World Bank Document · douewnt of the world bank for omcial use only repwt no. 8453 project completion report dominican republic sites and services project (loan 2104-do) march 19,

Douewnt of

The World Bank

FOR OmCIAL USE ONLY

Repwt No. 8453

PROJECT COMPLETION REPORT

DOMINICAN REPUBLIC

SITES AND SERVICES PROJECT(LOAN 2104-DO)

MARCH 19, 1990

Infrastructure and Energy DivisionCountry Department IIILatin American and the Caribbean Regional Office

This document has a resticted distribution and may be used by recipients only in the performance ofthikr offidal dutie Its contents may not otherwise be disclosed without World Bank authorization.

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W&01 FCIAL USE ONLYTHE WORLD SANK

Wa"tnon.D.C. 20433U.S.A.

Op.rfamm Evaluitmf

March 19, 1990

MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT

SUBJECT: Project Completion Report on the Dominican Republic -Sites and Services Project (Loan 2104-DO)

Attached, for information, is a copy of a report entitled 'ProjectCompletion Report on the Dominican Republic - Sites and Services Project(Loan 2104-DO) prepared by the Latin America and the Caribbean RegionalOffice. No audit of this project has been made by the OperationsEvaluation Department at this time.

Attachment

This document has a restricted distribution and may be used by rocipients onlY in dte performaneeof their oMcial duties Its contents may not othenrise be disclsed without World Bank authorization.

FOR OmCIAL USE ONLY

DOMIECAN REPUBLIC

SITES AND SERVICES PROJECTS (LOAN 2104-DO)

PROJECT COMPLETION RET

TABLE OF CONTENTS

Page No.

Preface#* .......................................... *............. (i

Project Completion Report Basic Data Sheet ....................... (ii)Highlights ....................................... (v)

CHAPTER I: Background ........................................... 1

CHAPTER II: Proiect Identification, Preparation and Appraisal ...... 2

2.1 Origin and Rationale for the Project ................... 22.2 Project Preparation and App aisal . . 22.3 Negotiations, Board Presentation and Effectiveness.... 42.4 Major Covenants of the Loan and Project Agreements ... 4

CHAPTER III: Proiect Implementation and Costs . .. . 4

3.1 Implementation. . . 43.2 Reduction of Professional S taf.. 63.3 Bank Supervision... ... . . 63.4 Project Costs a..... ..... .......... 83.5 Special Account. ..................... ... 83.6 Performance of Consultants and Contractors... 9

CHAPTER IVs Operating Performance. ........... .. ..... 9

4.1 Construction Delays .94.2 The Project Became too Expensive . . 94.3 The Project Was Underfunded .94.4 INVI Resumes Subsidies to Beneficiaries .104.5 Mortgage Portfolio Collections Unsatisfactory .104.6 Presidential Grants .10

CHAPTER V: Financial Performance .. 10

CHAPTER VI: Institutional Performance and Development. . 12

6.1 INVI ..................... 126.2 Government ... ............................... 136.3 The Bank .................................. 14

CHAPTER VII: Lessons to be Learned ................................ 14

This document has a restricted distnbution and may be used by recipients only in the performanceof theiofflcial duties Its contents may not otherwise be diclosed without Wodd Dank authoizion.

TABLE OF CONTENTS (CONT.)

ANNEXES

Annex 1 Major Covenants of the Loan and Project Agreements .... 152 Total Project Costs ...... *# ........................... 173 Total. Project Disbu rsements ........ 1O.8 ................ is4 Actual and Forecast Accumulated Disbursements ......... 195 Forecast and Actual Loan Allocations .................. 206 Comparison of Forecast and Actual Income

Statements (1981-87) .217 Comparison of Forecast and Actual Balance

Sheets (1981-87) .................-.-.-.-. 228 Chronology of Events .......................... 239 Principal Report Resources ......................... 3010 Comments from the Borrower .......................... 32

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SITES AND SERVICES PROJECTS (LOAN 2104-DO}


PREFACE

This is the Project Completion Report (PCR) for the Sites andServices Project. The loan amounted US$ 25.4 million and was approved onMarch 23, 1982. 7\e Borrower was the Do.linican Republic and the executingagency the Instituto Nacional de la Vivienda (INVI). The Project was notcompleted, and at the request of the Government, the Bank cancelled theUS$21.4 million of undisbursed balance of the Loan on December 4, i986.

The PCR was prepared by the Infrastructure and Energy Division, CountryDepartment III, of Latin America and the Caribbean Regional Office and isbased, inter alia, on the Staff Appraisal Report; the Loan and ProjectAgreements; supervision reports; a final report prepared by INVI; a missionby a Bank's consultant to the field; internal Bank's memoranda; andcorrespondence between the Bank and the Borrower.

This PCR was read by the Operations Evaluation Department (OED). The draftPCR was sent to the Borrower for comments and the- are attached to thereport (Annex 10).

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DOMMININ ARPUBLC

SITES MAD SERVICES PROJECTS (OAN 2104-DO)

glQoa= ORTON REPOT

BASIC DAU SHEET

AppraisalKey Project Data Estimate Actual

Total project cost 42.1 6.4(US$ million)

Cost Overrun (or Underrun) NAl

Loan Amount (USS million equivalent)Disbursed (as of March 31, 1989) 2:i.4 3.98Cancelled (as of March 31, 1989) None 21.4Repaid (as of March 31, 1989) 4.9 1.45Outstanding (as of March 31, 1989) 20.5 3.722

Date Physical Components Completed June 1987 1/

Economic rate of return 15.OZ os3

PerformancesFinancial Satisfactory PoorInstitutional Satisfactory PoorPhysicallsocial impact Satisfactory Poor

17 Project was cancelled in December 1986 after spending 15? of budgetedamounts. No physical component was completed.

2/ Includes exchange adjustment unfavorable to the Borrowert US$1.19million.

31 Nothing was sold.

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Monthl NO of StaffField Mission Data Year weeks Persons Week3l Rating Report Date

Identification Nov-79 2 3 6 NA 01-Jan-80Preparation Apr-80 2 1 2 NA 16-May-80Preparation Jun-80 2 2 4 NA N/APre-appraisal Dec-80 1 NA NA 22-Apr-81Appraisal May-81 2 5 10 NA 01-Mar-82Supervision 1 Jun-82 1 1 1 1 09-Jul-82Supervision 2 Nov-82 2 2 4 2 30-Dec-82Supervision 3 May-83 1 3 3 3 30-Jun-83Supervision 4 Nov-83 1 1 1 3 20-Jan-84Supervision 5 Mar-84 1 1 1 3 04-Apr-84Supervision 6 Oct-84 1 1 1 32 02-Nov-84Supervision 7 Jun-85 1 1 1 3 25-Jun-85Supervision 8 Nov-85 1 1 1 3 12-Dec-85Supervision 9 Dec-86 1 1 1 4 24-Dec-86

Other Project Data Actual

First mention in files 15-Nov-78Negotiations 03-Feb-82Board approval 23-Mar-82Loan Agreement date 14-Apr-82Effectiveness date 22-Oct-82Closing date 30-Jun-87Cancellation date 04-Dec-86Borrower Dominican RepublicExecuting agency Instituto Nacional de la ViviendaFiscal ,yeqr of borrower January 1-December 31

1/ Total staff weeks in the field.2/ New rating system, 1-4 was introduced. Prior rating system, 1-3.

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Selected Country Statistics

FREE RATE OF EXCHANGE CONSUMER PRICE INDEX

Rate 1982-1987Year $RDI$US ------------- ------- (1977 - 100)1979 1.211980 1.25 Year Index change1981 1.27 ---- ----- ------1982 1.45 1982 158.01983 1.58 1983 169.0 6.9?1984 2.76 1984 210.3 24.4?1985 3.08 1985 289.2 37.521986 2.91 1986 317.4 9.721987 3.22 1987 353.4 11.421988 (May) 3.20

1982-1987 123.f?

