. Current status of project site

7. The Project site of Zhumeng Hengzhuang HC and EC located in plot F of the Hengzhuang Public Security Housing project (the “HPSH project”) in Xiangyang City. Acquisition of 610 mu (40.61 ha) of collective land (which included 38.6 mu of land in plot F) in the HPSH project was completed in 2013 by the local government. The acquisition was not done in anticipation of the ADB project. The house demolition of HPSH project started in 2015 and implemented in different phases according to the subproject construction schedule in the area. As of the resettlement survey which was conducted by at the end of 2019, there were, six houses to be demolished in plot F.

8. At present, the Project site is vacant, except for the six residential houses located at the corner of the plot and a few vegetable plots. The six residential houses will be affected by the Project and detailed resettlement impacts and relocation schemes have been included in the separated RP. The Xiangyang project management office (XPMO) confirmed that during land acquisition from 2012 to 2013, compensation for land, young crops, and ground attachments have fully paid to the owners. As the land was acquired many years ago and not used for construction, four out of six affected households who have not relocated have planted vegetables for their own consumption on the acquired land, no vulnerable groups were found. The four households have expressed that they knew very well that land and ground attachments were compensated during land acquisition before and will not be compensated again. Traditionally, the elderly people of their families are used to planting when they see vacant space and it is very common in the city. They will stop

7 planting once informed by the community before project construction. There is no impact for their income or life.

Figure 2-2 Current situation of project site

9. The land acquisition and resettlement due diligence report aims to (i) review the land acquisition and resettlement in light of the Land Administration Law of the PRC, and the applicable provincial and county regulations and policies on resettlement; (ii) check the land acquisition and resettlement processes, their progress and effectiveness, and fund management; (iii) the affected persons (APs)’s production levels and living standards; (iv) their satisfaction with land acquisition and resettlement; (v) identify outstanding land acquisition and resettlement issues, if any; and (vi) propose corrective actions, if there are significant remaining issues.

C. Land acquisition review

C.1 Implementation agencies

10. The People’s Government of Fancheng District of Xiangyang City is responsible for coordination, management, and supervision of land acquisition and resettlement implementation of HPSH project of Xiangyang City, and to report the implementation progress to the Xiangyang Municipal Government and other relevant authorities. Xiangyang Housing Investment Co., Ltd is the construction unit of the project. The Land Resource Bureau (LRB) of Fancheng District was the land acquisition and resettlement authority, mainly responsible for the coordination, supervision, and arbitration during LAR. The Project Construction Command Department (PCCD) of the HPSH project of Xiangyang City was established in 2010. It has officers from the district government, Wangzhai Subdistrict Office and Hengzhuang Community, mainly responsible for the implementation of house demolition and land acquisition. The functions of the resettlement agencies are as follows:

The People’s Government of Fancheng District of Xiangyang  Conduct coordination, supervision, and arbitration during land acquisition

The Project Construction Command Department  Conduct the detailed measurement survey (DMS)  Participate in the calculation of compensation fees  Participate in the disbursement of compensation fees to affected persons  Handle grievances and appeals arising from resettlement  Provide employment opportunities for affected persons  Carry out land acquisition and house demolition

Land Resource Bureau of Fancheng District  Handle, review, and approve land acquisition formalities  Develop resettlement policies in coordination with authorities concerned  Participate in the DMS  Calculate compensation fees for land acquisition  Conduct coordination, supervision, and arbitration during land acquisition

Wangzhai Subdistrict Office  Participate in the DMS  Handle grievances and appeals arising from resettlement  Assist the PCCD in going through the land acquisition formalities

Hengzhuang Community  Participate in the DMS  Convene a village congress to discuss the compensation and resettlement program  Organize the implementation of the resettlement program  Disburse and manage compensation fees  Providing assistance to the vulnerable groups

C.2 Land acquisition process and procedure

11. As land acquisition of the project was included in the HPSH project of Xiangyang City, which started in 2012, the land acquisition announcement and Notice for hearing on LA was issued in 6 December 2012. It was also the cut-off date of the project. The DMS was conducted as soon as the LAR announcement was over. The Land Resources Bureau of Fancheng District entered into an LA agreement for 610 mu of land with Hengzhuang Community, Wangzhai Sub-district in 2013 and all compensation of land acquisition were fully paid to the APs in two months after the LA agreement was signed. There are no outstanding compensation issues.

12. Because of the COVID-19 outbreak during project preparation and the land acquisition has happened for more than 7 years, the document such as a copy of LA agreement, receipts of land acquisition compensation payments retained by APs could not be obtained to include in the DDR. However, the copy of some land acquisition compensation payment receipts available with Hengzhuang Community Committee

9 after audit by audit bureau has been provided by XPMO which included the payment receipts of 20 APs in Group No.8 of Hengzhuang Community. There were two options for APs to receive the payment of compensation, one is to receive payment through bank transfer and the other is to receive cash directly. Most of the APs choose the first option and received their payment through providing their bank account and the bank payment voucher will be kept by AP themselves. For affected people who choose to receive payment by cash, they need to sign on the payment form once received the payment. Please find the copy of payment receipts in figure 2-2.

