FINAL REPORT Demonstration Project Private Housing Construction on Municipally Owned Land Slovak Republic Prepared for United States Agency for International Development Bureau for Europe and the Newly Independent States Office of Energy, Environment and Urban Development Urban Development and Housing Division Washington, DC Prepared by Peter L. Bass Consultant in Municipal Development Robert W. Doubek Real Estate Development Specialist PADCO, Inc. 1025 Thomas Jefferson St., NW Suite 170 Washington, DC 20007 Contract No. EUR-0034-00-C-2032-00, RFS 76-OP August 1996 Funds for production of this report were provided by the United States Agency for International Development Table of Contents Executive Summary I Introduction .................................... 1 2 The Program .................................... 2 2.1 Consultant Team ............................. 2 2.2 Participating Municipalities and Development Projects .... 2 Summary of Project Activities .................... 2 2.3.1 Background ...................................2 2.3.2 Recruitment of Cities: May-October 1995 ............... 3 2.3.3 Drafting of RFPs: November 1995-January 1996 .......... 4 2.3.4 Pre-Proposal Conferences: March 1996 ................ 6 2.3.5 Developer Assistance: May 1996 ..................... 7 2.3.6 Assistance to Municipalities on Proposal Review and Evaluation: May1996 ....................................7 2.3.7 Final Actions ...................................9 3 Evaluation ..................................... 9 3.1 The Program ............................... I0 3.1.1 Concept ..................................... 10 3.1.2 Team Personnel ................................10 3.1.3 Logistics ....................................11 3.1.4 Costs and Level of Effort ......................... II 3.1.5 Recruitment of Cities ............................ 11 3.1.6 Municipal Sector ............................... 12 3.1.7 Private Sector ................................ 13 3.1.8 Documents ................................... 14 3.1.9 Announcements ............................... 14 3.2 Conditions and Concerns Affecting the Program Outcome 14 3.2.1 Country-Wide Conditions Affecting the Program .......... 15 3.2.2 Conditions in Specific Municipalities Affecting the Program . 16 4 Recommendations on Next Steps ..................... 18 4.1 Recommendations regarding the Public-Private Partnership Demonstration Program ....................... I8 4.2 Recommendations regarding Training in Market-Based Real Estate Development .......................... 21 4.2.1 Need for Training ...............................21 4.2.2 Audiences ................................... 22 4.2.3 Principles in Designing the Training Courses ............ 23 4.2.4 Contents of the Training Courses .................... 24 5 Specific Recommended Next Steps: Work Plan ........... 26 5.1 Regarding the Public-Private Partnership Demonstration Program .................................. 26 5.1.1 Complete Publication of Materials in Slovak ............. 26 5.1.2 Prepare Ongoing Sponsorship and "Guardians" for the Program 26 5.1.3 Provide Limited Ongoing In-Depth Technical Assistance .... 26 Regarding Training in Market-Based Real Estate Development ............................... 26 5.2.1 Refine Purpose of Training; Determine Target Markets and Recruitment Methods ............................ 26 5.2.2 ReviewIEvaluate and Select from Other Training Programs ... 27 5.2.3 Determine Course Modules; Relate to Target Audiences and Proposed Methods of Delivery ...................... 27 5.2.4 Plan, Prepare, and Hold a Two-Day Overview Course as Soon as Practicable ...................................27 5.2.5 Establish the "Local Infrastructure" to Support the Training Program .....................................27 5.2.6 Plan and Hold Subsequent Course Offerings Based on Demand 27 APPENDICES Appendix 1 Evaluation of the Public-Private Partnership Demonstration Project in the Slovak Republic Based on Interviews with Participating Companies Appendix 2 Indirect and Longer-Term Benefits of the Public-Private Partnership Program Demonstrations Appendix 3 The Public-Private Partnership Process as Applied in Slovakia: Step by Step Procedures and Documents Appendix 4 Proposed Technical Assistance to Bansk5 Bystrica on the Prianska Teresa Project Executive Summary The objective of this RFS was, in an attempt to replicate a similar program in Bulgaria, to demonstrate a process of public-private partnerships, through which Slovak municipalities could use their land resources to spur private development of housing by making land available to private developers on a competitive basis. The outcome of the process was disappointing, in that it failed to produce any acceptable development proposals. However, it