Source:

Central Reserve Bank Monthly BulletinAugust 1987, pages 137 and 171

Abbreviations and acronyms

BNV Banco Nacional de la Vivienda(National Housing Bank)

CZA Consejo Estatal de Azucar(State Sugar Company)

INAVI Instituto Nacional de Auxilios y Viviendas(Social Security and Housing Institute)

INV Instituto Nacional de la Vivienda(National Housing Institute)

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MOINIM AN F3NJL

SITES AND SERVICES PROJECTS (L2AN10Q4-D0)

PROJE;CT GNMIIZOS R M

HIGHLI~GHTSR

1. Loan 2104-DO (US$25.4 million equivalent), was made to theGovernment of the Dominican Republic, with the objective of financing thedevelopment of the sites of Sabana Perdida and Baina as integratedcommunities to accommodate about 8,000 low-income families. A rapid andeffective reconstruction program following a disastrous hurricane inSeptember 1979, had turned the Government's attention to the needs of iheurban poor. The Bank encouraged and supported the first efforts to dealformally with the needs of the country's urban population, which is growingtwice as fast as the population as a whole. The Bank signed its loanagreement under the premise that the Government had effected importantchanges in priorities.

2. The Sites and Services project, the Bank's first in the low-costhousing sector in the Dominican Republic, did not achieve its objectivesbecause the new administration of President Jorge Blanco, inaugurated twomonths before the loan became effective, changed the policies of itspredecessor (President Guzman). The Government did not supply thecounterpart funds stipulated in the loan agreement; instead, it applied itsavailable financial resources, which were scarce, to developing housing forhigh-income groups, who were not the targeted under the loan. Theappointed executing agency did not Implement the project, and spent only152 of projected construction costs (excluding fi"ncial charges). TheBank loaned VS$25.4 million and, at the request of a successor government,headed by President Joaquin Balaguer, cancelled the US$21.4 millionundisbursed balance four years after loan effectiveness. Your years ofBank effort did not persuade the governments of the current and formeradministrations to ratify and support the comitment of President Guzman(paras. 3.1.2, 3.3.2 and 4.3.1).

3. In all aspects the project was a failure, because nothing wasbuilt, the studies prepared were not implemented and TNVI's presentfinancial and organizational situation is worse than the one that existedat the time of appraisal (paras. 3.1.5 and 3.6.1)

DONNICAN REPU-LIC

SITES AND SERVICES PROJECTS (WAN 2104-DO)


I. BSGON

1.1 The Dominican Republic has a territory of 48,400 km2, a populationhalf rural, half urban with a density of 112 people per square kilometer,&mong the highest in Latin America. Previously to Loan 2104-DO, which isthe subject of this report, there had been no Bank involvement in thehousing sector, and there was no organized institutional housing programbenefitting the urban poor until a national disaster spurred the Governmentinto action.

1.2 The times se,emed favorable for a sites and services project in theDominican Republic. Two disastrous hurricanes in September 1979 thatdestroyed over 100,000 dwellings, principally in the urban areas, focusedgovernment attention on urban dwelling needs and accelerated Bank interestin addressing the problems of low-cost housing in the Dominican Republic.The project to build 8,000 low-cost housing solutions, was the firstorganized government effort to address the needs of a growing tvrbanpopulation with incomes at or below the absolute poverty line.

1.3 From 1970 to 1980 urban population grew 62 annually, twice theoverall growth rate, and constituted in 1980 approximately 502 of the totalpopulation of 5.4 million. Approximately half of the urban populationconstructed houses with sub-standard materials on public lands lackingessential public services.

1.4 Government priorities, however, favored investments in the ruralareas and did not reflect the demographic trend toward urban gr-wth. Thetwo government housing agencies, INI and INAVI (Instituto Nacional deAuxilios y Viviendas), received limited government support and suppliedhouses to middle-income families on concessionary terms. NVI, formed in1962, had built a yearly average of 500 middle-class homes from 1962 to1979.

1.5 Credit facilities were simply not available to the urban poor.The savings and loan institutions financed houses starting at tD$ 10,000(US$10,000 at the then official exchange rate of RD$ 1 - US$1), well abovethe amounts affordable by the urban poor.

1.6 Shortly after hurricanes David and Frederick struck the island,the government channeled unprecedented amounts ol reconstruction fundsthrough INVI, which effectively rose to the challenge. A new directorappointed in August, 1379, with a mandate for change and supported bygovernment policies, organized and directed assistance in 1980 to over40,000 families in repairs and reconstruction of 1,900 dwellings and themobilization of over 30,000 people in the reconstruction effort.

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11. !J_WJZCT IDENTIPICATION. PRUPARATION AN) APPRAISAL

2.1 Origin &d tationale for the Pro1ect

2.1.1 The project files began in October 1977 with A letter of the thenIDVI director expressing an interest in the Fundacidn Salvadore)a deVivienda Mliima (FUND&SAL), a successful private low-cost housiAgInstitution In 31 Salvador financed by the Bank. A few day. after -.heSeptember, 1979 hurricanes the Bank vent a brief reconnaissance mission.followed by an identification missiui In November, 1979.

2.1.2 The reconnaissance mission saw an opportunity to encourage animpressive change In priorities in the government and the seventeen-year-

old housing authority, IKVT. Supported by Increased government funding,INVI successfully built an organization cap&ble of executing the emergencyprogram. The reconnaissance mission, In concord with government officials,saw an unusual opportunity to help institutionalize this new-found energyin a formal low-cost housing program with a newly revitalized INVI as theexecuting agency. The mission recommended a US$500,000 project preparationadvance approved by the Bank on Pebruary 5, 1980. The advance allowed INVtto thoroughly prepare the project (final engineerlng and tender documents),publish an impressive project booklet (Proyectos Urbanos de Lotes yServicios, July 1982), and construct 15 pilot units on the Sabana Perdidasite.

2.2 Proiect nre"aration and agnraisal

2.2.1 Two project preparation missions in April and June of 1980confirmed satisfectory progress of the UPP (Unidad de Preparacidn deProyecto), a new division of INVI with 20 professional staff created withBank funds to prepare the project for formal appraisal. Thx project wasdesignated to serve the following objectives (set out in the first projectbrief issued in December 1979)s

1) Assist in housing policy formulation;

2) Develop institutional capacity to plan and implement theproject;

3) Improve resource a&location within the housing sector;

4) Increase output of urban units at affordable cost with areasonable cost recovery;

5) Mobilize private savings through broadened housing credit andsecure tenure;

6) Ensure replicability of low-cost housing programs;

7) Reduce foreign exchange requirements and adoption of labor-intensive construction methods; and

8) Gradually improve selected sites for planned commiunitis.

2.2.2 Three updated project briefs, a pre-appraisal mission In December1980 *nd an appraisal mlision in May 1981, reported satisfactory progressin project preparation and an ever-increasing resolve in INVI and thegovernment tn redirect government funds toward the urban poor. The projectpreparation facility effectively provided the seed assistance for aninnovative housing program.

2.2.3 2he Project was appraised in May 1981 and the mission recommendedthat a loan of US$25.4 millioa be processed. The Project contemplated theconstruction and sale of 8,000 serviced lots during a four-year peried ontwo undeveloped properties in the Santo Domingo area, Sabana Perdida (85hectares) and Baina (55 hectares). The appraisal report expected an 85Srecovery of all costs with 80S of sales to beneficiaries below the absolutepoverty level. A novel feature of the program was a planned sale of up to251 of the land to commercial users at market values estimated to beconsiderably above cost. The loan agreement described the Project asfollowst

Part As Off-site Infrastructures (1) Construction in Sabana Perdidasites four wellu. an abduction line, an elevated storage tank, astabilixation pond, and power substation.

Part :s On-site Infrastructures (1) provision of the necessaryinfrastructure such as water, sewerage and electricity, public lightingand roads and drainage for about 51.35 ha. of land for dwellings inSabana Perdida, about 34.75 ha. of land for dwallings in Haina andabout 4.40 ha. of land for commercial use. (2) construction of shelterunits in Sabana Perdida and Maina and provision of loans for theacquisition of dwelling plots and shelter units.

