K:\IAC\THogan\EMAIL INCOMING\NEW REPORTS TO WORK ON\Carol Rabenhorst\ASSESSMENT REPORT \06901-017 UZ.rpt.doc
ASSESSMENT OF CURRENT
LEGAL AND OPERATIONAL
STATUS OF HOUSING
PARTNERSHIPS IN
UZBEKISTAN
Prepared for
Prepared by
Carol Rabenhorst,
Irina Genstler, and Sabina Gradwal
The Urban Institute
Local Government Initiative Phase II—Uzbekistan
United States Agency for International Development
Contract No. EEU-I-00-99-00015-00, Task Order No. 811
THE URBAN INSTITUTE
2100 M Street, NW
Washington, DC 20037
(202) 833-7200
www.urban.org
November 2002
UI Project 06901-017
TABLE OF CONTENTS
I.
A.
B.
C.
II.
BACKGROUND AND OVERVIEW...........................................................................................1
Apartment Privatization............................................................................................................1
Creation of Housing Partnerships (TSJs)...................................................................................2
Conclusions............................................................................................................................2
LEGAL FRAMEWORK FOR TSJS............................................................................................2
A.
B.
C.
D.
Law on Partnerships of Housing Owners (1999) ........................................................................2
Presidential Decree on Additional Measures to Develop Activities of Housing Partnerships
(February 2002) ......................................................................................................................3
Resolution of the Cabinet of Ministers, March 2002, on Additio nal Measures to Support
Partnerships of Housing Owners ..............................................................................................4
Reform of Management and Control of TSJs “In Practice”...........................................................5
III.
RELATIONSHIP BETWEEN TSJS AND GOVERNMENT ENTITIES...........................................6
IV.
LOCAL NGO TRAINING AND HOUSING-RELATED ACTIVITIES ...........................................13
V.
TSJ ACTIVITIES AND ATTITUDES .......................................................................................15
VI.
RELATED USAID ACTIVITIES..............................................................................................16
VII.
RELATED ACTIVITIES OF OTHER INTERNATIONAL DONORS ............................................17
VIII.
CONCLUSIONS ...................................................................................................................18
ASSESSMENT OF CURRENT LEGAL AND OPERATIONAL STATUS
OF HOUSING PARTNERSHIPS IN UZBEKISTAN
I.
BACKGROUND AND OVERVIEW
From October 29 to November 5, 2002, as part of the start-up activities for the United States
Agency for International Development (USAID) Local Government Initiative in Uzbekistan, a team of Urban
Institute (UI) specialists1 conducted an assessment of the legal framework and current situation for creation
and operation of housing partnerships (TSJs, in the Russian acronym). This report contains the findings of
the assessment.
The assessment was limited in time and scope, and was intended to provide a quick overview of
relevant issues at the outset of the project. The information presented and conclusions drawn should be
read with that in mind. As the project progresses, additional research will be undertaken to augment and
clarify some of the topics discussed.
A. Apartment Privatization
Multifamily housing privatization began in Uzbekistan in 1993. Today, more than 95 percent of the
former tenants of state-owned apartments are owners.2 The Privatization Law provided that ownership of
common areas of apartments buildings was transferred to the residents along with their individual
apartments. The share of common ownership was determined in accordance with the size of the individual
apartment relative to the total size of all apartments. This familiar from of ownership is known throughout
the world as “condominium.”
In Uzbekistan, however, ownership rights and responsibilities have never been made clear to the
owners. While the Privatization Law created de jure condominiums with proportionate ownership of the
common property, most new owners were not aware of this. The privatization sales documents made no
reference to transfer of an ownership share of common property; rather, the size in square meters of each
apartment was simply increased to account for the rest of the building. Residents were confused about this
seemingly arbitrary increase in the size of their apartments, and knew that this would increase their fees for
communal services or maintenance, but their questions and complaints went unanswered.
For the first six years after privatization, there was no apparent change in the control or
management of apartment buildings. The owners of apartments were given no guidance and there was no
legal framework under which they could organize and take over management of their properties.
Maintenance continued to be provided by the government maintenance enterprises–the JEKs, or their
successor enterprises–and the owners continued to pay the local maintenance enterprises a mandatory fee
for these services.
1 Carol Rabenhorst is a lawyer and condominium expert from UI–Washington. Irina Gentsler is the Resident Advisor for the LGI project
office in Tashkent, Uzbekistan. Sabina Gradwal is a housing expert for the LGI project in Bishkek, Kyrgyzstan.
2 The Agency for Housing and Communal Services states that 98.2 percent of the housing stock in Uzbekistan is in private ownership,
including single family houses as well as apartments.
2
Local Government Initiative Phase II—
Uzbekistan
B. Creation of Housing Partnerships (TSJs)
In 1999, a Law on Partnerships of Housing Owners was passed, along with sample bylaws and
sample procedures for transfer of the apartment buildings into the management of the TSJs. TSJs were
created in almost all buildings by the local governments, and management remained in the hands of local
maintenance and communal services enterprises.
In early 2002, a decree of the President and a resolution of the Cabinet of Ministers were issued,
on measures to provide additional support for TSJs, including tax relief and earmarking of state and local
funds for repair of apartment buildings built prior to 1991. These measures did nothing to improve the
independence or owner-control of TSJs, and it remains to be seen whether they will have any positive
effect on conditions in multifamily housing.
C. Conclusions
Continuing Lack of Owner-Control—Although almost all apartment buildings are now in TSJs,
the owners have virtually no control over the most important issues regarding the operation of their
property; the local government selects their leaders, sets the amount of their maintenance fees and
controls the disbursement of the fees for maintenance or repairs; and decides who will manage the
buildings. The fees for maintenance and communal services are paid to the local enterprises, which are
under no obligation to account for the funds or how they are spent to the residents.
The current legal framework and relations between TSJs and the local and state authorities are
more fully discussed below.