13. After verifying with Fancheng District Natural Resources Bureau, Wangzhai Subdistrict Office, and Hengzhuang Community Committee, the XPMO confirmed that land acquisition compensation agreements were signed, and the compensation fee were paid on time according to the compensation agreements, without any outstanding issues. Please find the explanation and confirmation letter in Annex 2.

14. The timeline of land acquisition and compensation payment is given below:

Table 2- 2 Land Acquisition and Compensation Milestones No. Name of the activities Date Responsible Document agencies number and main contents 1 Land acquisition Dec 6, 2012 LRB of FDLRB announcement Fancheng Acquisition District (2012) No.41 2 Notice for hearing on land Dec 6, 2012 LRB of FDLRB Hearing acquisition Fancheng (2012) No.41 District 3 The approval of land April 2, 2013 HPLRD Reply acquisition and conversion (2013) No. 401 of agricultural land 4 Detailed measurement Dec 2012 to Villagers’ Conducted the survey (DMS) of land to April 2013 Committee, land acquisition find out land acquisition Wangzhai Sub- impacts survey impacts district Office, PCCD, LRB of Fancheng District, affected villagers 5 Disclose the DMS results April 2013 to Wangzhai Sub- Confirm the May 2013 district Office, impacts PCCD, LRB of Fancheng District 6 Villagers' representatives’ Dec 2012 to Villagers’ Explain land meetings April 2013 representatives, acquisition and Wangzhai Sub- resettlement district Office, policies;

No. Name of the activities Date Responsible Document agencies number and main contents PCCD, LRB of compensation Fancheng standard; District, village resettlement officers and scheme. group leaders of Hengzhuang community 7 Signing land acquisition 2013 LRB of The agreement compensation agreement Fancheng was signed District between Hengzhuang community and LRB of Fancheng District 8 Villager group meetings 2013 Affected village Discuss the group leaders compensation and villagers’ distribution representatives scheme among the group. 9 Distribute land acquisition 2013 Villagers’ compensation to affected Committee villagers Source: XPMO.

C.3 Land acquisition impact analysis

15. In Hengzhuang Community (Hengzhuang village before 2005) in Wangjiazhai Subdistrict, because of LAR, some villagers lost all their land and were transferred to urban residences. Covering an area of 2.2 square kilometers, Hengzhuang Community has nine village groups, one urban residential sub-community, and a school called Hengzhuang Primary School. Because it is located in the urban area and the rental prices are low, there are a large number of enterprises in the territory of Hengzhuang Community. Among them are two private-owned industrial parks; one collectively owned industrial park operated by the community; 23 enterprises, includes one restaurant, one drivers training school and six large-scale enterprises with an annual output value of over 300 million yuan. As of now, the total population of Hengzhuang community is about 3,500 households with over 10,000 people, including 1155 rural households with 4100 persons who are all Han people.

16. Among the total acquired land area, which was 610 mu, 382 mu were cultivated land (62.62%) and 228 mu (37.38%) were collective owned construction land. Among the total acquired land in plot F of the Project, 25.24 mu were cultivated land (65.39%) and 13.36 mu were collective owned construction land, affected 23 households with

68 persons in Group No.8 of Hengzhuang Community. According to an officer from Wangzhai Subdistrict office, before land acquisition, cultivated land in the village was scarce and was mainly used for planting vegetables and crops. Almost 50% of the villagers work in factories nearby, 30% of the villagers work in Xiangyang city as temporary hands. Others engaged in agriculture, before land acquisition and most of them were middle aged or elderly people. Most of their incomes came from small businesses or from labor at factories nearby. The monthly wage income ranged from 1500 yuan to 2000 yuan per person. All residents have been included in the medical insurance and social security system. Land acquisition didn’t have significant impact on their income.

C.4 Land Acquisition and Compensation

17. The collective land in Hengzhuang community acquired for the project is classified as Area III land in urban administrative region of Xiangyang City, where the land compensation rate is based on location-based comprehensive land price. According to the Notice of the People's Government of Hubei Province on Announcing Unified Annual Output Value Standard and Comprehensive Land Price of Land Acquisition in Hubei Province (E.Z.F.[2009] No.46), the compensation rate is 50,000 yuan/mu in the project area for all types of land which includes land compensation and resettlement subsidy. The compensation rate for young crops is one time payment of the unified annual output value which is 1800 yuan/mu for common cultivated land and 2200 yuan/mu for vegetable plots in the project area according to Letter of Land Resources Department of Hubei Province on Compensation and Resettlement multiple, correction coefficient and compensation standard for young crops of Xiangfan City (E.T.Z.H[2009] No.1645). The annual average output value (AAOV) and location of land were taken into account in the formulation of the comprehensive land price and adjusted every three to five years by the Department of Land Resource of Hubei Province (the new name is Department of Natural Resource of Hubei Province).