Part C: Community Facilitiess (1) construction in each of the projectsites of the following: a school, a health center, seven socialcenters (three in Haina), a payment collection office, a fire station,police station, sports grounds and trash collection services.

Part Ds Extension servicess provision of extension services tobeneficiaries including social assistance and technical advice in self-help home improvement activities.

Part S: Studies and Monitorings (1) study of INVI's future financialviability and (2) monitoring of the carrying out of the Project byINI.

2.2.4 In order to mininize the risks arising from INVI's lack ofexperience, the project provided for considerable technical assistance ininstitutional building. To complement the skill of national personnel, theproject included the financing of the costs of a UNDP resident expert anduse of consultants in information systems, mortgage portfolio collectionprocedures, computers, and savings development.

2.2.5 The appraisal mission est.mated the cost of the project at US$41.7million (excluding financial charges), with foreign and local costsestimated at US$14.9 and US$26.8 million respectively. The Bank ouldfinance 1002 of the foreign costs and 392 of the local cost. TheGovernment would finance the remainder of the local costs and the Interestduring construction.

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2.3 Negotiations. Board Presentation and Effectiveness

2.3.1 Negotiations took place on January 27-29, 1982 and weresuccessfully completed In February of that year. The one month delay wasdue to the fact that the negotiating team from the Dominican Republicproposed to have only one legal Instrument -- the Loan Agreement-* while theBank wanted to to spell out INVI's specific responsibilities in acomplementary Project Agreement. The negotiating team returned to theDominican Republic to consult with the Government, which finally acceptedthe Bank position. The Board approved the loan on March 23, 1982.Representatives of the Bank, INVI and the Government signed the Loan andProject Agreements on April 14, 1982. The loan amount was US$25.4 milliontthe term was 17 years, Including four years of grace. The interest ratewas 11-3/52 p.a, the coammitment charge, 3/4S p.a and the front-end fee,1-112S on the total loan amount. June 30, '1987, was set as the closingdate.

2.3.2 The Bank declared the loan effective on October 22, 1982 or fourmonths later than forecast at appraisal. The reason for this delay wasthat the Government did not make the initial deposit of US$1,700,000 to theproject account as scheduled; and the Congress, the Government and INVIacted slowly to approve/prepare the legal documentation required by theBank for declaring the loan effective. The delay, in part, is explained bythe fact that on August 16, 1982, between negotiations and loaneffectiveness, a new president took office and appointed a new director ofINVI. A 2-1/2 years relationship between the Bank and the INVI directorended, and although it was not yet evident at the tIme, the sharing ofcomnon goals also ended.

2.4 Maior Covenants of the Loan and Proiect Agreements

2.4.1 Annex 1 includes the major covenants of the Loan and ProjectAgreement. The Government and INVI did not comply with their respectivemajor covenants as explained in detail in Chapters III through V.

III - PROJECT IMPLEMENTATION AND COSTS

3.1 Imilementation

3.1.1 Stated bluntly, the project was never implemented and uo importantobjective was achieved. INVI never completed one house or sold one lotduring the entire period from loan effectiveness to cancellation. At best,INVI improved an urban property which, It now appears, another governmentagency will finish. Repeated changes in the director and key personnel, 1

construction delays, lack of counterpart funding and commitment to theproject objectives, contributed to this unsatisfactory performance. InMarch of 1987 the project was informally transferred from INVI to theCoordinating Office (Oficina Coordinadora), an arm of the President'sOffice created by President Balaguer to construct government housing.

3.1.2 In September 1982, a month after taking ofEice, President Blancoannounced a US$163 million public housing construction program at a time

11 lVIN had five directors betweert August 1979 and June 1988.

when the government's entire annual capital budget averaged US$250 million.More striking than the overly ambitious size of the program, which soonencountered financial obstacles, was the discovery during a December 1982supervision mission, that this program did not include funding for the Bankproject in the official budget. In September 1982, the new directorannounced ITNI's participation in the president's housing program, twomassive multi-family middle-class construction projects, Invivienda SantoDomingo __075 million) in the capital and largest city, and InviviendaSantiago (US$45 million), in the second largest city. Managerial attentionand resources originally intended for the Bank project were diverted to thenew projects. The director of the Sites av.4 Services Division (thesuccessor to the UPP) resigned in December 1982. Within a year, theInvivienda projects were suspended for lack of funds, and the presidentAppointed another INVI director on October 23, 1983. As of March, 1988,the date of the PCR mission, not one Invivienda dwelling had been finished,even though down-payments from prospective beneficiaries and a specialUS$60 million bond issue helped finance a significant portion ofconstruction costs.

3.1.3 During the first year of the loan, the Bank disbursedapproximately US$2,000,000, half on the creation of the special account(US$1,000,000) and half on other costs, principally project preparationrefinancing (US$532,000), consultants such as the UNDP Habitat residentconsultant (US$125,000) ant front end fees (US$ 375,000). From October1983 to August 1986, the Bank disbursed US$ 1.7 million for constructioncosts and US$ 0.3 million for other costs. The total cumulativedisbursements were US$3.98 million, but INVI still (as of May, 1989) owesthe Bank a refund of US$0.83 million of unspent funds from the SpecialAccount. Therefore, the net disbursement will amount to US$3.15 million or121 of the loan (Annexes 2, 3 and 4). Disbursements by loan categorieswere also far different from forecast (Annex 5).

3.1.4 INVI's Sites and Services Division did not complete constructionof one house or one fully serviced lot from October, 1982, date of loaneffectiveness, to March 1988. Works were undertaken on only one of the twosites, Sabana Perdida. INVI never carried out the expropriation decree orbegan construction on the Haina site. A visit to the Sabana Perdida sitein March 1988 revealed the following:

(1) approximately 50 squatter families still living on thepropertys

(2) approximately 250 unfinished INVI-built, Bank-financedhomes, 30 delivered at the request of the government tovictims of a fire in a nearby town. These homes have noelectricity, most have no water, no sewer connections andare virtually uninhabitable. The 30 occupants do not knowhow much they will pay for the homes but, in any case,refuse to pay anything until the homes are completed. INVTplans to gradually complete the houses under constructionaccording with the availability of its funds.

(3) approximately 900 non-Bank financed, non-INVI houses arebeing built by the President's Coordinating Office,President Balaguer's housing construction agency. Thesehouses, slightly larger than the INV houses, are supplied

to their respective owners totally finished. In thismanner, the serviced lot concept of the Bank-financedproject has been abandoned;

(4) open unfinished ditches for sewer and rain water lines;

(5) no paved roadst and

(6) a sewerage treatment pond is still without pumps orconnecting pipelines.

3.1.5 Although INVI has made infrastructure investment on a part of theSabana Perdida property, it had not completed anything to a point where itcould be sold as a finished lot or completed home as of March 1988. Thesite as it stands today is a valuable property and could have been sold ata profit to a more aggressive and efficient developer, but instead theGovernment transferred it informally to the Oficina Coordinadora.

3.1.6 It has to be pointed out that the Bank financed the purchase of acomputer which INVI successfully installed and uses today. In addition,the UN donated a personal computer for the planning unit.

3.2 Reduction of Professional Staff

3.2.1 Another factor that affected the project was substitution oftrained professional staff. The INVI's Division of Sites and Servicesinitiated itp activities in June 1980, as the Project Preparation Unit(Unidad de Precaracifn de Proyecto-UPP), financed by the Bank's projectpreparation facility (US$ 500,000). This unit rapidly expanded to 20professional employees. By May 1981, their work was ready for Bankappraisal. In January of 1982 with the expectation of becoming the leaderof a vigorous national sites and services program, the INVI directorchanged its name to the Division of Sites and Services. Instead ofexpanding, the division contracted to 12 employees in early January 1983.In May 1983, after further personnel reductions, the division closed itsoffice and moved to INVI's building. Thereafter, the division functionedas the construction supervisor of an underfunded, non-priority INVI housingproject. As of March, 1988, the division had only one full-time employee.