Need for State and Local Government Cooperation—TSJ formation has proceeded in a
compulsory manner, with little or no participation of residents in either the initial organization or ongoing
operation of the housing associations. Local authorities select the TSJ leaders, establish and collect
maintenance fees, with the funds going to local communal service enterprises with no accountability for
their use. Thus, there are strong vested interests at the local level in perpetuating the status quo. On the
encouraging side, there is apparent recognition in official quarters (both within the national government and
in some local administrations) that the system needs further reform. Given the country’s top-down political
culture, the ability of LGI-II to obtain significant results in terms of introducing concepts of democratic
housing governance may depend in large part on the success of UI and USAID together, early in the
program, engaging the cooperation of key State-level officials in demonstrating alternative modes of TSJ
organization and operation.
II. LEGAL FRAMEWORK FOR TSJS
A. Law on Partnerships of Housing Owners (1999)
The Law on Partnerships is a standard transition-country condominium law in most respects. It
provides that a TSJ is a non-commercial legal entity, founded upon the majority vote of the owners, at a
Assessment of Current Legal and Operational Status of
Housing Partnerships in Uzbekistan
3
meeting held on the owners’ initiative, in one or several closely related buildings united by a land parcel or
infrastructure elements. The management of the property of the owners and the financial affairs of the TSJ
are handled by a chairperson, a board of directors, and an internal auditing committee, all of which are to
be elected by the owners who are members of the TSJ.
The TSJ is registered by the local authorities (hokimiats), and thereafter all residents of the
buildings comprising the TSJ are members.
The common property of the buildings, which is to be managed and maintained by the TSJ, is
described in the law–the roof, stairways, hallways, mechanical systems and the like.
Land is transferred to the TSJ in “permanent use” rather than in true ownership. This is a socialist
concept that has been eliminated in the laws of some countries of the former Soviet Union but not all. In the
case of TSJs, this is not a serious problem, since the owners can exercise most rights of full ownership; for
example, they may lease or sell parts of the land, if the owners vote for this. It is unlikely that all of the land
would be disposed of as long as the building continues to be used for residential purposes.
One highly unusual provision in the law–Article 25–may be the source of at least some of the
inappropriate authority that local and state governments continue to exercise over privatized housing. This
Article gives TSJs and local governments joint authority over collection of payments for services,
determination of how maintenance payments collected from the owners should be used, and decisionmaking about maintenance and repair of the common property.
As a result of this provision, and the attitude on the part of the state and local governments that it
reflects and perpetuates, the local governments and their maintenance and communal services enterprises
remain in firm control of the privatized apartment stock. TSJs that have been formed have been made
answerable to the government, and owners lack the power to make their own decisions about how to
maintain the common areas or operate the TSJs.
Just after the Law on Partnerships was passed, the Cabinet of Ministers published sample Bylaws
for operation of the TSJs, and sample Procedures on Transfer of Residential Houses into the Management
of Partnerships.
B. Presidential Decree on Additional Measures to Develop Activities of Housing Partnerships
(February 2002)
In February 2002, President Islam Karimov issued a sternly worded Decree on Additional
Measures to Develop Activities of Partnerships of Housing Owners. The Decree acknowledges that 1,400
TSJs have been created since the Law on Housing Partnerships was passed, and the system of timely
payment for services have been improved, but it recognizes that this is not sufficient to solve serious
problems with the housing stock. It emphasizes that the owners have insufficient funds to improve the
condition of their buildings, including the engineering infrastructure and common areas.
To help ameliorate the financial problems of the TSJs, the Decree provides the following: (1) TSJs
are free of all taxes and fees to the state budget until 2007, providing they use the funds saved for repairs
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4
to and operation of the property. (2) Agreements for provision of and payment for communal services shall
be concluded between the enterprises and the TSJs, with discounts in the amount of fees charged to TSJs
where 100 percent of the fees are paid (15 percent discount), or more than 75 percent paid (7 percent
discount). The funds saved (or rebated; it is not clear how these discounts are to be provided) are to be
used for eliminating current debt for communal services, to help low-income residents pay for services, or
for improvements to the building. (3) Certain funds derived from privatization of enterprises and communal
services during 2002 to 2006 shall be “directed to” TSJs for reconstruction and capital repairs of in-house
infrastructure systems and common use areas of apartment buildings built before 1991. (4) The Ministry of
Justice and the State Agency for Housing and Communal Services (“Uzkommumhizmat”); see Section III,
below) shall propose additional legislation or amendments to current law to assure compliance with the
Decree.
C. Resolution of the Cabinet of Ministers, March 2002, on Additional Measures to Support
Partnerships of Housing Owners
In accordance with instructions in the Presidential Decree of February 2002, the Cabinet of
Ministers enacted a Resolution in March 2002. The Resolution states that assistance to TSJs to date has
been “unsatisfactory,” and orders comprehensive improvements in the conditions of apartment buildings
and economic reforms in the sphere of communal services. The provisions of the Resolution include the
following, all to be accomplished within one month of the date of the Resolution:
•
(1) Local officials3 are ordered to: (a) provide TSJs with state acts on land use rights relating to
their land parcels; (b) provide for the availability of state funds for reconstruction of the housing
stock; (c) ensure mandatory installation of gas and water meters during reconstruction and
capital repairs to the housing stock; and (d) organize tenders for contractors for the
reconstruction and capital repair projects.
•
(2) State and local authorities are ordered to: (a) provide funds from the Investment Program
for 2003 to 2006 for reconstruction and capital repairs to apartment buildings built before 1991,
up to 3 percent of the total amount of centralized capital investments allocated for local use, (b)
direct part of revenue in local budgets be used for this purpose, and (c) ensure attraction of
extra-budgetary funds for public works on roads, land adjacent to apartment buildings,
irrigation, street lighting, and the like.
