PROJECT INFORMATION DOCUMENT (PID)

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Project Name

Region

Sector

PROJECT INFORMATION DOCUMENT (PID)

CONCEPT STAGE

Report No.: AB1942

Land Management & Urban Development Project

EUROPE AND CENTRAL ASIA

General agriculture, fishing and forestry sector (60%);Subnational government administration (40%)

Project ID

Borrower(s)

Implementing Agency

P096263

THE REPUBLIC OF ALBANIA

Ministry of Finance

Albania

[ ] A [ ] B [ ] C [X ] FI [ ] TBD (to be determined)

Environment Category

Date PID Prepared

Estimated Date of

Appraisal Authorization

Estimated Date of Board

Approval

December 2, 2005

July 31, 2006

October 31, 2006

1.

Key development issues and rationale for Bank involvement

Secure property rights along with an efficient and transparent land management regime are fundamental for creating well functioning land and property markets in Albania; these in turn provide incentives for local and international businesses, households and individuals to invest in land and properties. Land titles are often used to access cheaper, affordable credit. For most of the poor, land is the primary means for generating livelihood and the main vehicle for investing, accumulating wealth and transferring it between generations. Furthermore, secure property rights, proper land management and development control system are enabling factors in improving investment climate, urban management, natural resources management, and in promoting good governance.

Well established land records and ownership rights constitute

sine qua non

conditions for fiscal decentralization and municipal autonomy deriving from property tax revenues. This revenue basis plays a crucial role in local governments’ ability to provide essential public services and infrastructure, necessary also for enabling business environment. Therefore, the project will focus on four main areas necessary to promote the development of an efficient land and property markets: (i) improving the security of tenure; (ii) strengthening local government capacity to develop and enforce land use plans; (iii) strengthening state land management; and (iv) supporting the development of property taxation function.

Sector Issues and Future Challenges

In the process of developing a Country Assistance Strategy (CAS) covering the period of next four years (FY 06-09), among the key threats to sustainable development of Albania were

identified: unclear land tenure, uncontrolled urban growth, and inadequate public infrastructure.

The proposed program aims at addressing these issues in a comprehensive manner through a combined operation tackling some key land and urban management issues. Furthermore, the proposed project will contribute to other focus areas of the CAS, namely: governance, decentralization and private sector development.

From 1991, Albania has carried out land and property administration reforms. Substantial progress has been made in ownership transfer and recognition of property rights. Land privatization, registration of ownership rights and land use planning have been incrementally addressed by the government through passing key laws and regulations such as Law on Land

Restitution and Law on Informal Settlements.

The Government created in 1993 the Immovable Property Registration System (IPRS), currently subordinated to the Ministry of Justice, with a network of 36 district offices. The agency has a mandate to register land ownership and property transactions. Furthermore, the government has started the process of restitution of properties to owners whose land was confiscated prior to

1945. The process to regularize informal settlements was also initiated.

The decentralization process is advancing and the major achievements of last years in this area include: completion of legislative framework for territorial administration, assignment of specific responsibilities to the local level, and creating defined budget transfer mechanism and a scope for revenue autonomy.

However, major problems remain . First, land and property rights are not fully secure. As of today, there are still about 600,000 urban and 300,000 urban parcels not yet registered and even registered ownership rights are not fully secure. The IPRS has been criticized for lack of efficiency and transparency and the process of registering property transaction is often very slow and expensive because of the high informal payments. Furthermore, there are unresolved conflicting claims to land and properties from former owners (pre-1945), especially in the coastal region.

Second, large numbers of illegal land subdivisions and construction projects have taken place, primarily on peri-urban areas and in tourism zones. Significant urbanization occurred since the demise of the socialist regime in 1991 when the restrictions on internal migration have been removed. Most of this development took place in peri-urban areas, often with no property rights, nor adequate building permit procedures. The rapid urbanization in absence of sound policy and enforcement of laws is recognized as a major threat to sustainable urban development in Albania.

Third, there is a wide spread perception of lengthy procedures and corruption in the registration of land and property transactions, and issuance of building and occupation permits. As a result, many transactions and construction projects take place without permits and many of these buildings do not comply with land use plans or the building code standards.

Fourth, while the government has devolved many functions to local governments through the decentralization process, local governments often do not have the capacity or the financial resources to serve the communities. Consequently, many municipalities lack the basic

infrastructure such as local roads, water supply and sanitation, and solid waste management.

Widening the tax base and reducing the tax evasion is one of key instruments for municipal development, in which land and transaction registration pay a crucial role.

Fifth, there have been some attempts in the past to address urban issues, mainly through investment in infrastructure (Community Works Project, and Urban Land Management Project).

However, the lessons suggest that these urban issues can be resolved only through comprehensive capacity building in the municipalities, covering technical, resource management, and governance aspects. Otherwise, investment in infrastructure (particularly non-tariff collecting infrastructure such as access roads, drainage, and sewage) would not be sustained.