3.3 Bank Supervisions

3.3.1 Two months after President Blanco announced the Inviviendaprojects, a December 1982 Bank supervision mission expressed concern thatthese projects would divert attention and funds away from the Bankproject. By June of 1983 the Bank noted multiple violations of the projectagreement. In December 1983 a supervision mission recommended suspension/cancellation of the loan unless INVI effected substantial changes, aposition ratified again during the next supervision mission in April 1984;but processing within the Bank of such decision did not take place. A Bankprogram mission in August 1984 obtained promises of reform from thegovernment, principally a willingness to transfer the moribund Inviviendaprojects from TNVT to another government agency and promises to put currentthe overdue government counterpart funds. However, the expectations notedin the October 1984 supervision mission vanished by June 1985 when asupervision mission again recommended cancellation or reallocation ofunspent funds.

3.3.2 The first telex threatening suspension was sent on March 19,1986. The Bank requested the Government and INVI to take the followingactions: (a) furnish a satisfactor7 three year program of action forimplementing the entire Sabana Perdida component; (b) provide satisfactoryevidence that at least US$5 million equivalent of counterpart funds wouldbe provided for this project in FY86 and US$2 million in FY87; (c) furnisha three year financial program for INVI; (d) furnish a copy of INVI's boardof eirectors' resolution confirming that INVI would apply appropriatelending terms, conforming to the provision of the project agreement, to allhousing loans in cities with more than 30,000 inhabitants; and (e) requestcancellation of the amount of the loan allocated to the Haina sitecomponents (401 of the loan amount). The telex outlined severalinfractions of the project agreement with INVI and asked for compliancewith a list of corrective actions by May 2, 1986, a deadline which waslater extended to June 19, 1986. A June 24, 1986 meeting in Washingtonwith government officials from the Office of the Presidency, the CentralReserve Bank and INVI signed an aide memoire that promised funding by July14, 1986. The Bank granted two additional extensions of this deadline toAugust 30, 1986 and then to Sept mber 30, 1986. On August 23, 1986President Balaguer's new administration appointed another INVI director whohoped to rescue the project, but was also unable to secure the necessarycounterpart funds. On December 4, 1986, following a November 2, 1986government request, that coincided with the expiration of the loan's four-year grace period on November 3, 1986, the Bank formally cancelled theunspent balance, US$ 21.4 million or 841 of the original loan amount.

3.3.3 The nine supervision missions from July 1982 to December 1986,which required more than a man year of staff time in the field, repeatedlycalled attention to the unsatisfactory performance. Section 3 of the lastsupervision report issued in December 1986, summarizes the deterioratedsituation as follows:

The SAR presentation (March 1, i982) associated themain risks of this project withs (i) the continuity ofthe Government commitment to a decisive turn in publichousing policy; (ii) the capacity of the executingagency (INVI) to sustain a prolonged process of changewhile substantially modifying its product; and (iii)the adoption of adequate cost recovery policies inpricing INVI's production and in selecting suitablebeneficiaries. Adverse circumstances have affected theproject in all three respects since its inception inOctober 1982. First, President Blanco's administrationimmediately diverted the productive capacity of INVIinto an underfunded and unsuccessful drive towardsconstruction of middle-income housing, which quicklydrained the Institute's staff and resources. Second,INVI underwent a sequel of top-management changes andwholesale substitutions of professional staff, thuswasting away the benefits of accumulated training andexperience. Third, the Borrower indulged in heavilysubsidized, political programs neglectingimplementation of the Bank supported project. Therepeated recommendations by Bank staff, UNDP and GTZexperts, the external auditors, and the economicplanning and monetary authorities, during four years ofdiscussions were of no avail to prevent the

decapitalization of the Agency. The new administrationinherited a situation in which the only sensible optionwas to apply for a long procrastinated cancellation ofthe undisbursed 84Z of the loan."

3.3.4 It has to be pointed out that the time allocated for supervisionwas extremely low for an innovative project and in light of the difficultexperience that the Bank had had with other loans to this country.Supervision missions were carried out at a rate of 4 staff-weeks per yearfor the first two years. They should have been in the order of 10 staff-weeks per year. This situation may have been one of the causes for thefailure of the project. A more intense supervision may have induced actionby the Government and INVI. Alternatively, if no responce was obtained, itwould have induced action by the Bank cancelling the loan immediately.

3.4 Proiect Costs

3.4.1 From October 22, 1982, (date of loan effectiveness) to June 30,1987, (the date of the mid-year audited financial statements), INVI spentUS$ 6.4 million, approximately 152 of the estimated appraisal costs of USS41.7 million (Annex 2). The Bank had agreed to finance US$ 25.4 million,approximately 61Z of total project costs. Excluding the remaining balanceof unused funds in the special account, the Bank disbursed approximatelyUS$3.2 million or 12Z of the loan amount (Annex 2).

3.5 SDecial Account

3.5.1 The Loan Agreement included a special account amounting up toUS$ 1,000,000. This amount was disbursed from the loan and deposited in anaccount in the Central Bank, which was denominated and operated in pesos,even though the loan agreement required that this account be established inUS dollars or other fully convertible currency. Vhen the undisbursedbalance of the loan was cancelled (para. 3.3.2), the special account had anoutstanding balance of US$ 826,953.04. The Bank asked the Government toidentify any eligible expenditure and send a corresponding withdrawalapplication or else refund this amount. No refund had been received byMay 1989. The Bank is insisting with the Government on the refund of theunused balance and has taken the position that no new special accounts willbe authorized in the Dominican Republic loans unless the -efund is made.

3.5.2 The purpose of the special account was to have funds in a fullyconvertible currency available exclusively for the Project, in order tohave an adequate flow of funds for the executing agency (INVI), forfinancing expenditures for specific project components with a minimum ofadministrative delay. The regulations of the accounts were not totallyfulfilled, particularly the aspects related to the currency denomination ofit. The Bank staff who supervised the Project did not raise any concernabout the operation of the account in local currency. For futureoperations, the Bank should examine very carefully the establishment ofspecial accounts in the Dominican Republic and monitor systematically itsoperation.

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3.6 Performance of coniultants and contractors

3.6.1 INV received help from many consultants. ?he United Nationsprovided a full-time architect planner, financed by the Bank for four yearsfrom 1983 to 1987. Another consultant prepared a lengthy report on thefinancial viability of NV1 (the Saladin report) which cost over US$ 40.000and contained many useful recommendations which, in spite of formaladoption by the INVI Board of Directors, were never implemented. GTZ, theGerman technical assistance agency, produced many reports on mechanizationpossibilities, cost accounting and other matters. The UN financed a studyof methods to improve mortgage portfolio collections. None of this aid hashad a significant Impact on INVI. To quote a coument about these studies,23 in all, found on page 19 of the project completion report prepared byINVI's UN consultant: 'these reports could be potentially useful when thegovernment grants INVI a definite housing role in the sector'.

3.6.2 INVI awarded a total of six contracts under the Sites and Servicesproject using Bank-approved bidding procedures. All of the contractsrequired renegotiations, once in May 1985 and again in February 1987 due todelays and inflation. None of the contracts had been completely liquidatedas of March 1988.

IV. OPERATING PERFORMANCE

4.1 Construction delays

4.1.1 The project encountered unreasonable delays from the outset.Construction began before the INVI could relocate the squatters pursuant toexpropriation decrees applicable to 202 of the Sabana Perdida site. INVImanagement was unable to stop the invasion of additional squatters evenafter loan effectiveness in October 1982, thus complicating a sensitivetask never completed. Six years after the project started, approximately50 squatter families were still living on the Sabana Perdida land. Delaysin supplying funds for relocation delayed construction and resulted in morethan one construction stoppage. Later, contractors stopped work when INVIwas unable to pay them. Considering the delicate nature of relocating thesquatters and its critical importance to the urbanization of the land,perhaps a detailed plan for squatter relocation could have beenincorporated into the conditions for initial loan effectiveness.

