Document ofThe World Bank

FOR OFFICIAL USE ONLY

Report No: 73448-HT

RESTRUCTURING PAPER

ON A

PROPOSED PROJECT RESTRUCTURING OF

PORT AU PRINCE NEIGHBORHOOD HOUSING RECONSTRUCTION PROJECT GRANT

FROM THE HAITI RECONSTRUCTION FUNDMay 3, 2011

TO THE

REPUBLIC OF HAITI

October 11, 2012

Sustainable Development DepartmentCaribbean Country Management UnitLatin American and the Caribbean Region

This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.

ABBREVIATIONS AND ACRONYMS

Regional Vice President: Hasan A. TuluySpecial Envoy: Alexandre V. Abrantes

Sector Manager: Anna WellensteinTask Team Leader: Sylvie Debomy

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HAITIPORT AU PRINCE NEIGHBORHOOD HOUSING RECONSTRUCTION PROJECT

CONTENTS

ContentsA. SUMMARY.......................................................................................................................... 4B. PROJECT STATUS............................................................................................................ 5C. PROPOSED CHANGES..................................................................................................... 6ANNEX 1: RESULTS FRAMEWORK AND MONITORING.................................................9ANNEX 2: PROJECT COMPONENT DESCRIPTION REVISIONS..................................13

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BMPAD - Bureau of Monetization of Development Aid Programs (Bureau de Monétisation des Programmes d’Aide au Développement)

CRC - Community Reconstruction Center (Centre d’Appui à la Reconstruction – CAR)GFDRR

GoHHRF IOM

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Global Facility for Disaster Reduction and RecoveryGovernment of the Republic of HaitiHaiti Reconstruction FundInternational Organization for Migration

MTPTC - Ministry of Public Works, Transport and Communications (Ministère des Travaux Publics, Transports et Communication)

NDC - Neighborhood Development CouncilPDOPMC

PREKADPRODEPUR

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Project Development ObjectiveProject Management ContractorPort-au-Prince Neighborhood Housing Reconstruction Project Urban Community Driven Development Project

SBA - Structural Building AssessmentUCLBP - Unité de Construction des Logements et Bâtiments Publics

PORT-AU-PRINCE NEIGHBORHOOD HOUSING RECONSTRUCTION PROJECT

RESTRUCTING PAPER

A. SUMMARY

1. This Restructuring Paper seeks the approval of the World Bank Vice-President for Latin American and the Caribbean to restructure the Port-au-Prince Neighborhood Housing Reconstruction Program (PREKAD – P125805). The proposed restructuring is in response to a request received from the Ministry of Finance of the Government of the Republic of Haiti (GoH) to accelerate the return of people to safe neighborhoods by introducing new support mechanisms in the form of Return Cash Grants1. This Restructuring would systematically align the financial incentives and mechanisms applicable to housing intervention projects across donors with the Return Strategy recently developed by the GoH.

2. The proposed restructuring would not extend the closing date of the project. Implementation arrangements for the project would remain unchanged. No additional Safeguard policies would be triggered. The Operational Manual would be updated to reflect current circumstances and the Return Strategy, building on lessons learned from the implementation of the Urban Community Driven Development Project (PRODEPUR), PREKAD and of the GoH’s Rehabilitation of 16 Neighborhoods and Voluntary Return from Associated 6 Camps Project (“16/6 Project”) to date. The proposed restructuring would require a minor change to the Project Development Objective (PDO) as outlined in paragraph 12 below.

3. The housing sector remains a top priority for the GoH. The Unité de Construction des Logements et Bâtiments Publics (UCLBP)2 was recently established to serve as the foremost housing authority in Haiti with the mandate to guide policy on reconstruction and create norms and guidelines for implementing agencies. The UCLBP has sustained consistent dialogue with donors regarding the return of affected residents to their homes and neighborhoods, or other durable solutions.