Table 2-3 Regional Comprehensive Land Acquisition Compensation Rates in Hengzhuang Community Affected Comprehensive land price in the Young crop village region where the land is acquired compensation (yuan/mu) District Class Commo Land Resettlem Subtot n Vegetab compensati ent al cultivat le plots on subsidy ed land Fanche Hengzhu ng ang III 50000 13586 36414 1800 2200 district Source: E.Z.F.[2009] No.46 and E.T.Z.H[2009] No.1645.

18. The XPMO reported that the copy of the land acquisition compensation agreement, signed in 2013, could not be obtained because of the access problem. According to the introduction of the staff from Xiangyang Housing Investment Co., Ltd, they have transferred put 31.2735 million yuan to the account of LRB of Fancheng District in 2013, which was set up by the Finance Bureau of Xiangfan City in April 2013. This amount tallies with the total compensation fee amount for land acquisition that was calculated by LRB of Fancheng District. LRB of Fancheng District transferred the

12 compensation fee to Hengzhuang community directly about two months after the agreement was signed. The compensation fee for young crops and ground attachments were paid directly to the owners. Based on the decision of village meeting, 100% of land compensation was paid by village collectives to affected villagers according to the area of their affected land.

19. According to the Notice of the office of the Municipal People's Government on printing and distributing the Interim Measures of Xiangfan City for the Employment Training and Social Security of the Land Expropriated Farmers (XFZBF [2009] No. 59), there were three main resettlement schemes for collective land acquisition: (i) social security. The APs could choose to join the social security voluntarily and make contribution based on different age categories. The APs could receive monthly pension, which was equal to the 1.2 times of minimum living standard (MLS) of urban residents and adjusted with the MLS together each year; (ii) trainings and job opportunities. The Human Resources and Social Security Bureau is responsible for the organization of priority training for affected farmers and distribution of information on job opportunities freely to affected farmers. Unemployed affected farmers can get subsidies during unemployment. According an officer from the Bureau, the Bureau has provided several certification trainings for the affected farmers each year according to their demand such as Chinese and western pastry making, electrician and welding. Meanwhile, they also provided entrepreneurship guidance and entrepreneurship fund to the APs who are willing to do small business by themselves; iii) finical service. If the affected farmers want to start their own businesses and find job by themselves, they can apply for small loan guarantee funds and small profit project's small loans with discount interest to the labor and employment administration department, as well as supporting public employment services.

20. According to the socioeconomic survey and interviews for 7 AHs (30.43% of total AHs) affected by land acquisition before during project preparation, 100% of the AHs are satisfied with land compensation standard, payment, implementation, and information disclosure, among them, 28.57% are very satisfied. 42.86% of the AHs conducted small business with the LA compensation and other 57.14% chose to deposit the compensation into banks. The average household income increased 15% compared with income before land acquisition. The box below presents the discussions with one of the affected persons:

Box 1: The records of interview with APs Interview time： 26 December 2019 Interview location: Heng Zhuang Community Interviewees: Mr Wang，the villager from the village group No.8 of HengZhuang community， 31 years old Q: How many people are there in your family? A: There were three people before land requisition ， me and my parents. After land acquisition, I got married and have child, there are totally 5 persons in my family. Q: Before land acquisition for the affordable housing project, how much land did your family have? A: About 1.5 mu Q: How much has been acquired by the affordable housing project? A: All of them were acquired. Q: When did the land requisition happen? Have you received the compensation? A: About the end of 2012 to the beginning of 2013. We received the land acquisition

compensation in 2013. Q: Are you satisfied with the compensation standard? A: Yes, satisfied. Q: What did you do after receiving land requisition compensation? A: I used part of the money to do small business, and all the extra money was deposit into the bank. Q: Does land requisition affect your family income? Is it increased or decreased after land acquisition? A: Both my father and I are worked at public institutions. I worked in the community and my father worked in the subdistrict office. My mother retired from an enterprise, my wife taking care of our child at home and does not work now. The main income of the family is salary income, my father and I can earn about 150,000 yuan a year, my mother's pension is basically used for the daily living expenses of the family. As a result, our family income was not affected by land acquisition. After land acquisition, our family income increased. Source: socioeconomic survey during project preparation

C.5 Complaints and Grievances

21. The project has established a transparent and effective channel for grievance redress. LRB of Fancheng District was responsible for explaining to the APs all related issues of land acquisition. It also informed the APs about the appeal procedure to the villagers’ committee, Wangzhai Subdistrict, PCCD, and the procedure of seeking court’s assistance to arbitrate disputes. All resettlement policies and compensation standards had been disclosed to the APs. According to the office records, authorities received no grievances or complaints. Also, no judicial case related to resettlement had been filed.