4.2 The oroiect became too expensive

4.2.1 The pilot project of Sites and Services met a pressing need forlow-cost housing solutions with the possibility of serving as a guide for anational housing policy. Delays and inflation accompanied by a three-to-one devaluation of the Dominican peso in January 1985 drove costs upwardfaster than the income of the beneficiaries. Cost recalculations preparedin 1985 indicated that the 85 cost recovery objectives would be difficultto achieve.

4.3 The Proiect was underfunded -

4.3.1 After the initial deposit, a condition for effectiveness, theGovernment never complied with Article 3.02 td) of the project agreementrequiring it to maintain the peso equivalent of US$500,000 in the projectbank account. The Bank cancelled the undisbursed project in December 1986

- 10 -

principally for lack of counterpart funding, but also because theGoverrment was not interested in the serviced lot concept of the projectand the cost recovery principle of it. A vigorous entrepreneurial approachto the project might have salvaged parts of it in spite of the anemiccounterpart funding. Until the Coordinating Office of the presidentunofficially commandeered the project site and began to build on it in1987, INVI owned a valuable improved urban property with the Bank'sapproval to sell up to 25Z of the land at market prices to privatedevelopers. This novel feature, never utilized, could have providedadditional needed funds.

4.4 INVI resumes subsidies to beneficiaries

4.4.1 Starting August 1982, INV reverted to a policy of subsidizingbeneficiaries by setting sale prices below costs and interest rates onloans below market values. INVI often charged 62 to 82 to itsbeneficiaries, and never as much as the 122 interest rate stipulated in theloan documents.

4.5 Mortiame portfolio collections unsatisfactory

4.5.1 INVI's mortgage collections continued to be a problem for tworeasons. First, INVI never could muster the resolve to foreclose on onesingle beneficiary, no matter how delinquent. Second, INVI officials oftenpermitted occupancy without signed agreements, and began to bill monthlypayments. Month after month, the delinquency statistics were overstatedreflecting balances overdue for accounts that were not collectable at theoutset.

4.6 Presidential grants

4.6.1 President Blanco's powers apparently permitted him to forgivemortgages due (RD$ 2.6 million in 1985 and RD$ 6.2 million in 1986) vithoutcompensation to INVI. Likewise, the write-off in 1986 of over RD$ 19million of INVI receivables for completed occupied projects with no salesagreements could be considered a de facto grant. This practice received somuch unfavorable publicity that a Decree 80-87, promulgated in February1987, prohibited state institutions from donating their assets.

V. FINANCIAL PEPORMANCE

5.1 Annexes 6 and 7 compare the actual and appraisal income statementsand balance sheets for the period 1981-1987. INVI's financial performanceduring the period was poor. All the years of the period show losses (para.5.5) and the current ratio was inadequate throughout the period. The debt-equity ratio was extremely low, which reflected INVI's poorcreditworthiness and high government subsidies.

5.2 The project produced no income. No part of the Project wascompleted and nothing was sold in four years. INVI spent 15.32 ofprojected construction costs estimated at US$41.7 million.

5.3 A sutmary of project costs from Inception, October 1982, throughJune 30, 1987, as reported by the external independent auditors, is shownas Annex 2. As mentioned In paragraph 5.4 below, INVI records may be

- 11 -

unreliable to determine actual amounts spent. For instance, the localcurrency records were adjusted in 1985 to reflect the effect of thedevaluation of the peso in January 1985. Historical local currencydisbursements are not readily available.

5.4 The quality of records and reports to the Bank was consistentlypoor. The external auditors required generally over six months to issuethe audited statements, wbich contained many qualifications. INVI never

* really produced a satisfactory 5-year plan as required under the projectagreement. Separate accounting records for the Sites and Services projectnever agreed with the INVI general accounting records. The discussion of

- costs in the following paragraphs relies exclusively on the annual auditedproject accounts as reported to the Bank.

5.5 Contrary to appraisal projections, INVI continued to lose moneyfrom 1980 to 1987. Net income never met appraisal objectives, as shown inthe table belowt

INSTITUTO NACIONAL DE LA VIVIENDA

MET INCOME FOR YEAR ENDED DEC. 31(thousands of Dominican pesos)

Year Forecast Actual Dif.

1982 567 -2,400 -2,9671983 967 -1,900 -2,8671984 1,783 -3,864 -5,6471985 2,917 -9,320 -12,2371986 5,424 -28,309 -33,7331987 3.547 -3.160 -6.707

15,205 -48,953 -64,158- = . mm

5.6 The major causes of these losses weres persistent losses on salesof finished houses, a low-interest mortgage portfolio, no income from theBank-financed project and a write-down of accounts receivable of housesoccupied with no sales agreements. A table of sales and cost of sales ofhomes from 1982 to 1986 is shown below:

- 12 -

INVI SALES AND COST OF SALES OF HOUSES

YEARS ENDED DECEMBER 31. 1982 TO 1987(Thousands of Dominican pesos)

Cost of Profit/Year Sales sales (loss) S

1982 11,007 14,212 (3,204) -29.1?1983 19,470 21,457 (1,987) -10.2Z1984 2,708 5,859 (3,150) -116.3Z1985 3,239 6,980 (3,741) -115.5Z1986 409 1,016 (607) -148.4Z1986 1 0 19,585 (19,585)

36,833 69,109 (32,274) -87.6S

US$ (000)2/ 36,833 69,109 (32,274)

11 Write-down of accounts receivable of finished homes.2/ Based on historical costs during construction

of RD$ 1 US$1

VI. INSTITUTIONAL PERPORMANCE AND DEVELOPHENT

6.1 lil

6.1.1 INVI was formed as an autonomous body In 1962 to formulate anational housing policy, to implement part of this policy to encourageprivate participation in housing programs, and to provide technical adviceand promote self-help housing programs. At appraisal the Bank saw in INV5an institution with the potential, unrealized since its formation, toassume an effective role in low-cost housing policy formation andconstruction. Although the charter granted INVr broad responsibilities,its activities in fact had been limited to small-scale programs andadministration (collections and repairs) of other government-sponsoredhousing projects. Houses were sold below cost on concessionary terms tomiddle-class beneficiaries. In seventeen years INVI was unable to generatesufficient cash flow to build within its own funds and was completelydependent on government grants. The hurricane reconstruction programduring 1980 and 1981 could have been an important turning point for INV5and the project. The Bank preparation mission (April, June 1980), pre-appraisal mission (December 1980) and appraisal mission (May 1981)consistently detected noteworthy improvements that contrasted sharply withlnVI's performance from 1962 to 1979. Some of these key improvements weres

(1) Evidence of increasing execution ability. INVI was chosen as thekey executing agency for channelling hurricane reconstructionaid. The appraisal mission recognized an impressive performancein noting that INVI helped over 30,000 families and built over1,922 houses during 1980, an unprecedented level of activitycompared with the pre-hurricane 17-year average of 500 houses ayear.

- 13 -

(2) Policy reorientation toward the urban poor. The new directororiented the hurricane aid toward the disadvantaged people andaccepted the Bank's offer in February 1980 to finance the studiesand evaluation of the first systematic housing program forbeneficiaries at or below the poverty level.

(3) Awareness of need for institutional strengthening. The newdirector actively searched for and obtained international aid tohelp INVI prepare for its new role. In 1980 the UN sent theHabitat urban planner to advise on general institutionaldevelopment and the German Technical Assistance Agency (GTZ)signed a technical assistance agreement in 1981.

6.1.2 At negotiations in February 1982, INVI had demonstrated duringthe prior 2 112 years a willingness and ability to overturn seventeen yearsof lethargy and begin a conversion to a national housing agency for theurban poor. The Bank was an enthusiastic partner and catalyst in aninnovative pilot program.

