pD _A-B$.104 I I ~1f~ I~ I I I CHEMONICS INTERNATIONAL INC I MARKET-ORIENTED FARM SUPPORT ACTIVITY I I HOUSING AND UTILITIES REORGANIZATION I IN THE GRYAZOVETS RAION VOLOGDA OBLAST, RUSSIA I I SubmItted to IT S Agency for InternatIonal Development I Under Contract No EPE-0006-C-00-6007-00 I SubmItted by Chemomcs InternatIOnal Inc 1133 20th Street NW SUIte 600 I Washmgton, DC 20036 Tel (202) 955-3300, Fax (202) 955-3400 I Prepared by NatIOnal Academy of PublIc Admuustratlon I 1120 G Street NW SUite 850 Washmgton DC 20005-3801 I Tel (202) 347-3190, Fax (202) 393-0993 I June 1997 I I I I I I I I I ThIS report was completed by short-term Mumcipal Management AdvIsor, Mr RIchard E Hage, for the MOFSA Project m Vologda as fulfIllment of hIS dehverables for hIS assIgnment Mr Hage was contracted by the Nanonal I Academy of Pubhc AdmlllistratIon, one of MOFSA's subcontractors Mr Hage's I aSSIgnment was conducted durmg the penod April 3 - May 8, 1997 I I I I I I I I E I I I I HOUSING AND UTILITIES REORGANIZATION IN THE GRYAZOVETS RAION I EVALUATION AND REPORT ON IMPLEMENTATION I INTRODUCTION The Market-Onented Farm Support ActIVIty (MOFSA) In Vologda, RussIa, IS workIng In the rural areas ofthe Cherepovets and Gryazovets R.a1ons (CountIes) With support from the I U S Agency for International Development There are two components ofthe project, agnbusmess development and rural SOCial servIces Improvement, the latter Includmg I Improvement ofrural housmg and utIlitIes services Work began m Apnl 1996, and IS expected to be completed m early 1998 I Ongmally, the plan for assistance m the Gryazovets Raton (whose total populatIon IS about 47,000) was to Improve the management skIlls ofthe Raton housmg and utlhtIes managers Dunng field work m 1996 by the CastIllo Company and the MOFSA staff, mcludmg the RUSSian I SOCial planner counterpart, they concluded that the better approach would be to reorgaIllze the way ofproVldmg hOUSing and utlhtles servIces The Raton Head ofAdmlmstratIon concurred and the "RatIonalized Model for HOUSing and UtIhty Services," prepared by staffand I consultants, was presented to the R.a1on m December 1996 The ongmal schedule for ImplementatIOn called for preparatIon and adoptIon ofleglslatIon and regulatIons by February 1, 1997, to be followed by transfers of authonty over assets m October 1997 The Deputy Head of I AdmlmstratIon for Housmg and UtIhtIes, whose retIrement Will take effect m May 1997, has not, however, been supportIve ofthe plan and as ofthe tIme ofthls proJect, Apnl3-May 8, 1997, I none of the scheduled actIons had taken place On Apnl 14, 1997, the appomted mayor ofthe City ofGryazovets was promoted to the posItIon ofFrrst Deputy Head ofthe R.a1on and Will have I responSibilIty for housmg and utIlIties HIs cOmmitment to the new plan IS strong The task ofthe Mumclpal Management AdVIsor, under a subcontract between the NatIonal Academy ofPubhc AdnumstratlOn and Chemomcs, mcluded revlewmg and evaluatIng the I Model, asslstmg m ImplementatIon, preparmg and conductIng a workshop for offiCials ofthe Rmon, and reportmg on the results aclueved The task was carned out between Apnl 3 and May 8,1997 Three field VISits were made to Gryazovets located about 25 mIles from Vologda on the I Moscow Road (Moscow IS about 250 mIles further south) The purpose ofthe VISits was to reVIew present support for the Model, Idennfy needed assistance m Implementanon and to make plans for a trammg program I was accompaIlled on these VISits by either Ron Schremer, I MOFSA SOCial Planner or hIs RUSSian counterpart, Konstantm Efremov, or both The two-day I I 2 I trammg program was held m Gryazovets May 6 and 7 WIth semor MOFSA staff, I also met WIth the Deputy Governor ofthe Vologda Ooblast, Anatoly Tak, and heads ofthe Oblast departments ofeconomIC development and property admimstratlOn PnvatIzmg of hOUSlllg and lowenng government spendmg on both houSlllg and utlhtles were stressed as major goals ofthe Oblast MOFSA staffpresented the Gryazovets Model as one that could be applIed throughout the Oblast STATEMENT OF THE PROBLEM CondItIOns m RussIa Accordmg to a recent Russian FederatIon whIte paper, lack of adequate housmg and water supphes are acute problems In RUSSia The average floor space per person IS 18 1 square meters (about 200 square feet) and IS far less than that m more than halfofthe country In rural areas 70-80 percent ofthe hOUSIng stock has no runmng water, sewage systems or central heatIng Where there are central water systems, the water usage IS not metered and IS used In prodigiOUS quantltles about twice as much water IS used per Capita as m other developed countrIes The water supply IS hIghly polluted Fifteen percent ofall famthes m 1995 were on Watling hsts for housmg yet only eight percent ofthat number