•
(3) Procedures are to be developed by the Ministries of Finance and Macroeconomics and
Statistics, the Central Bank, the State Tax Committee, and Uzkommunhizmat (State Agency
for Housing and Communal Services) for accounting for TSJ revenue in special depository
accounts, and regulations are to be prepared for directing and financing reconstruction and
capital repair works. (It is interesting to note that, unlike the Presidential Decree which orders
that funds be “directed to” TSJs for repairs, the Cabinet Resolution does not mention the TSJs
at all in the implementation of repairs.)
3 Hokimiats of oblasts and Tashkent and the Council of Ministers of the Republic of Karakalpakstan.
Assessment of Current Legal and Operational Status of
Housing Partnerships in Uzbekistan
5
•
(4) The Resolution recommends that commercial banks make “beneficial” credits available to
TSJs for capital improvements to the housing stock.
•
(5) Uzkommunhizmat is to provide training for chairpersons and accountants of TSJs on issues
of reforming communal services and financial and economic activities of the TSJs.
•
(6) The Ministry of Justice, Uzkommunhizmat, and other concerned ministries and agencies
are to propose amendments to improve the legislation and regulatory framework in compliance
with the Resolution.
D. Reform of Management and Control of TSJs “In Practice”
It is not yet clear what effect the Presidential Decree and the Resolution of the Cabinet of Ministers
will have. So far, the sweeping changes that were ordered have not resulted in improvements in the
relationship between TSJs and local governments or maintenance and service providers, in the condition of
the multifamily housing stock, or in the independence of the financial and operational activities of the TSJs
themselves. Assuming the Decree and the Resolution represent good intentions on the part of the
President and the Cabinet of Ministers, however, these provisions should be helpful in creating momentum
for reform of the housing sector.
The Decree and the Resolution seem to be intended to get funds channeled to the TSJs, but they
provide that the funds go through the local authorities. In other words, the TSJs and the local authorities
continue to locked together in the effort to get buildings repairs, which gives the local governments the
power to continue to control the process and the funds. Nowhere do the documents indicate that the money
that TSJs collect belongs to them and it is up to the owners to decide how to spend it.
In fact, there is already some evidence that the provisions in the Decree and Resolution may be
viewed by at least some local authorities as merely increasing the opportunities to exploit the TSJs for
economic gain. The new provisions are generally interpreted as requiring that all housing built before 1991
be repaired, with the cost split as follows: 70 percent paid by the state, 25 percent by the local
governments, and 5 percent by the TSJs. TSJ representatives report that local authorities have stepped up
their efforts to enforce payment obligations of the owners, even trying to force them to sign documents for
loans that the owners have not approved. Pressure has been applied to force TSJs to install water and gas
meters, without allowing the TSJs to select the supplier of the meters or the contractor who will install them.
Bank accounts with the owners’ maintenance fees, contractors for construction work, the scope of the work
to be done, and suppliers of materials are all still selected and controlled by the local authorities, not the
TSJs. (See Section V, below, for fuller discussion of meetings with owners.)
If the new resolutions are to have a beneficial effect on housing conditions, the rights of the owners
to make their own decisions and control their own finances is more important than ever. In this sense, the
timing of the LGI housing reform program is highly fortuitous.
6
Local Government Initiative Phase II—
Uzbekistan
III. RELATIONSHIP BETWEEN TSJS AND GOVERNMENT ENTITIES
General Information—Prior to apartment privatization in 1993 and establishment of TSJs in 1999,
state-owned housing was managed and maintained by state-owned housing and communal services
enterprises known as JEKs. The JEKs were disbanded when the TSJs were formed. Today, there are two
enterprises under local authority that have taken over some of the functions of the JEKs, the Tashkent City
Communal Services Enterprise (TEKO) (Territorial Communal Maintenance Union), and the KRAVs
(Communal Repairs and Emergency Services). TSJs were more or less automatically placed in a
contractual relationship with these successor entities at the time the TSJs were formed by the local
authorities. More owners report that they have been forced to contract with the KRAVs and to report to the
TEKOs on the financial status, even if they would prefer to be self-managed.
While the precise division of responsibilities was not made entirely clear during the assessment, it
appears that the TEKOs perform administrative functions on behalf of the local governments in relation to
the TSJs–such as collecting fees, controlling bank accounts, collecting information on payments for
communal services, and the like. The KRAVs perform the actual maintenance services to buildings on an
emergency basic, and maintain the communal services networks (those that outside of the apartment
buildings). The KRAVs inherited the equipment and supplies that were formerly allocated to the JEKs.
The state agency with responsibility for housing reform and issues relating to communal services is
Uzkommunhizmat (State Agency for Housing and Communal Services), which is directly subordinated to
the Cabinet of Minister; it does not have ministerial status itself.
KRAVS appear to be directly subordinated to the local governments, while the TEKOs are under
the control of the Cabinet of Ministers, through the Uzkommunhizmat. TEKOs are organized on two levels–
state, or republican, and local (city or rayon). The city or rayon-level TEKO is responsible both to the state
level organization, and also to the hokim (head of the city or rayon). It is the city or rayon-level TEKO that
interacts with the TSJs on behalf of the local authorities.
State Agency for Housing and Communal Services (“Uzkommunhizmat”), Training and
Engineering Center (“Uzkommunukuvtashkilotchi”)—(Kurban Halidovich Magomedov, Director of
Training Center). The Training Center comes under the jurisdiction of Uzkommunhizmat, the state agency
described above. It is responsible for developing normative and legal acts and training materials for
authorities and providers of housing and communal services. In addition, the Training Center works with a
working group on housing reform and policy development called “Dialogue,” which was set up under
resolution of the Cabinet of Ministers. The Agency coordinates all housing reform programs for the state
government, and monitors and makes recommendations on the quality of personnel, legal, and technical
issues. It supervises all government-run housing and communal service activities, including the legal
entities and individuals that provide the services.