6.1.3 The vision the Bank and the INVI airector shared from 1979 toAugust 1982 never survived the change in national and INVI administrationsin August 1982. After that, INVI's housing programs were guided indirections incompatible with the sites and services concept of access tothe lowest strata of the population at a reasonable cost recovery.aunagement and team formation degraded with massive personnel changes.Regarding the Division of Sites and Services, the concept of a separatedivision with a clearly defined responsibility to build and sell was neversuccessfully Implemented. The first division manager, the result of acareful search whose curriculum was approved by the Bank, was replacedwithout Bank participation on two occasions with less experienced staff.2

The initial marketing activities of the Sites and Services divisionencountered difficulties with the INVI Social Services division, whichattempted to exercise its traditional XNVI role of processing and selectingbeneficiaries. This apparent divisional rivalry resolved itself only whenit became clear that there would be nothing to sell.

6.1.4 As of March 1988, INVI was practically building nothing. INVI'schief activity is now the collection of a troubled mortgage portfolio ofless than 7,000 accounts, producing a cash flow that scarcely provides forcurrent expenses and leaves insufficient funds for constructioninitiatives. GTZ uses some INVI personnel for the projects it finances inmarginal urban areas. The lNVI organization is demoralized with nomission, while plenty of funds are available elsewhere for housingconstruction (e.g. through the President's Coordinating Office).

6.2 Government

6.2.1 Throughout Project implementation, the Government performed, forthe most part, unsatisfactorily. The new government which took office inAugust 1982 gave the least priority to the Project, and consequently didnot provide the counterpart funds for it. The present administration,which took office in August 1986, decided that the funds for housing wouldbe channelled through the President's Coordinating Office, which it set upfor the purpose. This office, among an impressive list of projects costing

21 The Loan Agreement did not include a covenant to cover this risk.

- 14 -

a minimum of US$5.0 million a month, has begun building on the SabanaPerdida land and is attempting to finish the ill-fated Invivienda projectsbegun in 1982 and suspended in 1983. There is no organized institutionalgovernment housing program with a plan for adequate cost recovery andorientation toward the urban poor.

6.2.2 The prospects for renewing a low-cost housing dialogue must awaitfuture events and a possible change in administration in 1990. Large statesubsidies implicit in construction of complete houses for beneficiaries whocan afford to pay for them continue as they always have.

6.3 The Bank

6.3.1 The Bank's performance also could be regarded as unsatisfactory,because it did not allow sufficient time for cupervisLon of the project,and because even though it was clear since the time tte loan becameeffective that the Government did not want to implemen- the Project, it didnot press the Government enough to fulfill its commitments or cancel theloan once no adequate response from the Government was obtained. The loanwas not cancelled until four years after the date tJ effectiveness.

VII. LESSONS TO BE LEARNED

7.1 Given the sensitive nature of land acquisition and squatterrelocation to the Project, proof of clear title to the land and a Bank-approved plan for squatter relocation should have been a condition for loaneffectiveness.

7.2 The project agreement in Section 2.11 obligated INVI to consultwith the Bank on significant project events. Given the expectation thatthe Bank-financed project would become INVI's most important activity, theagreement should have included a capital expenditure limitation covenant.

7.3 There were no warnings that a new government assuming power inAugust 1982 would rapidly lose interest in supporting a commitment of itspredecessor. The transition period from the elections in May 1982 to-inauguration in August may have been an opportunity to brief the incominggovernment on Bank commitments incurred on the Sites and Services and otherlank projects. Promptly after it became evident that INVI and theGovernment were not fulfilling the covenants of the Loan and ProjectAgreements, the Bank should have set a deadline to obtain concrete actionsto solve the problems. There is a possibility that INVI and the Governmentmight have responded more favorably to this remedial action. If nopositive reaction were achieved, the Bank should have cancelled the loan.

7.4 The balance of the special account of US$ 826,953.04 has not beenrefunded to the Baztk as of May 1989. The main reason is that the accountwas established anti operated in local currency, multiple devaluationsoccurred and the Government currently is experiencing a shortage of foreignexchange. The lank is pressing the Government to solve this problem in thecontext of another Bank operation in the country. It is recommended thatfor future operations, the Bank should examine very carefully theestablishment of special accounts in the Dominican Republic and monitorsystematically their operation.

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ANNEX 1_Page I of 2

DOMINICAN REPUBLIC

INSTITUTO MACIONAL DE LA VIVIENDA LINVI)


SITES AND SERVICES PROJECT (LOAN 2104-DO

Maior Covenants of the Loan and Project Agreements

Performance of the Government and INVI under the major covenantsof the Loan and Project Agreement of the Sites and Services Project weregenerally unsatisfactory.

Loan Agreement

1) Section 3.01 required the Government to i) cause DNVI to carryout the Project and to perform in accordance with the Project Agreement,ii) to make available to INVI the proceeds of the loan as well as the othernecessary resources to carry out the Project (part. 4.3.1).

2) Section 3.02 required the Government to establish an accountfor the purposes of financing the carrying out of the Project, under thefollowing terms i) deposit an initial amount in peso equivalent of at leastUS$ 1,7QO,000, ii) to replenish this account according with the Projectneeds, /lnd iii) to maintain in such Project Account not less than the pesoequiv*' nt of US$ 500,000 (para. 4.3.1).

3) Section 3.04 required the Government to cause CorporacifnDominicana de Electricidad and Instituto Nacional de Agua Potable yAlcantarillados to enter into the contractual arrangements referred to in 8below.

Prolect Aireement

4) Sections 2.01 and 3.01 required DNVI to carry out the Projectand manage its affairs with due diligence and efficiency and in conformitywith appropriate administrative, financial, engineering and public utilitypractices and under the supervision of experienced and competent staff.

5) Section 2.03 required INVI i) maintain modest and affordableconstruction standards, ii)set the sales prices of lots at levelspermitting the recovery of all costs allowable to beneficiaries, iii)maintain mortgage eligibility criteria and procedures for the selection ofbeneficiaries consistent with the objectives of recovering all costsallowable to beneficiaries and attracting low-income families, iv) sell nomore than 252 of the land developed under the Project to other thanbeneficiaries, including private entrepreneurs,at market price and subjectto Bank approval, and v) maintaining in Sabana Perdida and faina an officeadequately staffed with construction and extension services experts (para.4.3.1, 4.4.1, 4.6.1).

- 16 -

Page 2 of 2

6) Section 2.06 required INVI that in carrying out Part I of theProject INVI i) fu.4nish to the Bank for review and comuent, by June 30,1982, the draft terms of reference for the studies; ii) to carry out suchstudies by January 31, 1983: iii) furnish to the Bank for review andcomment, by March 1, 1983, a draft five-year financial program, and iv)adopt the five-year financial program by January 31, 1984 (para. 5.4).

7) Section 2.08 required INVI to maintain records to umitor theprogress of the Project and furnish to the Bank at regular intervals allsuch information as the Bank shall reasonably request concerning theProject, its costs and, where appropriate , the benefits to be derived fromit, the expenditure of the proceeds of the Loan and the goods and servicesfinanced out of such proceeds (para. 5.4).

8) Section 2.11 required INVI i) to review with the Borrower andthe Bank,before March 30 of each year, the progress achieved in thecarrying out of the Project in the precedent year; ii) furnish to the Bankfor approval, before September 30 of each year, its proposed Projectexecution schedule for the following year, and iii) inform the Bankpromptly of any condition which interferes or threatens to interfere withthe progress of the Project.

9) Section 2.12 required INVI to enter into contractualarrangements with Corporacion Dominicana de glectricidad (CDE) and with theInstituto Nacional de Agua potable y Alcantarillado (INAPA) for carryingout the electrical and water supply works of the Project, respectively

10) Section 3.03 required INVI not to make loans to residents ofhousing projects in cities with more that 30000 inhabitants on terms andconditions that are more favorable than those for the beneficiaries underthe Project.

11) Section 4.02 required INYW to audit its accounts andfinancial statements by independent auditors acceptable to the Bank andfurnish to the Bank a certified copy of such staterCnts not later thanthree months after the end of each fiscal year (para. 5.4).