Therefore, the project will focus on strengthening local governance, especially on land use planning and development control, and the collection of property taxes, both important to develop an efficient land and property markets. The taxes could then provide sustainable stream of funds for investments in local infrastructure and services.

2.

Proposed objective(s)

The overall goal of the proposed project is to support the development of efficient land and property markets, strengthening the capacity and resource base of municipalities, improving urban infrastructure and services. The specific objectives are the following: (i) improve tenure security in urban (including informal settlements), rural, and coastal zone areas, improve service delivery and promote transparency of land registration institution; and (ii) build sustainable capacity of selected local governments in urban land management.

3.

Preliminary description

Component I: Security of Tenure and Registration of Property Rights

The objective of Component I is to complete the systematic registration of property rights and improve the efficiency and transparency of the property registration system so that citizens can receive adequate services in an efficient manner, and the property market can operate without inhibitions. The component will cover the whole country, but initially, will concentrate on those areas that have the highest value properties and are most economically active. The component will include two sub-components:

Sub-Component I: Completion of Registration of Rights

. The sub-component would support the completion of first registration of the remaining 300,000 rural properties and 600,000 urban properties. The project will also support the regularization and registration of informal settlements. The sub-component will finance aerial photography and orthophoto production, ground surveying and mapping, and legal search and adjudication.

Sub-Component II: Improvement in Service Delivery of IPRS.

The sub-component will support the improvement of service delivery of IPRS in registering land and property transactions through re-engineering of office functions, introducing of information technology, and developing, dissemination and monitoring of service standards. Furthermore, the component will

finance regular customer surveys to measure the extent of compliance with service standards.

The component will also support development of a hotline to report corruption in IPRS, which would be managed by an independent operator.

Sub-component III: Land Policy Development.

The sub-component will provide support to the development of critical land policies through participatory processes and public hearings. There are several critical land policies which need to be addressed in order to complete the registration process and to enhance land and property markets. These policies would include: security of registered parcels, resolution of multiple claims, particularly in coastal zone areas. During project preparation, critical policies will be identified, and the process of their development will be defined and agreed.

Component II: Urban Management and Infrastructure

The main objective of this component is to strengthen the capacity of selected municipalities in urban management, and to improve delivery of essential urban services. This component would support selected secondary cities whose population is more than 20,000, and which are committed to engaging themselves in the process of reform and improved municipal management. The first phase of the program will support 3-5 municipalities who have shown a strong commitment to reforms. The component will include two sub-components:

Sub-component I: Municipal Capacity Building.

The sub-component would assist in development of capacities of selected municipalities in urban land management. In particular, the project would finance technical assistance, equipment, and office renovation to help participating municipalities to develop the following key documentations essential to urban management: (i) inventory collection (land use, occupants and business registration, infrastructure, vulnerable groups, human and fiscal resources, and environment, etc.); (ii) city development visions and strategies; (iii) registration of residents and introduction of property tax;

(iv) municipal management plan covering land use, infrastructure management, and resource management; (v) city investment plan. These documents would be prepared with extensive public consultations. Through the process, the municipalities would gain adequate knowledge and expertise in urban management.

Sub-component II: Municipal Infrastructure.

The sub-component will help the participating municipalities implement the city investment plan and carry out improvement works to municipal infrastructure. The financing would be provided for urban and social infrastructure on a cost-sharing basis. The eligible list of infrastructure will be determined and agreed during project preparation, and so will be the percentage of cost-sharing..

Component III. Project Management.

Project management will be streamlined within the existing structure of the implementing agencies. The component will finance the incremental operating costs of managing the project.

4.

Safeguard policies that might apply

[Guideline: Refer to section 5 of the PCN. Which safeguard policies might apply to the project and in what ways? What actions might be needed during project preparation to assess safeguard issues and prepare to mitigate them?]

The project has been classified as category FI as the specific investments will not be known until the implementation. The following safeguard policies are likely to be triggered: Environmental

Assessment, Involuntary Resettlement, Cultural Property (tbd) and International Waterways

(tbd). Further preparatory studies and assessments will determine their final application and mitigation methods. During project preparation the following studies will be carried out and documents developed: infrastructure needs assessment for the selected municipalities, institutional capacity assessment, resettlement policy framework, environmental policy framework, and operational manual.

5.

Tentative financing

Source:

BORROWER/RECIPIENT

($m.)

5

20 INTERNATIONAL BANK FOR RECONSTRUCTION AND

DEVELOPMENT

INTERNATIONAL DEVELOPMENT ASSOCIATION

6.

Contact point

Contact: Wael Zakout

Total

20

45

Title: Sr. Operations Officer

Tel: (202) 473-3537

Email: [email protected]

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