Technical training courses are offered in maintenance and repair of utility services and mechanical
systems–water, heat, electrical, elevators, and the like. Leaders of TSJs participate in the training, as well
as employees of city maintenance enterprise and communal service providers. The cost of training is
Assessment of Current Legal and Operational Status of
Housing Partnerships in Uzbekistan
7
usually 5,000 sums. The local governments select the leaders of TSJs to be trained, and pay the cost of
their training.
According to the Director of the Training Center, TSJs elect their own leaders and are independent
of local government control. They are free to conduct their own maintenance and repair activities, and they
set up their own bank accounts and disburse funds in a manner that they believe is appropriate. [This
information is contrary to the reports the UI team received from representatives of TSJs; see Section V,
below.]
The Director discussed the new Resolution under which the state, the cities, and the TSJs are to
share the expenses of repairing all apartment buildings constructed before 1991. He agrees that the
buildings are in poor condition, but believes it was better policy to transfer them to the residents first and
then do the repairs than for the government to do the repairs and then transfer the buildings to the balance
of the TSJs, even if the repair program takes a number of years. The repair program is now in its first year,
and is encountering many difficulties with purchase of materials, preparing contracts, and the like. Some
repair projects have begun, and a few have been completed. One of the priorities will be installation of
meters for water and gas. Each building is required to purchase and install meters.
Mr. Magomedov said he is very willing to cooperative with the LGI program of housing reform, and
will make the Center’s resources available for training programs. He offered to communicate with the
director of the State Agency about our program, but the UI team agreed that it is premature for LGI staff to
meet with the State Agency directly until more is known about the current situation with TSJs and local
authorities. He agreed that TSJs are not operating at an optimal level, but blames the local authorities for
improper performance or misinterpretation of the laws.
The State Agency is also the Government of Uzbekistan’s liaison with international agencies for
matters relating to housing and communal services. For example, it is monitoring a project for water
treatment under a loan from the Asian Development Bank, which includes funds for the Training Center for
training in use of new equipment and implementation of water quality standards.
Seminar Organized by the Training Center “Uzkommunhizmat”—Irina Gentsler was invited by
Mr. Magomedov to attend a seminar sponsored by the Training Center to report on the multinational
meeting on TSJs and condominiums in the former Soviet Union, held in Moldova earlier this year. The
following is a report on the seminar:
•
Uzbekistan has the largest number of TSJs (up to 98 percent of total multi unit housing
covered by TSJs), and a good legal basis for their operation. Support to TSJs by the State in
terms of development of legal and normative acts was provided by the Center and the Agency,
unlike in Kyrgyzstan, where there is no centralized agency to coordinate condominium
activities and develop legal and normative acts for condominiums.
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•
Mr. Magomedov in his presentation recognized that Uzbekistan is facing some difficulties with
TSJs, including the following:
—
Mistakes were made during the formation of TSJs. Though the law and the President
developed a good basis for TSJ formation, local governments and executive authorities did
not always comply with the requirement established by law while implementing.
—
Expensive housing maintenance and utilities services. Percentage of utilities fees in
housing payments is very high–up to 85 percent, while common property repair and
maintenance is only 15 percent. This ratio, as well as high level of tariffs for utilities is
caused by a) lack of expertise and analyses of the pricing/tariff structure; b) unreasonably
high norms of consumption (no metering devises); c) providers increase tariffs to have
sufficient amounts of money to cover costs and repay old debts of residents/consumers.
—
Variety of housing maintenance fees in different regions of Uzbekistan. The Training
Center is concerned by the fact that different TSJs in Tashkent have different membership
fees.
The Center has legal and normative acts available (for sale) for any interested person.
The Center will be involved in testing regional training centers and issuing certificates authorizing
them to conduct training activities on housing maintenance issues, with emphasis on the more technical
issues.
The general impression given by the presentation and in communication with the Center is that the
Center sees itself as the primary entity for coordinating TSJ activities on behalf of the State.
Best Practice Session. “Oltyn Chulpo” TSJ in Tashkent, formed in January 2001. Initially covered 9
buildings. General meeting decided on formation, elected board, internal auditing committee, and
chairperson. Upon a short period of good performance, residents from neighboring buildings started
applying to join the “Oltyn Chulpo” TSJ. Currently the TSJ covers 33 buildings (up to 3,000 residents; total
area-15 hectares). The Chairperson of the TSJ has JEK experience. The TSJ has developed its own
public awareness campaign focused on design and issue of a press release and information brochure for
all residents.
The TSJ had to deal with many emergency repairs during the first year of operation; for the second
year, a repair plan was designed. Management is performing according to the plan. The board decides on
membership fees (tariff for housing maintenance). The fee in this TSJ is relatively high in comparison to
others (44 sums per square meter).
The management is seeking additional financial sources. Recently the Board applied to the local
government for permission to open a shop to operate a for-profit repair service for other buildings. The
government rejected the application.
Assessment of Current Legal and Operational Status of
Housing Partnerships in Uzbekistan
9
One of the top priorities for the TSJ management is collection of fees. The management has a
good communication system with residents, including those who do not reside in their apartments in the
TSJ buildings. The TSJ has experience of going to courts and notary offices to deal with debts.
This TSJ believes that a good relationship with local makhalya is a key to success. The
Chairperson of the TSJ is a deputy head of the correspondent makhallah committee. The TSJ has good
relations with local governments as well. Every week the chairperson participates in working meetings on
housing issues conducted by local governments (hokimiyat).