12) Section 4.03 required INV1 to seek Bank agreement prior tocontracting new long-term debt, if its maximum debt service for anysucceeding fiscal year would exceed two-thirds of its internal cashgeneration in the last preceding fiscal year.

- 17 -

ANNEX 2

DOMINICAN REPUBLIC

SITES AND SERVICES PROJECT LOAN 2104-DO


TOTAL PROJECT COSTS(thousands of US$)

From October 22, 1982to June 30, 1987

Bank finan id costss Budget Spent S

Constr tion (includingUSS 8,000 unallocated) 33,612 2,692 8.02

Project preparation 816 874 107.12Consultants, extension 1,228 555 45.22services

35.656 4,121 11.62Other costes ------ ----- ----

Land acquisition 2,873 1,328 46.22Project administration 3,211 950 29.62

6,084 2,278 37.4%

41,740 6,399 15.32

TOTAL BANK LOAN

(thousands of US$,


Budget Disb. 2Bank financed costsa ------ ----- ---

Construction (includingUS$ 8,000 unallocated) 23,950 1,722 7.22

Project preparation 500 532 106.42Consultants 550 525 95.52Front end fee 400 375 93.82

25,400 3,154 12.42Unspent funds in the

special account 827 3.32

25,400 3,981 15.72mm m ,

- 18 -

ANX 3

DOMINICAN REPUBLIC

SITES AND SERVICES PROJECT LOAN 2104-DO


TOTAL PROJECT DISBURSEMENTS

ACCOUNTING RECORDS(in thousands)


RD$ pesos US$ dollars

Total Bank Total BankBudgeted, Bank-financed: ---- ----- ----

Construction 4,668 3,106 2,692 1,722Preparation facility 927 532 874 532Consulting and equip. 1,329 1,269 555 525Front end fee 375 375 375 375

7,300 5,282 4,496 3,154

Budgeted, non-Bank financedsLand 1,328 1,328Administration 2,131 950

3,459 2,278

Total budgeted 10,758 5,282 6,774 3,154

Not budgeted:Commltment fees 1,297 691Interest 3,213 1,530Devaluation cost 3,959

8,469 2,221

Total to June 30, 1987 19,227 5,282 8,995 3,154

- 19 -

ANNEX 4

DOMINICAN REPUBLIC

INSTITUTO NACIONAL DR LA VIVIENDA (INVI)


SITES AND SERVICES PROJECT (LOAN 2104-DO)

Actual and Forecast Cumulative Disbursements(In million of US$)

Actual Actual Disb4rsement as aIBRD Total percentage of AppraisalFiscal Year Disburse- Appraisal Estimate (up to lastestand Semester ments Estimate semester)

1982December 31, 1981 0.3 0June 30, 1982 0.5 0

1983December 31, 1982 1.91 1.2 159June 30, 1983 1.91 2.5 76

1984December 31, 1983 2.03 5.7 36June 30, 1984 2.31 9.9 23

1985December 31, 1984 2.40 14.2 17June 30, 1985 3.30 17.6 19

1986December 31, 1985 3.53 21.8 16June 30, 1986 3.981 23.4 17

1987December 31, 1986 3.98 25.42 16June 30, 1987 3.98 16

1988December 31, 1987 3.98 16June 30, 1988 3.98 16

1 Includes the balance of the Special Account of US$0.83 million whichwill be refunded.

21 US$21.42 million were cancelled from the loan account.

- 20 -

ANNEX SDOMINICAN REPUBLIC

INSTITUTO NACIONAL DE LA VIVIENDA (INVI)


SITES AND SERVICES PROJECT (LOAN 2104-DO)

Forecast and Actual Loan Allocation(In US Dollars)

Cateaorv Forecast Actual

(1) Material, furniture, equipment andcivil works for:

a) Parts A, B (1) and C of the Project 9,350,000 1,542,065.07b) Part B (2) of the Project 6,600,000 180,116.58

(2) Consulting and extension services 55,000 524,722.00

(3) Refunding of Project Preparationadvance 500,000 532,110.00

(4) Special Account 1.,000.0001 826.953.04225,400,000 3,981,335.69

1/ Inicial deposit according to Section 2.02 (d) of Loan Agreement.

2I Balance of the Special Account pending of refund to the Bank.

(Ft le:PCO04) DOMNCAN REPUDUC189,_b-_07:10 PM DSTIUTO NACIOSAL DE LA VIVDA (1DWI)

PROJECT COFLETIN RWT

SITES AND SRICES PROJECT (am 2104-00)

Comerteo of Forecst end ActualIcome stateent. (1981-1937)(eil Iion of curant RD I)

-- 1661- -1902- -16608- -1964-- - 198S-- -19i0- -19117-So Actual SR Actual SM Actua SM Actus I SAt Actual SM Actual SA Actal

Operatino Revenuee

Interest 1222 1124 lf91 1661 2859 2210 8188 8158 4201 8181 881 8t1 726 S19o0e 247 278 296 982 80 1069 8s8 771 428 1094 062 212 707

_ _ _ _ _ _ _ _ _ ______~~~~~~~~~--- _____4 _____ __._ _ __

Total %peating Renus 1469 2 20 27 4 929 424 422 4 7

Operating Coat.

Personnel axpenu 828 0 86 0 910 1747 O66 2629 1008 2540 106S 269 11 0 1Administrative expense 746 1762 499 2047 648 7n0 24 1608 S8S 4278 781 210S 828 4494Intarett 21 82 884 82 242 7 183 S11 19 841 16 1U5 2621 2424

Total Operating Coat 162 1794 1719 2.09 1700 8252 17io 4648 1707 7169 1820 O 4460 69M8

Operating Incom -128 -897 667 804 967 87 1788 -714 2917 -2034 6424 -946 8547 -8222

Ottr Incoe_

Non-operating lco (easpnes) sn 68S 0 -8204 0 -198? 0 -8160 0 -6888 0 -27868 0 62

Total other lncome 671 6 0 -8204 0 -1987 0 -8160 0 4e8 0 -27868 0 62

Not I e44S 289 SB7 -2400 987 -1900 1788 -864 m7 -9820 6424 -28809 864 -S80

__ _ _ -- - C- _ I_ C=

(FI lotPC1:204) OOMMCAN RAEIUUC

07:10 Ps ITU MACtOIAL DE LA VIV_6 (D.VI)

PROJECT COWLETIN RawRT

SITES AOS sm"uVI PROEC (LoAN 210440)

Coeriso of Forerca and Actual Sal.... Showb. (101-1s87)WMaIlle of current RD8

-1 1- -1S -- -103-19 - -1 - -106--- --- 10- -107-SAR Actul soR Atul BAR AS t SAR Actal SR Actual S6R Actual SAR Actul

Cujrrent Assfts

C*ah ad B.k me 912 no S38W 731 S8 s02 1202 1409 223a 1780 3110 1443 8l11Account. Sceivabl. 126 2304 4665 8126 70113 84W gm 6076 1496 a822 22071 4473 2427 a6

Otber m 9 26Su 0 O 14 0 314 0 343 0 376 0 411 m00

Total Current aet. 22 3n14 n2 6m 012 7n7 11144 6en? 16760 60s6 27 72 821 167

Fixead Asseta

L 020 747 62 642 629 720 620 729 620 720 620 720 62 720

Su lding Nd Equipwet (net) 316 401 S46 400 8r7 744 400 1019 429 1002 463 229 479 1066_ _~~~~ ~~~-_ _ _ _ ,00 NO_ _

Total Fixed Asst 044 1148 1242 100 147 1082 1746 9 1O7 1S21 1062 80o6 1108 1625

Other Asset

Metpoe Rewevabl. 21304 2427 8m6 83011 62m 493 0770 40716 92790 40806 07m 46274 1o7M 41803