D. Conclusion

22. Based on the site visits, review of documentation on (i) announcement of land acquisition issued by district land resource bureau, (ii) approval of land acquisition and conversion of agricultural land issued by Department of Land Resource of Hubei Province, (iii) payment of compensation to the district land resource bureau, and consultations with 7 affected persons in the project sites, it is confirmed that there are no outstanding grievances or issues related to payment of compensation to the affected persons.

Figure 2-2: Documents of LAR in Hengzhuang community for the project

Announcement of land acquisition issued by Land Announcement of Land Acquisition Hearing Resource Bureau of Fancheng district on 6 Dec 2012 published by Land Resource Bureau of Fancheng district on 6 Dec 2012

Approval of Land Acquisition and Conversion of Approval of Land Acquisition and Agricultural Land of Hengzhuang Public Security Conversion of Agricultural Land of Housing project (the “HPSH project”), issued by Hengzhuang Public Security Housing Department of Land Resource of Hubei Province on 2 project (the “HPSH project”), issued by April 2013 (page 1) Department of Land Resource of Hubei Province on 2 April 2013 (page 2)

The certificate of payment Announcement of Rural House Demolition (original bank receipt voucher evidencing payment of for Hengzhuang Public Security Housing compensation fee with total amount of 31.27 million project (the “HPSH project”) issued by yuan to the Land Resource Bureau of Fancheng Project Construction Command Department District) on 3 Nov 2015

Receipts of compensation payment to APs kept by Receipts of compensation payment to APs Hengzhuang community committee after auditing by kept by Hengzhuang community committee audit bureau. Page 1. (4 APs choose receive payment after auditing by audit bureau. (3 APs through bank transfer and bank account were hidden choose receive payment through bank for privacy protection) transfer and bank account were hidden for privacy protection)Page 2.

Receipts of compensation payment to APs kept by Receipts of compensation payment to APs Hengzhuang community committee after auditing by kept by Hengzhuang community committee audit bureau. Page 3. (12 APs choose receive after auditing by audit bureau. Page 4. (1 payment through bank transfer and bank account APs choose receive payment by cash) were hidden for privacy protection) Source: XPMO.

3 RESETTLEMENT DUE DILIGENCE REPORT ON THE SOUTH JIANSHE ROAD EC FACILITY

A. Basic information of the Facility

23. The South Jianshe Road EC Facility (EC 8) is located east of Dufu and south of the Jianshe Road, covering 6800.54 m2. The designed floor area is 11148.17 m2 with four 5-floor buildings that can provide 195 beds.

Table 3-1 Key Design Indicators of South Jianshe Road EC No. Item Amount 1 Site area 6800.54 m2 2 Floor area 11148.17 m2 Including 2.1 Ground floor area 8798.17 m2 2.2 Underground floor area 2350 m2 3 Building coverage 29.8% 4 Floor area ratio 1.29 5 Green land ratio 35% 6 Parking 61 Including -Ground 15 -Underground 46 Source: FSR.

Figure 3-1 The planning graph and layout chart of project facility

B. Current status of project site

24. The project site is in Zhaojiaxiang Community, Hanjiang Subdistrict of Fancheng District. It was in the central city area which belonged to the old industrial

18 zone of Fancheng District before with crowded living space, poor infrastructure, and lack of greening and public entertainment space. There were two 5-story high residential buildings with 57 urban households with a total housing area of 4874.63 m2. As the whole Zhaojiaxiang Community has been included in the Old City/Shantytown Renovation Project in Caiyue Area (the “OCR project”) with other three communities - Caiyue Community, Hannan Community and Shiying Community, the house demolition has been conducted by the local government for the OCR project from March 2016 to September 2016. Such demolition work was not done in anticipation of the ADB- assisted project. At present, all of the affected households have moved to new houses and the Project site is vacant.

25. The resettlement due diligence report aims to (i) review the house demolition and resettlement in light of the Land Administration Law of the PRC (2004) and Regulations on the Demolition and Compensation of Houses on State-owned Land of PRC (2011), and the applicable provincial and city regulations and policies on urban house demolition and resettlement; (ii) check the house demolition and resettlement processes, their progress and effectiveness, and fund management; (iii) the affected persons (APs) production levels and living standards; iv) their satisfaction with house demolition and resettlement; (v) identify outstanding house demolition and resettlement issues, if any; and (vi) propose corrective actions if there are significant remaining issues.