According to its leaders, the main difficulties faced by the TSJ are the following:
•
State-run organization developing construction-repair documents for repair of buildings
charges TSJs for the service, the fee includes VAT, though the government issued a resolution
to have TSJs VAT exempt. Moreover, KRAVZ’s sub -contractors for buildings’ repairs charge
VAT for services/works provided to or performed for TSJs
•
Heat providers include VAT to the heat fees for TSJs
•
Electricity providers are supposed to pay TSJs a certain amount of fees collected for electricity
to repair and maintain internal networks (vozmeshenie). In fact, providers transfer the money
to the city (city level TEKO), and city transfers money to KRAZ. Nothing goes to the TSJs
•
Water and heat providers pay for in-building networks maintenance to TSJs, but the amounts
are not sufficient to cover expenses
•
Though the state has identified a list of resident categories for benefits (rebates or discounts)
on utilities payments, the corresponding funds go not to TSJs but to KRAVZ (communal repairemergence service with which the TSJs are forced to contract). The KRAVZs tell TSJs they
accumulate these funds for major repairs of buildings of TSJs, but when repairs are to start,
KRAVZ requires the TSJs to cover their repair costs, i.e., KRAVZ does not count the rebate or
discount money as the co-funding portion of the TSJ. KRAVZ does all the repair work and bills
the TSJ.
•
TSJs can not afford to take loans for repairs due to high interest rates
•
The right to use and dispose of attached land parcels. Though the Decree of the President
stipulates that TSJs may uses or dispose of their land parcels, including leasing them for
garages, local governments (rayon hokims) collect the corresponding rent payments and do
not turn them over to the TSJs.
•
According to the same Decree, TSJs have the right to collect rent for non-residential premises
leased to state government-funded organizations. But the State Property Committee collects
rent despite of the Decree. Thus, the TSJ decided to increase maintenance fees for the
affected tenants.
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10
•
Courts refuse to hear TSJs’ law suits because TSJs are exempt from the state fee for initiation
of court actions.
Main Concerns of Regional TEKO Representatives—EKO representatives report that their main
concern is focused on the relationships between the TSJs, the local governments and the TEKOs.4 The
local governments require that TSJs report to TEKO, and that TEKO report to the local governments.
According to the current legislation, however, TSJs are not accountable to TEKOs on
maintenance/management performance or on financial accounts. Nevertheless, local governments require
that TEKOs report on these matters. TEKO representatives believe that if they complained to higher-level
officials–either the State Agency on Housing and Communal Services or other state officials–they would be
penalized in some way by the local governments, and the problems would not be solved.
A second concern is that local governments formally establish TSJs and appoint their chairmen
and board members. Thus, only few people participate in decision-making process on the initial stage or
after. Furthermore, local governments decide on membership fees for TSJ, which contradicts the Law on
Housing Partnerships.
Third, the tariffs for utilities increase more rapidly than income. The Ministry of Finance establishes
rates for utilities in accordance with state obligations to comply with market-oriented principles mandated by
international organizations.
Fourth, chairpersons or managers of TSJs and accountants need training on management,
technical, accounting, and the legal framework. The state allocates funds for local governments to pay for
training for TSJs. Local governments should apply to regional offices of the Training Center for training
sessions for representatives of TSJs.
Fifth, capital repairs issues: (a) though the state program stipulates that capital repairs are to be
funded, there are no funds made available as of November 2002. Whenever allocated funds go to local
governments, LG transfers funds to KRAVZ, and the latter disposes of the money. TSJs have no control
over disbursement or use of the funds.
Sixth, housing previously owned and maintained by enterprises, agencies, organizations remains
under control (maintenance and management) of the former owners, despite the fact that the law requires
that such housing be transferred to TSJs on a par with other types of housing, regardle ss of the former
ownership.
4 In reading this section, it is important to note that the concerns expressed by TEKO representatives were given in a context where
LGI-II staff as well as State housing authorities were present. While TEKO’s concerns seem to be quite similar to those of housing
owners (See Section V), their vested interest in maintaining the status quo may make them less willing partners in reform efforts than
their public statements may indicate.
Assessment of Current Legal and Operational Status of
Housing Partnerships in Uzbekistan
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General TSJ Information—The government regularly issues requirements regulating TSJ
operations and the supply of various types of services. For example:
Reporting system—TSJs on a quarterly basis report to the Office of Statistics. The Ministry of
Finance requests local governments to provide information on accounts and financial statements of TSJs
on a monthly basis.
There are no departments within local governments to regulate TSJ activities—This is one
reason why local governments request the TEKOs to report on TSJs’ issues.
Registration of regional TSJ associations should be performed by the court offices that register
other NGOs, not by local governments.
LGI Presentation—Irina Gentsler was asked to make a brief presentation on the LGI project.
During the official session there were no questions or requests for information, but many of the participants
mentioned that they are familiar with the Kyrgyz experience with condominiums, mainly based on UI’s
video, training, and study tour (those who participated). After the seminar, some of the participants
expressed interest in cooperation with the Urban Institute. In particular, Andijan and Ferghana leaders of
TEKOs requested UI to consider their cities as sites for project implementation.
Tashkent City Communal Services Enterprise (“TEKO”)—(Kabul Zakirovich Farmonov, Deputy
Director), Mr. Farmonov is newly appointed to this position. He was formerly the deputy hokim for Unus
Abad rayon of Tashkent.
Formation of TSJs—According to Mr. Farmonov, TSJs in Tashkent were formed strictly in
compliance with the legislation. Residents of 20 to 30 residential multiunit buildings delegated their votes to
Domkoms for the later to participate in founding meetings for TSJs formation. Most of the TSJs in Tashkent
cover up to 5,000 units. Typically, Domkoms would become members of the boards of TSJs. The
chairperson would be elected from among the residents of the buildings joined in the TSJ. The elected
chairperson has the right to sign documents, including financial papers. If the chairperson does not have
sufficient expertise to manage the housing, the Board could appoint or hire an executive director. If a TSJ
has a chairperson and an executive director who performs management for the TSJ, only one of them
would have the right to sign documents as the legal representative of the TSJ. Typically, this person would
be the executive director.
Boards of TSJs decide on the staff for management and maintenance of the housing and their
salaries; vote for annual budgets, and control the quality of maintenance and repairs. Boards meet on a
weekly basis to discuss issues and set priorities for maintenance.