4. As of June 2012, an estimated 390,000 individuals (or 98,000 households) remain in 575 camps and camp-like settlements that formed post-earthquake across the earthquake affected areas.3 Those able to return to neighborhoods have done so or have identified other durable solutions. The individuals and households who remain in camps lack the resources to transition to better living conditions. At the same time, living conditions in the camps are at an all-time low, with degradation of sanitary conditions and high susceptibility to diseases, and increased incidents of gender-based violence and gang activity. Given the time since the earthquake, financing, humanitarian assistance 1 Return Cash Grants include a rental subsidy, livelihood subsidy and transportation assistance, and an associated package of services including health, psycho-social, protection, water, sanitation and hygiene assistance, and vocational training. 2 UCLBP was established on November 11, 2011 and confirmed by Presidential Decree on July 1, 2012. 3 International Organization of Migration Tracking Matrix, April 2012.

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and organizations that have kept camps open and functional to date are starting to withdraw, further exasperating the increased vulnerability.

5. In response, the GoH and UCLBP have developed a Return Strategy, which provides immediate solutions to facilitate the voluntary return of people from camps to neighborhoods. The Return Strategy offers options based on individual and household- specific circumstances, and complements the options currently available to owners to repair or reconstruct their houses. The Return Strategy provides Return Cash Grants to beneficiaries, which include a rental subsidy, a livelihood subsidy, and transportation assistance, in addition to a comprehensive package of services, including health, psycho-social, protection, water, sanitation and hygiene assistance, and vocational training. To date, Return Cash Grants have enabled over 18,000 households to return to neighborhoods and safe housing.

6. The passage of Tropical Storm Isaac on August 25, 2012 re-emphasized the extreme vulnerability of the remaining camps. Approximately 12,000 tents were destroyed in camps across Port-au-Prince and earthquake affected areas causing a spike in cholera incidence rates. In light of this, the GoH has requested the World Bank and other donors contribute resources and redouble efforts to help accelerate the return of individuals and households to neighborhoods and safer housing. In response, the proposed Restructuring would facilitate the use of PREKAD project funds to finance Return Cash Grants in support of the Return Strategy.

B. PROJECT STATUS

7. PREKAD, financed by a US$65 million Grant from the Haiti Reconstruction Fund, was approved by the Vice-President for Latin American and the Caribbean on May 4, 2011, and the accompanying Grant Agreement was signed on May 10, 2011. The project became effective on July 28, 2011. The Project has complied with all environmental, social and fiduciary safeguard requirements, and both financial management and procurement has been carried out in accordance with the Bank’s Financial Management and Procurement Guidelines.

8. The Project is currently rated Moderately Satisfactory for achievement of Development Objective, and Moderately Unsatisfactory for overall Implementation Progress, mainly due to delayed procurement processes and the need for a clear reconstruction strategy. The Project has disbursed a total of US$4.99 million (equivalent to 8 percent) as of October 1, 2012.

9. Over the last few months, the institutional capacity has improved with the creation of the UCLBP, internal reorganization of the BMPAD, the implementing agency, and improved donor coordination. In May 2012, the UCLBP developed a national housing policy which established the basic principles for reconstruction and is now providing consistent guidance to implementing agencies. Additionally, the BMPAD has been bolstered by procurement capacity building.

10. Two major contracts have been signed under PREKAD with Project Management Contractors (PMCs or Maîtres d’Ouvrage Délégués), the Project’s implementing

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agencies at the community level, for a total amount of US$ 20 million. Works are expected to begin in October 2012 in the neighborhoods of Simmonds Pele and Nazon-Christ Roi-Poupelard, resulting in an expected increase in disbursements over the coming months. These contracts will focus primarily on medium and long-term permanent housing solutions.

11. To support the Return Strategy, this proposed Restructuring would finance two major additional contracts that would prioritize and support return activities. These contracts are expected to assist in the return of roughly 12,000 households (an estimated 60,000 people) to neighborhoods over the course of the next year through the provision of Return Cash Grants for safe rental housing options.

C. PROPOSED CHANGES

12. Supporting the financing of Return Cash Grants would require an Amendment to the Grant Agreement, including a minor change to the PDO, minor revisions to the project component description and subsequent revisions to the results framework, and minor reallocation of funds, detailed below.

Project Development Objective

13. The proposed Restructuring would entail a minor change to the PDO to include the wording “and/or return to improved housing conditions”. The revised PDO would read, the objective of the Project is to help residents of Selected Port-au-Prince Neighborhoods severely affected by the Earthquake return to their communities by supporting them to repair and/or reconstruct their houses and/or return to improved housing conditions and improving basic community service infrastructure.