The location of project site: in the south of The current situation of project site Jianshe Road and north of Han River Figure 3-2 The location of project site and current situation

C. Implementation Agencies

26. On March 26, 2016, Fancheng District Government issued the Notice of Housing Demolition on the State-owned Land of the Old City/Shantytown Renovation Project in Caiyue Area (the “OCR project”). The scope of housing

19 demolition of the OCR project is from Changhong Road in the East to Yueliangwan Park in the west, from Hanjiang River embankment in the south, to the enclosed area of Jianshe West Road - Hanjiang South Road - Renmin West Road in the north, which included Caiyue Community, Zhaojiaxiang Community, Hannan Community, and Shiying Community. There were 7,145 houses to be demolished with a total building area of 674,859.72 ㎡ including 6,707 urban houses on state-owned land, with a building area of 630,555.13 ㎡; and 438 rural houses on collective land with a building area of 44,304.59 ㎡. The total investment of the project is 4.6 billion yuan. In view of the large acquisition scope of the project, in order to improve the efficiency of housing acquisition and resettlement, the house demolition was carried out in two phases. The scope of first phase house demolition included households located from Changhong Road in the East to Hanjiang South Road in the west, and from Hanjiang River embankment in the south to the enclosed area of Jianshe West Road in the north. A total of 3,416 households in Caiyue Community and Zhaojiaxiang Community were relocated in the first phase, including the two residential buildings in the project site of South Jianshe Road EC Facility (EC 8, PPP).

27. The People’s Government of Fancheng District of Xiangyang City (FDG) is responsible for coordination, management, and supervision of house demolition and resettlement implementation of the OCR project, and for reporting the implementation progress to the Xiangyang Municipal Government and other relevant authorities. Xiangyang Housing Investment Co., Ltd is the construction unit of the project, which is also a subsidiary of Hanjiang State-Owned Capital Investment Group Co., Ltd. (HJGT). The Housing and Urban-Rural Development Bureau of Fancheng District was the house demolition and resettlement authority, mainly responsible for the coordination, supervision, and arbitration during house demolition and resettlement. The Hanjiang Subdistrict Office and House Demolition Office of Xiangyang City 4 was the implementation agency mainly responsible for the implementation of house demolition and resettlement. Hanjiang Subdistrict Office have appointed persons to be responsible specifically for resettlement and coordination. The community committees assigned staff are in charge of house demolition and resettlement. The project command department of OCR project (PCD) was established in March 2016. It has the officers/staff from the district government, sub-district office, and community committee who are responsible for house demolition and land acquisition.

28. Xiangyang Housing Investment Co., Ltd has a land acquisition and house demolition department which is responsible for cooperating with resettlement implementation agencies and FDG of LAR. Most of the staff members involved in the component have rich experience in land acquisition and resettlement. They are familiar with the house demolition and compensation policies and practices and have played a good organizing and coordinating role in house demolition and resettlement activities. They have performed their duties very well thereby ensuring successful resettlement implementation. The functions of the resettlement-related agencies are outlined below:

(i) The People’s Government of Fancheng District of Xiangyang: coordination, management, and supervision during house demolition and resettlement implementation of the OCT project

(ii) Housing and Urban-Rural Development Bureau of Fancheng District: (a) conduct coordination, supervision, and arbitration during house demolition; and (b) entrust the real estate appraisal agency to carry out the appraisal of affected houses and facilities;

4 Belonged to Housing Security and Housing Administration Bureau of Xiangyang City.

(iii) The Project Command Department of OCR project (PCD): (a) responsible for overall coordination; (b) promoting work and organize meetings of stakeholders; and (c) publicize compensation policy and collect complaint information;

(iv) The House Demolition Office of Xiangyang City: (a) conduct the detailed measurement survey (DMS); (b) participate in the calculation of compensation fees for affected households; (c) participate in the disbursement of compensation fees to affected persons/enterprises; and (d) develop resettlement policies in coordination with authorities concerned;

(v) Hanjiang Subdistrict Office: (a) conduct the detailed measurement survey (DMS) of the affected households and support the House Demolition Office; (b) participate in the disbursement of compensation fees to the affected persons; and (c) handle grievances and appeals arising from resettlement;

(vi) Zhaojiaxiang Community Committee: participates in the DMS;

(vii) Xiangyang Housing Investment Co., Ltd: (a) raising and managing funds for urban construction; (b) investing in urban infrastructure construction and supporting projects; and (c) construction of resettlement housing and livelihood security housing.

D. Resettlement policies and compensation rate

D.1 Domestic Laws, Regulations and Policies Applicable to Resettlement

29. It is confirmed by XPMO that all of affected urban households have received compensation for their demolished houses according to the compensation standards of national and local policies and findings from the consultations with APs. The compensation standards were based on:

(i) Land Administration Law of the PRC (January 1, 1999, amended on August 28, 2004), (ii) Ordinance on House Demolition on State-owned Land and Compensation (State Council Order No.590, 2011), (iii) Measures for the Assessment of Housing Demolition on State-owned Land issued by the Ministry of Housing and Urban-rural Development of the People's Republic of China (JF [2011] No. 77), (iv) Hubei Province Ordinance on House Demolition on State-owned Land and Compensation (HZL No. 380, 2015), (v) Guidance on Promoting the Resettlement of Urban Old City/Shantytown Renovation into Monetary Resettlement" issued by Housing and Urban-rural Development Department of Hubei Province " (EJ [2015] No.8), (vi) Compensation standard for House Demolition on State-owned Land in Xiangyang City (XFZ No.79, 2011), and (vii) Implementation Plan of Compensation for House Demolition on State- owned Land of Old City/Shantytown Renovation Project in Caiyue Area

issued by Fancheng District People's Government of Xiangyang City in March 26, 2016.