Utilities—Utility providers prefer contracts with individual consumers for their services, although
some have contracts with TSJs. Besides contracts for services, TSJs have different contracts with
providers of maintenance and repairs for in-building networks. Owners of apartments own in-building
networks and are responsible for maintenance up to the first wheal (kolodets). Although there is a
mechanism for calculating rebates or discounts (vozmeshenie) to TSJs by utility providers for maintenance
and repair of networks, the TEKO’s approach is the following: TSJs have to prove their expenses and
Local Government Initiative Phase II—
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12
report to providers on what had been done in terms of maintenance and repair before providers would
make any reimbursement payments.
This is one of the examples of the official approach to TSJs in terms of their reporting and
subordination.
Weaknesses of TSJs—Tashkent TEKO’s main concerns are focused on debts for utilities. Local
government (rayon level of city) makhalya’s leaders have to go to residences to collect fees for utilities.
The government encourages the TSJs to collect debts. In February 2002, the President issued a
Decree for utilities providers to provide a discount of 15 percent of the amount owed in cases where there
is 100 percent payment, and 7 percent if more than 75 percent of the debt is collected and paid to the
provider. The same Decree provides for TSJs to disburse the funds from the discount for incentive
payments to TSJ officers or staff members, for payment of housing maintenance debts, for support to lowincome families for their utilities payments, and for buildings repairs or improvements to attached land
parcels.
The second main concern is lack of skills among technicians maintaining housing. Many welleducated and qualified technicians and housing experts have left Uzbekistan since the early 1990s.
Needs/desires:
•
Develop training centers under TEKOs, provide centers with all necessary equipment to train
housing maintenance technicians
•
Study tours to CEE countries for TEKO’s mid -level officials, representatives of maintenance
organizations, leaders of TSJs (on a quarterly basis)
•
Mr. Farmonov expressed his interest in European experience in professional housing
management
As far as Kyrgyz experience is concerned, Mr. Farmonov said he is not supportive to using Kyrgyz
experience in Uzbekistan due to differences in culture, history, and the government’s approach to housing.
The main difference is seen in Uz government’s continuing financial investments into housing repair and
maintenance.
The general impression of the meeting was that TEKO officials deem it necessary to have TSJs
reporting and being accountable to TEKO so that TEKO in turn can report to local governments on the
TSJs’ technical and financial issues. There seemed to be little or no awareness of the concept that the
TSJs should be independent of local government control in their operations or financial management.
Mr. Farmonov ensured willingness to cooperate on certain events, and to recommend candidates
to participate in the project implementation.
Assessment of Current Legal and Operational Status of
Housing Partnerships in Uzbekistan
13
City of Andijan TEKO (Communal Services Enterprise) (Ismailov Adyl, Deputy Director)—
Andijan is a city in the Ferghana Valley. Mr. Adyl, who participated in UI’s condominium development
seminar for Ferghana Valley in the spring of 2002 in Osh, Kyrgyzstan, requested to meet with UI
representatives to discuss the possibility of participating in the LGI program in Uzbekistan.
There are 967 multi unit residential buildings in Andijan. After the Law on Housing Partnerships
was adopted, 107 TSJs were formed. As of November 2002, there are only 60 to 65 TSJs still operating.
Lack of housing background and expertise and insufficient will on the part of chairpersons to manage
buildings in many cases has resulted in the merging of two or more relatively small TSJs into larger ones.
General housing concerns—(1) lack of electricity, affecting heat, (2) lack of gas (ending point of
the gas distribution networks), (3) low income of Andijan residents.
TSJs’ concerns—(1) lack of understanding in terms of ownership and responsibility towards
common property among regular citizens, (2) there is no mechanism in place for TSJs to deal with
utilities/maintenance debts of owners selling their apartments, (real estate transactions go through
registration under the notary and do not require information on debts paid from TSJs. This type of
information comes from the makhallah, the head of which is not aware of payments in the buildings).
Most of the buildings in Andijan need repairs—The current maintenance system is not capable
of providing adequate maintenance services. Some people working for this system are interested in
changes to the system for the good of housing and residents. Such representatives apply occasionally
directly or through the Training Center “Uzkommunhizmat” to the government for improvement of the
housing environment, but the government is not responsive.
Needs/desires:
•
Wide public awareness campaign. Preferably basic videos on TSJ basics, operation issues
focused on regular residents, to be aired on prime time on television.
•
Study tours to Kyrgyzstan (similar to the one he participated in) for deputy hokims/local
governments, heads of local KEU (Communal maintenance departments/TEKO), and most
active chairpersons of TSJs.
UI agreed to attempt to communicate concerns of local and regional housing authorities to a higher
level of government as recommendations of a third party for housing reforms and improvement in
implementation programs.
IV.
LOCAL NGO TRAINING AND HOUSING-RELATED ACTIVITIES
Federation for Protection of Consumers’ Rights—(Zuhra Saydaminova, Executive
Director)—Mrs. Saydaminova founded the Federation in 1996 and is its executive director. The Federation
is an NGO that provides education, training, and technical assistance to groups and individuals that support
the development and protection of citizen and consumer rights. The Federation is identified as the only
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NGO in Uzbekistan that has significant experience with housing problems. In additional to providing
information and training to TSJ leaders, it has served as an informal gathering place for persons who wish
to reform the current system of organizing and managing TSJs. It has exerted considerable pressure on the
state government to address the needs of TSJs, and was instrumental in convincing the President and
Cabinet of Ministers to issue the decrees relating to repairs of apartment buildings in February and March
of this year. The director believes the Federation has good relations with Parliament and the central
government, including the State Agency for Housing and Communal Services, but not with the local
governments, who often thwart the Federation’s efforts to increase democratic decision-making among the
general population.
The Federation believes that the current method of managing privatized housing–through the rayon
administration communal services and maintenance departments or TEKOs–should be ended, and the
owners should be empowered to make decisions about housing maintenance and manage their own funds
for this purpose. However, there is a great need for training and technical assistance to increase the skill
level and capacity of chairpersons of TSJs. The Federation has a number of technical experts on its staff
that could form a nucleus for a TSJ training program, and is very interesting in cooperating with LGI in this
effort.