Results Framework

14. The Results Framework would be adjusted to reflect the increased scope and impact of the project activities. See details in Annex 1.

Project Components

15. The proposed Restructuring would also involve minor changes to the description of project components in the Grant Agreement, specifically Component 1 (Schedule 1, Part A, Section 2 and 3). See a detailed description in Annex 2. Table 1 below outlines the change in project component description and reallocation of funds.

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Table 1: Project Component and Detailed HRF Allocation RevisionsComponents/Activities Project Costs (US$m.)

Original Revised Current ProposedComponent 1: Debris Removal and Housing Repair and Reconstruction

Component 1: Debris Removal and Housing Repair and Reconstruction and Return Activities

37,000,000 37,000,000

Component 2: Repair and Improvement of Community Infrastructure

No change. 19,800,000 24,600,000

Component 3: Institutional Support and Studies

No change. 4,800,000 2,000,000

Component 4: Project Management No change. 1,400,000 1,400,000

Institutional Arrangements, Fiduciary and Safeguards

16. Implementation arrangements for the project would remain unchanged. The proposed Restructuring would not extend the closing date of the project. The Project has complied with all environmental, social and fiduciary safeguard requirements. No additional Safeguard policies would be triggered. Both financial management and procurement has been carried out in accordance with the Bank’s Financial Management and Procurement Guidelines, and there would be no changes to either Financial Management or Procurement arrangements of the project.

17. An audit for PREKAD would be conducted annually, as is the case for PRODEPUR. The report for the first audit would be submitted to the Bank no later than January 31, 2013. There are not overdue audit reports for the Project.

Reallocation of Grant Proceeds

18. There would be a change to the description of Category 1 to incorporate Return Cash Grants, which would also be reflected in the Grant Agreement. The addition of Return Cash Grants will not require a reallocation of funds and the current allocation of US$ 37 million for Category 1 will remain.

19. To reflect the increased need for neighborhood investments (financed under Category 2), and taking advantage of the restructuring process, the GoH elected to reallocate US$2.8 million from Category 3, and US$2 million from Category 5 to Category 2. Category 5 (Unallocated) would subsequently be eliminated.

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20. The table below sets out the revised expenditure categories to be financed out of the HRF Grant proceeds:

Table 2: Revised Allocation of Proceeds (US$) Category of Expenditure Allocation (US$) % of Financing

Current Revised Current Revised Current Revised(1) Works and/or goods to be financed under Cash Grants, works under Parts A.1 and A.2(i) of the Project, and consultants’ services under Part A of the Project

(1) Reconstruction and Return Cash Grants and Works and/or goods and non consulting services to be financed under Part A.1 and A 2(i) of the Project, and consultants’ under Part A of the project.

37,000,000 37,000,000 100% 100%

(2) Goods, works and Non-consulting Services under Parts B, C and D of the Project

No change. 19,800,000 24,600,000 100% 100%

(3) Consultants’ services and Training under Parts B, C and D of the Project

No change. 4,800,000 2,000,000 100% 100%

(4) Operating Costs No change. 1,400,000 1,400,000 100% 100%(5) Unallocated Cancelled. 2,000,000 0 100% 100%

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ANNEX 1:Results Framework and Monitoring

PORT-AU-PRINCE NEIGHBORHOOD HOUSING RECONSTRUCTION PROJECT

Results Framework

Revisions to the Results Framework Comments/Rationale for Change

PDOCurrent (PAD) ProposedTo help residents of Selected Port-au-Prince Neighborhoods severely affected by the Earthquake return to their communities by supporting them to repair and/or reconstruct their houses and improving basic community service infrastructure.

The objective of the Project is to help residents of Selected Port-au-Prince Neighborhoods severely affected by the Earthquake return to communities by supporting them to repair and/or reconstruct their houses and/or return to improved living conditions and improving basic community service infrastructure.

Addition of return activities to broaden scope of work and impact.

Intermediate Results IndicatorsCurrent (PAD) Proposed changeDebris Removal and DemolitionProject neighborhoods are cleared of debris allowing repair and/or reconstruction activities to start.

No change. No change.

Housing Repair and Reconstruction Housing repair and/or reconstruction activities allow former resident to return to neighborhoods.

Housing Repair, Reconstruction and Return ActivitiesHousing repair and/or reconstruction and/or rental support to allow former residents to return to neighborhoods.