were accommodated - Other SOCial and econOffilC Indicators are not encouragIng The populatlon has been decreasmg, I even though about 60 percent ofthe losses from natural declme have been made up by mumgratIon ofethnic RUSSians from the former Soviet Repubhcs Real mcomes have been droppmg steadIly, mcludmg a 13 percent drop In 1995 Sales offoodstuffs are down over fifty I percent from the levels of1990, although food outlays have begun to Increase Nearly 25 percent ofthe population had mcomes below the subSistence level Labor resources contInue to declIne and 36 percent ofthose who are employed receive wages below subSistence levels Iromcally I perhaps, remuneratIOn from bUSIness and other actiVIty now exceeds that from labor Housmg and Utlhtles OrganIzatIOn m RUSSia and Gtyazovets I ApproxImately 40 percent ofthe housmg In RUSSIa under the old system was owned by state I enterpnses Under pressure from the RUSSian FederatIon, whIch IS beIng prodded by outside lenders such as the World Bank, housmg as well as utilIty assets have In large part been turned over to local governments by the enterpnses In the case ofGryazovets Raton, hOUSIng and I utIbtles owned by the large collectIve farms have now been transferred to the Raton government The housmg apartments are generally In poor repatr and common grounds are not matntaIned User fees charged by the collectIve farms for hOUSIng and utlbtIes were nomInal In the past, the I costs beIng considered for the most part as labor costs, thIs has made It dIfficult for the Raton authontles to raIse charges to fully cover costs UtIlItIes Include heat and hot water from central plants---plped above ground---as well as the more commonly prOVIded water, sewer, and I I 3 fI I I I electnclty Except for electrIcity, there are no meters for the utlhtles, and, because ofthe way the housmg IS bUllt, It IS Impractical to Install them, the sIngle user fees for both utlhtles and hOUSIng IS based on the amount ofspace beIng occupIed HOUSIng reSidents In Gryazovets pay, on I average, about one thIrd of the costs ofprovIdIng hOUSIng and utIhtIes servIces Makmg Up for the shortfall accounts for 20 to 30 percent ofthe Raton budget and as local government IS I subSidized by the Ooblast and the RUSSIan FederatIon In the Gryazovets Raton, 16 rural adnumstrations that are urnts ofthe Raton government serve Villages rangIng In SIZe from 444 to 2,175 Each has created a hOUSIng and utIhty authonty to I manage assets transferred from the collectIve farms Pnvatlzatlon ofhOUSIng contlnues to be a goal m both RUSSia and Gryazovets In the RUSSIan I system this has meant that the murnclpahty sells the urnt only, but not an mterest In the shell or the common areas Thus a typiCal bwldmg has both owners and tenants Generally about 30 I percent ofall umts have been pnvatlzed smce 1992, but the process now has stagnated As tenants have many nghts, mcludmg that ofpassmg the urnt onto therr chIldren, and as there IS VIrtually no chance ofbemg eVicted, RUSSians presently do not see a benefit In becommg owners, I partIcularly as It means becommg responsible for both mamtenance and taxes In any event, the accepted goal for pnvatlzatlon m RUSSia IS 70 percent ofthe umts, the balance would contmue to be publIcly owned m order to meet other SOCial goals such as housmg for veterans and other I groups The federal constItutIOn hrntts housmg and utlbtles charges to 15 reSIdents' mcome, at present thIs figure IS more a goal than a constraInt I GOALS AND OBJECTIVES The goal ofthe proposed reorgamzatlon IS to reduce the cost to the government ofprOVIdIng I housmg and utlhtIes serVIces It would do this through 1) abobshmg the sIXteen rural housmg and utlhtles authontIes and transfemng therr functlons to a central agency, 2) creatlng a cost­ competltIve enVIronment by de-monopobzmg (pnvatlzmg) publIcly prOVIded utIbtles and I housmg mamtenance servIces, and 3) fostenng householder assoclatlons to manage mamtenance I and, mdrrectly, to encourage further pnvatIzatIon ReorgamzatIon I The Model proposes transfemng control from the decentralized local housmg and utIlIty authontIes, whIch would cease to eXist, to a quasI-governmental "mumcipal enterpnse" to be created by the Raton It IS to be called the SerVIce Center-m the Model It was ongmally called I the Central Purchasmg Office--and IS patterned after a serVIce center establIshed for the City of Gryazovets (population 16,000) m 1994 As the latter IS also a Raton-founded unIt, It Will, m effect, be expandmg Its charter to cover the entireJunsdIctIon. The change would not affect I ownershIp ofthe housmg and utIhtles, whIch now, and m the future, rests With the Raton I I 4 I government The RaIOn WIll provIde oversIght through the office ofthe hOUSIng and utIlItIes dIrectorate, fInance