The director believes that housing is the most corrupt sector of the economy because the funds of
the owners and the state and local governments go to local officials and KRAVs, construction companies,
and corrupt chairpersons of TSJs rather than to improving conditions in the housing. This situation is
considered very pervasive and will be difficult to end because of the financial benefit to those who actually
control the funds.
Among the educational activities the Federation has engaged in are publications, consultations and
“open door” sessions with representatives of TSJs, organizational meetings with apartment owners, forums
for TSJ chairpersons, and mass media (radio, television, and newspapers) programs to provide information
on housing reform. The preparation of a manual on operation of TSJs was prepared with the financial
support of Eurasia Foundation and USAID’s Global Project.
The federation has 200,000 members, who pay a fee of about 20 to 25 cents to join (10 percent of
the official minimum salary of $2 to 2.50 per month), and an additional monthly fee of about one cent.
Disabled persons or pensioners pay no monthly fee. The membership fees are not sufficient to sustain the
Federation’s activities, but serve as a more or less symbolic commitment to the organization. The
Federation’s programs are largely financed through grants and contracts with international donors. There
are 4 persons on the staff and about 30 professional volunteers, including 14 who specialize in issues
relating to housing and communal services.
Tashkent Public Training and Education Center (Muborok Tashpulatova, Director)—The
Public Training and Education Center has a 7-person staff consisting of trainers and trainers-of-trainers.
The Center is involved primarily in public education–training for secondary school teachers and
administrators, and development of textbooks. Some of the public education work has been sponsored by
grants and contracts with Eurasia Foundation, the National Endowment for Democracy, and the Open
Assessment of Current Legal and Operational Status of
Housing Partnerships in Uzbekistan
15
Society (Soros Foundation). Their focus is on changing teaching methodology and “democratization” of the
mentality of Uzbekistan students.
The Center recently began to design an in-service training program with state sponsorship, for
Tashkent local officials. The focus will be on public culture, education, and healthcare.
The Center sees development of TSJs as a very challenging project due to the lack of willingness
among residents to participate in any decision-making process, and the lack of knowledge about property
rights and common property maintenance obligations among residents. The director suggested that UI find
another training partner, because she is very pessimistic about the possibility of successfully training TSJ
representatives.
In 2001, Counterpart Consortium awarded the Public Education Center a contract for training and
development of the Civil Society Support Centers. After 6 months, Counterpart terminated the contract
dissatisfaction with the reporting and accounting practices of the Center. Because of this experience, and
the Center Director’s high level of pessimism about the chance for success in training TSJs, the Center
would not seem to be a likely choice for conducting the training programs of LGI.
V.
TSJ ACTIVITIES AND ATTITUDES
The Federation for Protection of Consumers’ Rights arranged for the UI team to meet with 12
apartment owners who are active in their TSJs and 2 of the Federation’s experts on housing and utilities.
The owners reported that the local authorities created the TSJs they belong to and selected the
chairman without their knowledge or consent. Several of the apartment owners discussed the problems
they have encountered in trying to create TSJs that are independent of government control. In a number of
cases, buildings that are members of large TSJs want to withdraw and create smaller TSJs. The held
meetings and received the approval of a majority of the owners and prepared all the necessary
documentation, but their applications to register the smaller TSJs were turned down by the local authorities
(the rayon hokim office in a micro-district of Tashkent). In one example, 5 buildings that were part of a 22building TSJ went to court to appeal for the right to withdraw and form a small TSJ, but so far they have not
succeeded in this effort.
The owners all reported that they have found it impossible to separate the financial management of
the TSJs from the control of local authorities. They have been pressured to sign documents agreeing to
take on the previous debts of the JEKs that managed their buildings. One owner, who was a member of an
auditing committee, reported that of the 33 TSJs in her rayon, all but hers have signed agreements to take
on the debts of the JEKs that accrued before the TSJs were organized. (For example, if a repair project
was not paid for or communal service bills were not paid, those debts were kept on the balance of the
building, even if it was the responsibility of the JEK to pay for these expenses from the maintenance fee
income of the building, or they would be transferred back to the building if the TSJ agreed to accept the
debt.) In addition, they have been forced to sign contracts for emergency services from an enterprise
formed by the city authorities (KRAV), and in some cases even have been pressured to sign documents to
take out loans for improvements to the buildings. One chairman said the local government representatives
came to his building repeatedly to try to get him to sign an agreement to borrow 6 million sums for building
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Uzbekistan
repairs. So far, he has successfully evaded them, but there have been reports of threats to chairmen who
refuse these and other similar demands.
Representatives from the city come to the buildings repeatedly to pressure the chairmen of the
TSJs. In addition, the chairmen are expected to meet with the city authorities on a regular basis (at least
once a week) to account for the collection of maintenance fees from the owners. The fees collected are
turned over to the local maintenance companies, who refuse to report to the owners on the status of their
funds or how they are used. In the few cases where repairs have begun, they are often not completed or
are of very poor quality. One chairman reported that his building decided they would make repairs on their
own, but when they went to withdraw money from the TSJ’s bank account, the bank said they could not do
so without the permission of the city.
All TSJs are required to maintain their accounts in one bank selected by the city. The bank charges
higher than usual rates for services and does not pay interest on TSJ accounts.
Other owners discussed problems with service providers, who refuse to deal directly with the
owners of the buildings but only with the local authorities. This is contrary to the mandate of the Resolution
of the Cabinet of Ministers of March 2002.
The owners said there is a desperate need for training for TSJ leaders, to increase their
understanding of ownership rights and to improve their financial management and technical skills. Training
is also needed for local authorities and for communal service providers, since there is very little awareness
of the basic rights of the owners among any of these parties. On the other hand, some owners expressed
the opinion that the local authorities were well aware of the laws relating to TSJs, and used them to
maintain control of the buildings and the funds that the owners are required to turn over to the local
maintenance enterprises (TEKO or KRAV). All representatives agreed that it was helpful for the owners to
have a forum where they could meet to discuss their common problems with experts such as those
provided by the Federation.