was useful in introducing a host of new procedures and perspectives that the municipalities, in particular, found of interest and applicable to other situations. It also helped identify some of the factors most needed for market-driven residential development to succeed in Slovakia. Four Slovak municipalities were assisted in organizing and conducting a pilot project to develop private housing on municipal land. Two sets of consultants - municipal development specialists (one American and one Slovak) and private sector real estate development specialists (one American and one Slovak) - provided the assistance. Over the period October 1995 to May 1996, involving six visits, the consultants worked with each sector (the city and the developers) through the steps in the project. This report provides a description of the program, including the consultant team, the participating municipalities and their projects, and the specific activities involved. The report also includes an evaluation of the program, a discussion of the conditions that affected its outcome, recommendations for the next steps to capitalize on the experience, and a proposed workplan. Finally, it provides recommendations for real estate development training in the public and private sectors. Appendix 3 of this report includes a manual of step-by-step procedures for replicating the program in other municipalities in Slovakia. 1 Introduction The objective of this RFS was to demonstrate a process of public-private partnerships, through which Slovak municipalities could use their land resources to spur private development of housing by making land available to private developers on a competitive basis. During 1993-94, USAID supported development of a demonstration program in Bulgaria to pro- vide technical assistance and training to municipal officials and private developers in organizing private development of housing on municipal land. A consultant team introduced three muni- cipalities to an Request for QualificationsIRequest for Proposals (RFQIRFP) land tender and pro- curement process. Within 12 months, all three municipalities had selected sites, prepared RFPs, received development proposals, and awarded development contracts. More than 300 housing units were developed as a result of the program, with no external funding involved. The Slovak program sought to replicate the Bulgarian one, based on similar conditions: muni- cipalities who wished to reduce their housing shortages; private developers who wanted to enter the market and build housing as a commercial venture; and private citizens who wanted to upgrade their living standards by obtaining single-family and low-rise, multi-family units and to leave the mass-produced, panelized-concrete housing estates. Under the Slovak program, USAID assisted four municipalities in organizing and conducting a pilot project to develop private housing on municipal land. Two sets of consultants - municipal development specialists (one American and one Slovak) and private sector real estate development specialists (one American and one Slovak) - provided the assistance. Over the period October 1995 to May 1996, during six visits to Slovakia, the consultants worked with each sector (the city and the developers) through the steps in the project. The consultants: assisted in assessing sites and defining development objectives; provided sample documents for developing the tender (RFP); previewed and helped complete the documents prepared by the cities; assisted in advertising the tender and in planning a pre-proposal conference; assisted in holding the pre-proposal conference; assisted in developing selection criteria and forming selection committees; assisted private developers in preparing proposals to respond to the tender; and assisted in reviewing and evaluating the developer proposals. Two additional tasks were intended, but could not be accomplished given the lack of any accep- table proposals: working with both the city and developers to refine proposed development concepts and business structures; and assisting the municipal project coordinators in setting up monitoring mechanisms. The Program 2.1 Consultant Team The consultant team included two U. S . consultants, Real Estate Development Specialist Robert W. Doubek and Municipal Development Specialist Peter L. Bass, two Slovakian counterparts, Municipal Development Specialist Jan Komrska of the Slovak Technical University Faculty of Architecture and Real Estate Development Specialist Jaroslava Zapletalova of the Slovakian Housing Institute, and the Administrative ManagerIInterpreter Gabriel Kindernay. 2.2 Participating Municipalities and Development Projects The following municipalities, with the indicated projects, participated in the program: Village of