Addition of return activities to broaden scope of work.

Technical AssistanceProject activities are carried out in coordinated and efficient fashion.Advisory services for repair and reconstruction are provided in close contact with beneficiary communities.

No change. No change.

Community Infrastructure Repair Improvement and ExtensionLiving conditions in project neighborhoods are improved to better than previous levels.

No change. No change.

Institutional Capacity Support and StudiesUrban planning exercise leads to improved spatial organization of project neighborhoods.

No change. No change.

Project Management Component Monitoring and evaluation of project implementation is carried out efficiently and periodically.

No change. No change.

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Results Monitoring

Project Development Objective (PDO): The objective of the Project is to help residents of Selected Port-au-Prince Neighborhoods severely affected by the Earthquake return to their communities by supporting them to repair and/or reconstruct their houses and improving basic community service infrastructure.

Revised Project Development Objective: The objective of the Project is to help residents of Selected Port-au-Prince Neighborhoods severely affected by the Earthquake return to their communities by supporting them to repair and/or reconstruct their houses and/or return to improved housing conditions and improving basic community service infrastructure.

PDO Level Results Indicators* C

ore

D=DroppedC=ContinueN= New

R=RevisedUnit of

Measure Baseline

Cumulative Target Values**

Frequency Data Source/Methodology

Responsibility for Data

CollectionYR 1 YR 2 YR 3 YR 4 YR 5

Indicator 1:Number of displaced households who have returned to neighborhoods upon completion of housing repair and reconstruction works and/or receiving return support

RHH 0 5,600 11,800 15,100 15,800 16,000 Annual BMPAD

Reports BMPAD/PMCs

Indicator 2:Number of households benefitting from community-wide upgrading

C HH 3,000 15,000 25,000 35,000 42,000 Annual BMPAD reports BMPAD/PMCs/ Municipality

Indicator 3:Direct Project beneficiaries of which female (Core)

C Person 0 15,000(50%) 75,000 125,000 175,000 210,000 Annual BMPAD reports BMPAD/PMCs/

MunicipalityINTERMEDIATE RESULTS

Component One: Debris Removal and Housing Repair and Reconstruction and Return Activities

Sub-Component 1: Debris Removal and DemolitionProject neighborhoods and cleared of debris allowing repair and/or reconstruction activities to startIntermediate Result indicator One: % Volume (m3) of debris cleared in neighborhoods. C m3 Contractual

Targets

% of contracted agreement

% of contracted agreement

% of contracted agreement

Annual BMPAD Reports BMPAD/PMCs

Sub-Component Two: Housing Repair and Reconstruction Housing conditions are improving as a result of repair and reconstruction work

Revised Intermediate Result (Sub-Component Two): Housing Repair and Reconstruction and Return ActivitiesHousing conditions are improving as a result of repair and/or reconstruction work and/or return activitiesIntermediate Result indicator One: Cumulative number of repair and reconstruction and return activities contracts financed and completed

R U 0 5,600 11,800 15,100 15,800 16,000 Annual PMCs reports BMPAD/PMCs

Intermediate Result indicator Two: Number of housing units repaired compliant with standards

C U 0 500 1,500 2,500 3,000 3,000 Annual PMCs reports BMPAD/PMCs

Intermediate Result indicator Three: Number of housing units rebuilt compliant with standards

C U 0 100 300 600 800 1,000 Annual PMCs reports BMPAD/PMCs

Intermediate Result indicator Four: Number of households provided Return Cash Grants 4

N 5,000 10,000 12,000 12,000 12,000 Annual PMCs reports BMPAD/PMCs

Sub-Component 3: Technical SupportSocial Mobilization and Advisory Support for Reconstruction activities are being implemented successfullyIntermediate Result indicator One: CRC are established, fully staffed and effective C Unit 1

At least one per zone

MTR/End of project

BMPADReport

BMPAD/Municipality

Component Two: Repair, Improvement and Extension of Basic Community Service Infrastructure Living conditions in project neighborhoods are improved to better than previous levelIntermediate Result indicator One: Number of community infrastructure repair and rehabilitation contracts completed

C Nb 0TBD once infrastructure is identified

Annual BMPAD reports BMPAD/PMCsMunicipality

Component Three: Institutional Capacity Support and StudiesReconstruction is carried out following a sound urban planning approachIntermediate Result indicator One: Community urban development plan completed and approved by the

CUnit 1 One per

zoneMTR/End of project

BMPADreport

BMPAD/Municipality

4 This is a new Results Indicator which will capture the increase beneficiaries who will receive Return Cash Grants. The cumulative target values for the other indicators have been subsequently revised to reflect the change in emphasis for the financing, leading to a decrease in beneficiaries for repair and reconstruction activities, but an increase in the number of beneficiaries receiving Return Cash Grants.