In addition to providing training and information about ownership rights, the Federation experts are
available to assist owners with designing, budgeting, and implementing repair projects to improve
conditions in the privatized buildings.
VI. RELATED USAID ACTIVITIES
Counterpart Consortium (Dina Mukhamadieva, Programs Director, and Lyudmila Tolpegina,
Program Coordinator)—Counterpart operates a large program of NGO development and training. At
present they are operating 15 Civil Society Support Centers in Uzbekistan. The CSSC program includes
assisting local NGOs and the traditional makhallahs carry out Participatory Community Assessments to
identify community problems and carry out solutions. Counterpart makes grants to the CSSCs, to local
NGOs and to other community-based organizations to help them implement programs to meet communityidentified needs. There are 2 CSSCs in cities in Ferghana Valley and one in Tashkent. The program is due
to end in March 2003, unless extended by USAID.
Assessment of Current Legal and Operational Status of
Housing Partnerships in Uzbekistan
17
Eurasia Foundation (Juliya Shevkqn, Program Officer, and Dinara Alimdjanova, Program
Manager)—Eurasia has a comprehensive training and development program for NGOs, and makes grants
to NGOs to implement related activities. In 2001, they made a grant of $3,000 to the Federation to develop
materials and a public information campaign on various consumer rights issues. The grant-supported
program was successfully implemented. Eurasia also has a grant-making advocacy program to develop the
skills and capacity of makhallahs to represent the needs of constituents.
ABA-CEELI (Lynn Sferazza, Advocates Program)—ABA-CEELI works with advocate groups
who wish to develop seminars or training on legal-related issues. They will also assist with drafting or
revisions to legislation, upon request. They do not focus on housing per se, but would cooperate in
delivering materials or seminars on housing laws for NGOs, government representatives or TSJ chairmen.
The Federation plans to submit a proposal for an ABA-CEELI training seminar on legal issues relating to
their work.
VII. RELATED ACTIVITIES OF OTHER INTERNATIONAL DONORS
Open Society Institute–Soros Foundation (Umida Khusankhodjaeva, Law and Civil Society
Program Coordinator)—OSI plans to undertake a program for training and technical assistance to TSJs,
beginning around January 1, 2003. The goal will be to encourage the development of owner control of
housing.
The housing program will focus on 3 areas: (1) cooperation with communities, including TSJs, to
mobilize the residents to become more active in managing their buildings; (2) working with block
committees (makhallas) of local self-governments, which have played a critical role in neighborhood
development and are now in charge of collecting some local taxes; and (3) public policy to encourage
“social partnerships.”
With regard to TSJs, the program will try to improve the legal framework; develop brochures and
other information materials for owners; train owners to conduct meetings, get organized, register their
TSJs, and operate more effectively; promote conflict resolution techniques among owners and with
makhallas; prepare video training materials.
We discussed the fact that there is considerable overlap between the OSI program and LGI, and
that we should coordinate our efforts to avoid duplication and wasted effort. Ms. Khusankhodjaeva is in the
process of preparing a work plan for this program, and will contact Ms. Gentsler when there is more specific
information to discuss, probably in December.
OSI considers the makhallas to be key players in the development of citizen-based programs. They
have been regarded as highly respected members of the community, and not under the control of the
government. The state is cutting off support to them, however, and forcing them to develop ways to fund
their activities, such as through collecting some types of local taxes and performing other government
functions. The general population looks to makhallas as leaders, but the state views them as something of
a threat.
Local Government Initiative Phase II—
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OSI has worked with the Federation and considers them a good partner.
OSI ended its program of assistance to local governments because it was considered a “negative
experience” in that the local authorities were not cooperative in introducing more transparency and citizen
participation in their decision making and control of local government activities.
World Bank (Dinara Isimidinova, Coordinator, Community Empowerment Network
Program)—This program is just getting underway, with funding from the World Bank Institute. Ms.
Isimidinova expects to have a work plan prepared by the end of November. The project will fund small
projects to help develop community involvement. It will partner with a local NGO, the Businesswomen’s
Association. There is a possibility of collaboration with TSJs, especially in relation to social protection of
vulnerable residents who have difficulty paying for communal services. When LGI learns more about the
programs of state grants to TSJs, and the discount for high percentages of collection of fees from owners
for communal services, we should discuss opportunities for collaboration with the World Bank initiative.
VIII. CONCLUSIONS
TSJs have not been permitted to operate independently of local authorities in Uzbekistan. There
appears to be growing awareness of this among the owners, however, and frustration that their rights are
not being observed or protected. In addition, the recent Decree of the President and the Resolution of the
Cabinet of Ministers appear to reflect at least some level of commitment on the part of state authorities to
improving conditions in multifamily housing.
In other countries, housing partnerships or condominium associations are not required to turn over
their maintenance fees to a local authority which then makes all decisions about how to spend the funds
and is not accountable to the owners. Changing the way TSJs operate in Uzbekistan will be difficult
because the legal framework supports the status quo, and because the local authorities and some TSJ
chairpersons benefit financially from the current arrangement. However, at least some of the owners seem
well aware that the situation is undemocratic and unfair, and are highly motivated to acquire additional skills
and take over management of their buildings.
If local authorities can be persuaded to cooperate, and if the recent pronouncements of the
President and Cabinet of Ministers are implemented to any reasonable extent, there is no reason that TSJs
cannot enjoy greater success than they have to date. Wide experience in many other transition countries
has shown that education of the owners remains the key to successful owner control and management of
multifamily housing. Training in decision-making and financial and technical management skills, such as
that provided in neighboring Kyrgyzstan, will be instrumental in improving the situation in Uzbekistan.