D.2 Cut-off Date of Eligibility

30. The cut-off date for compensation is the date of the house demolition announcement. On April 6, 2016, Fancheng District Government officially released the Announcement of Housing Demolition on the State-owned Land of the Old City/Shantytown Renovation Project in Caiyue Area. The cut-off date of the OCR project of Caiyue Area in Fancheng District is on April 6, 2016.

D.3 Urban House Demolition Compensation Rates and Resettlement Schemes

31. Compensation for urban house demolition on the state-owned land is according to the Ordinance on House Acquisition from State-owned Land and Compensation (State Council Order No.590, 2011)，and related policies of Ministry of Housing and Urban-rural Development, Hubei Province and Xiangyang City. The APs of urban residential house demolition could choose cash compensation and resettlement housing scheme. According to an officer of land acquisition and house demolition department of Xiangyang Housing Investment Co., Ltd, all 57 affected households chose Cash Compensation modality.

32. For the households who chose cash compensation, the total amount of house demolition compensation fee includes three parts: i) part A - house compensation fee; ii) part B - compensation for decoration, and ancillary facilities; and iii) part C - other compensation fees includes moving subsidy, rewards for APs if they remove belongings on time, and other compensation for the relocation of water meter, electricity meter, natural gas and telecommunication network equipment etc. 11.The calculation formula of part A, house compensation is as follows:

Part A = (location-based price (P1) + housing replacement price (P2) × correction factor (a)) × affected housing area (b).

33. Location-based price refers to the average price of state-owned land calculated through comprehensive evaluation of economic, traffic, environmental and other factors in the area. According to the introduction of property valuator from Xiangyang chengzuo Real Estate Appraisal Co., Ltd which is also responsible for property assessment of the project, the location-based price of Caiyue Area reached 4,519 yuan/m2 which is the highest in Fancheng District.

34. Housing replacement price refers to the replacement cost of the one square meters of housing with same type of structure. As the affected buildings have the same housing structures, the housing replacement price of affected houses is 902 yuan/m2.

35. The correction factor is calculated by real estate appraisal agency according to the house decoration condition and equipment condition. The correction factor of most of the affected houses in the project site ranged from 80% to 88% (figure 3-3). 15.Part B is evaluated by the real estate appraisal agency according to the market price.

36. Part C includes the following subsidies and rewards:

(i) moving subsidy: the compensation standard is 10 yuan/m2; (ii) moving reward: from 5000 yuan to 7000 yuan per household; (iii) reward for signing agreement: from 3000 yuan to 10000 yuan per household; (iv) reward for decoration: the compensation standard is 500 yuan/m2; (v) subsidy for property management fee: the compensation standard is 5040 yuan per household which is calculated by the total amount of property management fee for the household with 100 m2 for three years according to the average price of property management fee in urban area of Xiangyang City (1.4 yuan/m2/year); (vi) additional reward for house demolition: 15% of the part A; and (vii) other compensation: according to the evaluation of actual affected equipment.

37. For an example, one affected house with total housing area of 79.34 m2, please find in figure 2-3 the copy of house demolition agreement of second case, a AH could get 579,093 yuan of cash compensation in total according to the compensation agreement. Please find the calculation process in the BOX below:

Part A= (4519 yuan/m2+902 yuan/m2*80%)*79.34 m2=415789 yuan

Part B= 21045 yuan for compensation of decoration+ 13758 yuan for compensation of ancillary facilities= 34803 yuan

Part C= 10 yuan/m2 *79.34 m2+7000yuan+ 10000yuan+ 500yuan/m2*79.34 m2+5040 yuan+ Part A * 15%+3630 yuan=128501 yuan

The total amount of house demolition compensation fee= Part A+ Part B+ Part C=579093 yuan

Source: The copy of house demolition compensation agreement of AH.

38. The price of commercial residential buildings on sale in Xiangyang city during house demolition in 2016 was about 5,700 yuan/m2. Based on this estimate, an AH could get about 7,298 yuan/m2 of compensation for their affected houses, which is 28% higher than that of the market price.

E. House Demolition Impact Analysis and Implementation

39. The average housing area of the affected houses is 86 m2. The living environment of the affected households was less than satisfactory as living space was crowded, infrastructure such as roads, water supply, and drainage facilities were poor, and the area lacked greening and public entertainment space. The house demolition compensation is enough for the AHs to purchase new houses with more housing area than before and to have a better living environment. The total compensation fee is 35.15 million yuan for the 57 Ahs. XPMO confirmed that the payment of house demolition compensation was completed in September 2016 and all affected households have received compensation and with that money they bought new houses. No complaints or remaining issues with regard to house demolition, compensation payment, and resettlement were reported (Details of compensation for each AH is given in Table 3-2).