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CommunitiesComponent Four: Project ManagementMonitoring and evaluation of project implementation is carried out efficiently and periodicallyIntermediate Result indicator One: Baseline established no later than 6 months after project launch and M&E reports available annually

C Unit Baseline 1 1 1 1 Annual BMPADreport

BMPAD/PMCs

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ANNEX 2:Project Component Description Revisions

PORT-AU-PRINCE NEIGHBORHOOD HOUSING RECONSTRUCTION PROJECT

1. The proposed Restructuring would involve minor changes to the description of project components in the Grant Agreement, specifically Component 1 (Schedule 1, Part A, Section 2 and 3), which read:

Provision of support to residents of Selected Port-au-Prince Neighborhoods to carry out: (i) the repair and/or retrofitting of Yellow-tagged Houses5 and Buildings, through the hiring of local contractors under the supervision of PMC; or (ii) the on-site reconstruction of Red-tagged Houses and Buildings, and houses unfit for repair in economical conditions, through the provision of Cash Grants to Beneficiaries.

Provision of technical assistance to support neighborhood communities including NDCs in the preparation and implementation of Project activities and other associated activities, through, inter alia: (i) the coordination and implementation of community-based mapping exercises; (ii) the preparation of Cash Grants selection criteria and procedures; (iii) the provision of advice on resettlement policies and procedures (in accordance with the Resettlement Action Plans); (iv) the provision of training on gender awareness; (v) the establishment and operation of CRCs; (vi) the creation and implementation of conflict-resolution mechanisms related to Project activities; (vii) the supervision of housing repair and/or reconstruction activities; and (viii) the provision of training on the use of new building codes and techniques.

2. The proposed change would reflect the broadening of activities to include support for return to neighborhoods, which, given the success of the GoH’s Return Strategy, has emerged as a successful approach providing an immediate and improved housing solutions where repair and/or reconstruction was not viable. The change would therefore be reflected as follows:

Provision of support to residents of Selected Port-au-Prince Neighborhoods to carry out: (a) the repair and/or retrofitting of Yellow-tagged Houses and Buildings, through the hiring of local contractors; or (b) the on-site reconstruction of Red-tagged Houses and Buildings, and houses unfit for repair in economical conditions, through the provision of Cash Grants to Beneficiaries or the hiring of local contractors under the supervision of PMCs; or (iii) the provision of Return

5 Through the Global Facility for Disaster Reduction and Recovery (GFDRR) the Bank funded a Structural Building Assessment (SBA) program which was carried out by the Ministry of Public Works, Transport and Communications (MTPTC). The program assessed the structural conditions of about 400,000 single and multi-unit residential buildings with green, yellow and red classifications. Green structures were classified as safe and immediately inhabitable. Structures marked Yellow were classified inhabitable after completion of necessary repairs, in accordance with MTPTC guidelines. Structures marked Red were classified as severely damaged and would only be inhabitable following serious structural repairs, in accordance with MTPTC guidelines, or marked for demolition. .

Cash Grant to allow Beneficiaries to move to neighborhoods with superior living conditions.

Provision of technical assistance to support neighborhood communities including NDCs in the preparation and implementation of Project activities and other associated activities, through, inter alia: (i) the coordination and implementation of community-based mapping exercises; (ii) the preparation of Cash Grants selection criteria and procedures; (iii) the provision of advice on resettlement policies and procedures (in accordance with the Resettlement Action Plans); (iv) the provision of training on gender awareness; (v) the establishment and operation of CRCs; (vi) the creation and implementation of conflict-resolution mechanisms related to Project activities; (vii) the supervision of housing repair and/or reconstruction and/or return activities; and (viii) the provision of training on the use of new building codes and techniques.

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