Table 3-2 Detailed House Demolition Compensation Fee for AHs Affected housing House Demolition Compensation Fee (yuan) area No.

(m2) Part A Part B Part C Total

1 67.30 352692 19350 110047 482089

2 92.57 485122 42473 144719 672314

3 58.23 305160 33353 100211 438724

4 92.57 485122 35273 144519 664914

5 68.96 361392 18101 113918 493411

6 95.66 505630 27289 151461 684380

7 90.03 478308 47785 145081 671174

8 84.23 445215 12462 136449 594126

9 84.23 445215 24523 136769 606507

10 84.23 445215 26751 136919 608885

11 88.84 469582 29467 140286 639334

12 88.84 469582 24341 142656 636578

13 87.45 462234 32549 140845 635628

14 88.84 469582 23014 142776 635371

15 88.84 469582 51082 142456 663119

16 84.23 445215 36650 136719 618584

17 88.84 469582 12100 142926 624607

18 90.03 478308 32341 144491 655140

19 95.66 505630 39524 151661 696815

20 87.45 462234 19126 138475 619835

21 54.53 288229 8339 97875 394443

22 54.53 288229 16197 96625 401051

23 51.88 271882 14942 91781 378605

24 54.53 288229 15954 98225 402408

25 86.34 458704 16806 135659 611169

26 86.34 458704 27539 135779 622022

27 84.35 445849 28120 136656 610625

28 84.35 445849 37560 136776 620185

Affected housing House Demolition Compensation Fee (yuan) area No.

(m2) Part A Part B Part C Total

29 84.35 445849 37786 136926 620561

30 107.68 569164 23525 167371 760061

31 84.35 445849 13589 134636 594074

32 84.35 445849 22319 136726 604894

33 84.69 447646 19707 135569 602922

34 84.69 447646 19781 133279 600706

35 84.69 447646 25501 137419 610566

36 108.11 571437 21018 166282 758737

37 108.11 571437 47140 166132 784709

38 108.11 571437 44127 168032 783596

39 84.69 447646 31591 137049 616286

40 108.11 571437 19485 167932 758854

41 84.69 447646 32319 137369 617334

42 84.69 447646 36474 137169 621289

43 84.69 447646 27737 137199 612582

44 84.69 447646 32413 137169 617228

45 84.69 447646 26570 135769 609985

46 84.69 447646 33428 135649 616723

47 84.69 447645 13735 137167 598547

48 108.11 571437 26017 167681 765135

49 84.69 447645 35448 135647 618740

50 84.69 447645 6588 137047 591280

51 108.11 571437 14473 167911 753821

52 84.69 447645 25696 134757 608098

53 119.84 638843 59318 183975 882136

54 66.41 348028 33194 113053 494276

55 79.34 415789 34803 128502 579094

56 72.42 379524 25643 116683 521850

Affected housing House Demolition Compensation Fee (yuan) area No.

(m2) Part A Part B Part C Total

57 79.11 414584 16129 129364 560077

4874.63 25755415 1558565 7832220 35146200 Total Source: XPMO.

F. Public Participation and Grievance Redress

40. According to the state, provincial, and municipal policies and regulations on land acquisition and resettlement, it is necessary to conduct public consultations at the preparation and implementation stages of the project in order to protect the legal rights and interest of the affected persons and reduce grievances and disputes.

41. The compensation rates, the resettlement program, and the compensation distribution program for house demolition of affected households in the project site have been determined through repetitive consultations. Land acquisition compensation has been paid fully to the affected households in a timely manner. Due to adequate and careful planning and public participation, project management received no grievances from the affected persons. The compensation rates and the resettlement program comply with applicable state and provincial regulations and policies.

42. A grievance redress mechanism was established during resettlement implementation, where residents lodged their grievances and obtained relief. Appeals to the community committee/sub-district office/project command department/house demolition office were the primary channel of grievance redress, and People’s government of Fancheng District for sending letters and to do visits. If the affected person refuses to accept the compensation decision, he may apply to the Xiangyang Municipal People's government for administrative reconsideration or file an administrative lawsuit at the people's court for relief. The APs may file appeal about any aspect of resettlement including compensation rates. The PMO has informed the APs about the grievance redress mechanism. They know their right to appeal. In addition, the appeal process and contact information were attached with the project house demolition announcement and published on mass media for the benefit of the affected population..

43. In practice, since the compensation rates of the project comply with the applicable regulations and policies, the compensation has been fully paid on time, as reported by the officer of land acquisition and house demolition department of Xiangyang Housing Investment Co., Ltd, the APs are highly satisfied, and there has been no grievance or complaint regarding land acquisition or compensation.

G. Conclusion

44. The DDR carried out a comprehensive review of the documents provided by XPMO related to the land acquisition and compensation carried out, including (i) the notice of establishment of project command department of OCR project, (ii) resettlement policies of Hunan and Xiangyang that was implemented for the project, (iii) announcement of housing demolition and resettlement plan of the project, (iv) urban housing demolition policy booklet, (v) resettlement impact and compensation table of APs, (vi) housing demolition compensation agreements of 3 APs. Site visits carried out as part of the due diligence confirmed that the proposed which is vacant now and the house demolition has been completed. Consultations with the officials from Housing and Urban-Rural Development Bureau of Fancheng District and house demolition office, the project site of South Jianshe Road EC Facility (EC 8) confirmed that all compensation payment (a total of 35.15 million yuan) has been paid, all APs have moved to new houses and resettlement programs were completed satisfactorily.

45. Before and during house demolition in 2016, a series of consultations with affected households were organized by Project Command Department of OCR project and conducted by resettlement-related agencies, included: (i) resettlement policy publicity through distribution of policy booklet and face to face explanation, (ii) selection of real estate appraisal agencies; (iii) impact surveys; and (iv) house demolition compensation plan development. During the process of house demolition, the real estate appraisal agency was selected through voting by residents’ representatives, and house evaluation was conducted by the agency in accordance with relevant specifications. The value of the affected buildings and the housing for property replacement was evaluated by the selected agency. The compensation plan was developed by implementation agencies according to the surveys conducted on the ownership, location, building areas of demolished buildings and their associated facilities.

46. During the development of the compensation plan by Fancheng District, overall considerations have been given to facilitate the project, protect interest and rights of the APs and ensure full public participation. Moreover, the APs could get 28% higher than the market price through cash compensation. As a result, there has been no complaint to the grievance redress mechanism. The compensation rates and resettlement program comply with the applicable state and provincial regulations and policies, and ADB’s involuntary resettlement safeguard requirements. The APs are satisfied with the resettlement policies, and their living environment improved.

47. Based on the findings of the due diligence site visits, review of documentation of land acquisition process and payment of compensation, and consultations and verification of government officials, it is confirmed that there are no outstanding grievances or issues related to payment of compensation to the affected persons.

Figure 3-3 Agreement on cash compensation for house acquisition

Sample A: House demolition compensation Sample A: House demolition compensation agreement (Page 1) agreement (Page 2)

Sample B: House demolition compensation Sample B: House demolition compensation agreement (Page 1) agreement (Page 2)

Sample C: House demolition compensation Sample C: House demolition compensation agreement (Page 1) agreement (Page 2)

ANNEX 1 PHOTOS OF PROJECT FACILITIES AND RELATED DOCUMENTS OF LAND USE APPROVALS

Name of the facilities: Zhumeng Hengzhuang EC1 and HC1

The location of the project site: Plot F of Zhumeng The completed affordable housing on plot A. Heng Manor in Hengzhuang community, Wangzhai Subdistrict in Fancheng district

The affected houses of Hengzhuang community in The same as left photo this project

Name of the facilities: EC2 (Xiangcheng: No.4 middle school)

The location of the project site: North of No.4 Middle School, Sunjiaxiang village, Panggong Subdistrict in Xiangcheng District The current situation of project site

Name of facilities: EC3 (Xiangcheng: Grain bureau)

Location and status of Food Administration Bureau of Xiangyang in Xiangcheng District (former site)

Minutes on Coordinating the Purchase of Office Name list of 14 assets and the 6th is the Food Buildings of the Departments directly under the Administration Bureau of Xiangyang. Municipal Government by Hanjiang State-Owned Capital Investment Group Co., Ltd. (page 1)

Name of facilities: EC4 and EC5 (High tech zone: Public rental housing community in Shenzhen Industrial Park)

State-owned land use right of the public rental housing community obtained in 2016

Name of facilities: EC6 (Xiangcheng)

The location of the project site: on the west of Current situation of project site Xingguang Aavenue, north of Xiangyang road and Shijiamiao village, Panggong Subdistrict in Xiangcheng District

Name of facilities: EC7 (Dongjin New district: PPP) and HC2 (Dongjin New District)

Project site location: in the north of Jiangshan Current situation of project site Road, Xiaoying village, Dongjin New District

EC8 (Fancheng: PPP)

The location of project site: in the south of Jianshe The current situation of project site Road and north of Han River

HUAS training base (Xiangcheng District)

The project site is located in the southeast corner The current situation of the project site is a of Hubei University of Arts and Science. The puddle. Because of the suspension of project site is the foundation of a school building, construction as lack of money, some water which belonged to the university. The total area of accumulated after the rain, forming a puddle the foundation is about 4000 m2 and the facility of now. The houses are along the Huanshan Road this project will use 2300 m2 among them. and not in the project scope.

The current situation on the east of project site The access road and entrance (the green barrier in the picture) was inside the university

Land Use Right Certificate of the university obtained in September 2011.

Source: TRTA consultants and XPMO.

ANNEX 2 EXPLANATION AND CONFIRMATION LETTER