7inIIWd hoome 674 1167 600 87 600 8447 000 4660 600 17786 000 2660 204169Worki prbo_ 27123 gem 25173 264U 1600 70 171U 841i 16407 40626 11000 25m20 077 81088

= toContractors7 607 7I00 4590 10O0 372s 600 4402 SOO 2145 S00 2801L 6o 270

ote 865 50 124 124 124 104 104 104

Total Other Asets 54327 70623 6387 70 71443 13 66210 022s6 0041 109811 11o064 10 11677 105406

TOTAL A#UETS 67a 7166 6e720 76074 8068 144475 -mm6 10038 1178 11700? 186048 112440 14n72 12240s

EWImY UO LABULTIES

Current L)ebllitiee

Account. PYabl- ad othSr 579 412 So0 10657 400 22010 200 767 200 0211 200 087 200 18166

Total Currat ULbilltt 579 8412 5O 10o7 400 220o 200 7077 2O 9211 200 0O87 200 0l146

Long-Tore Debt (gross) 20es 4487 5208 lss6o 8709 14737 160 1760 2386 266 28472 2568 2o654 16621

Equity

ov.rmeat Ceetrlihbloe 47715 60998 6704 66616 6671 10980 74720 81420 83744 9n8e 92762 10 10178 11488

Res.rafor Laese, 0 121 0 0 0 0 0 0 0 0 0 166 0 1006

RetaIned Earnlg 2601 10U 8066 -681 4035 -2401 M1 -6325 6785 -13164 14150 -40565 17706 -4807

etst Eq1Ity 50236 61g 6972 54U97 0760 1 7 g0 704 92479 8n71 101 7747 11046 67417

Oth0w Liabilitlsa 4882 627 17m 0 1692 0 1286 0 12568 0 1280 0 1261

TOTAL ESIY AN LAULTES 57683 75885 07290 76074 06 14447110 11720 117687 18628 u112449 147102 122400

Currnt Rtlo (times) 1.1 0.7 0.3 0.6 0.7 0.6 0.0hbt/Debt..Aqity Ratio (S) 6.e 17.1 12.2 19.0 24.2 24.0 15.2

- 23 -

ANNEX 8Page 1 of 7

DOMINICAN REPUBLIC

SITES AND SERVICES PROJECT LOAN (2104-DO)


CHRONOLOGY OF EVENTS

Inst Date Event and description

INVT 15-Oct-77 INVT director expresses interest to IWB in FUNDASALminimum housing project in E1 Salvador

Dom 16-Aug-78 President Guzman inauguratedVB 15-Nov-78 World Bank identification missionDom 05-Sep-79 Hurricanes destroy 100,000 homes in the Dominican

RepublicVB 15-Sep-79 VB 5-day reconnaissance missionVD 18-Sep-79 VB back-to-office report reconnaissance missionIVI 16-Oct-79 INV director Ing. Frida Aybar de Sanabia appointed by

President GuzmanINvI 16-Oct-79 INVI director Ing. Adolfo Perez Ramires resignsVB 15-Nov-79 VB identification mission in wake of hurricanes

identifies need for low cost-housing programnV 15-Dec-79 INVI submits formal request for a project preparation

loanVB 28-Dec-79 World Bank 1st project brief issued recounends a

project preparation loanINVI 15-Jan-80 INVI informs VB of technical assistance agreement with

Fundasal, El SalvadorVB 28-Jan-80 World Bank internal memo recommends project

preparation US$ 500,000 facilityVD 05-Feb-80 VD approves US$ 500,000 project preparation facilityVB 14-Apr-80 World Bank project preparation mission, 11 days, two

persons, reports satisfactory progressINVI 06-Jun-SO INVI signs technical assistance agreement vith UMDPWB 15-Jun-80 World Bank 10-day project preparation mission 2

personsINVI 15-Jun-80 INVI forms UPP (Unidad de Preparacion de Proyacto) in

separate offices in Galerias ComercialesDon 01-Sep-80 GTZ project mission for INVIIWB 12-Nov-80 VS issues 2nd project briefVB 10-Dec-80 VD pre-appraisal missionINVI 15-Dec-80 INVI director Frida Sanabia appoints Ing. Gustavo Toca

as director of UPPINV1 15-Dec-80 INVI UPP has approximately a 20 man staffVD 19-Dec-80 VB pre-appraisal aide memoireVB 22-Apr-81 WB issues 3rd project briefVD 23-Apr-81 GTZ signs technical agreement with INVI

- 24 -

ANNEX 8Page 2 of 7

inst. Date Event and descriktion

Dom 01-May-81 Chris Lewin arrives for GTZVB 17-May-81 VD issues 5th project briefVB 17-May-81 WB 13 day appraisal missionVB 12-Jun-81 WB issues paper and 6th project briefVD Z2-Oct-81 WB yellow cover appraisal report issuedVB ll-Dec-81 VD Report and recommendations to the president issuedVB 03-Jan-82 World Bank appraisal report P3163-DO issuedINVI 15-Jan-82 INVI director Prida Sanabia appoints Ing. Gustavo Toca

as director of Lotes and Servicios (L y S)INVI 15-Jan-82 INI converts UPP to Division de Lotes y Servicios (L

y S)IEV! 16-Jan-82 INVI Division of Lots and Services reduced to 12

employeesWB 03-Feb-82 World Bank negotiates Loan 2104-DO in three daysWB 04-Mar-82 VB Report and recommendations to the president issued

final versionVD 23-Mar-82 World Bank board approves Loan 2104-DOVB 14-Apr-82 World Bank signs Loan 2104-DODom 15-May-82 Jorge Blanco wins the presidential electionsMD 09-Jul-82 IWB supervision 1 reports satisfactory progress, helps

INVT with reporting requirements13W 30-Jul-82 INVI L y S initiates prequalification of biddersDon 16-Aug-82 President Jorge Blanco takes office1IW 16-Aug-82 INVI director Prida Sanabria resigns to make way for

new directornEV 16-Aug-82 INVI director Ing. Pedro Bonilla Mejia appointed by

President Jorge Blanco13W! 30-Sep-82 WB receives 1st progress reportI3VI 20-Oct-82 nINV launches projects Invivienda Santo Domingo and

Santiago at request of President BlancoVI 22-Oct-82 Front-end fee collected for US$ 375,369VB 22-Oct-82 World Bank Loan 2104-DO becomes effectiveVB 22-Oct-82 Project preparation facility refinanced at US$ 532,111VB 24-Nov-82 Special account opened for US$ 1,000,000INVW 01-Dec-82 Director of Planning, objects to Invivienda projectsWB 30-Dec-82 VB supervision 2 shocked by and concerned about extent

of Invivienda projectsINVI 31-Dec-82 INVI L y S director Ing. Gustavo Toca resigns as

director of L y SINVI 31-Dec-82 INVW director Ing. Bonilla appoints Ing. Jose

Navarrete as interim director of L Y SIEV! 01-Jan-83 nINV forms Licitation CommitteeINVW 21-Mar-83 nIVI L y S first cash advance to contractor MagnaINVT 15-May-83 INVI L y S offices moved to INVI premises

- 25 -

ANNEX 8Page 3 of 7

Ins-t. Date Event and description

VB 30-Jun-83 Supervision 3, very critical, signals multipleviolations

VD 30-Jun-83 World Bank supervision PY 82183 12.7 man weeksVD 30-Jun-83 WB fiscal year 82183 disbursements total US$ 2,032.480

of which, none is for constructionWB 18-Jul-83 WB letter to INVI following supervision mission very

critical and requests concrete remedial actionsINVI 25-Jul-83 INVI L y S contractor Magna complains that squatters

prevent initiation of workDom 01-Aug-83 Invivienda Santiago and Santo Domingo work suspended

for lack of funds.INVI 20-Sep-83 INVI L y S contractor Magna Infrastructura Phase I

Request No. 1 RD$ 64,583INVT 20-Sep-83 IMV! L y S first payment request from contractor MagnaVB 04-Oct-83 VB disburses US$ 125,000 in support of UNDP technical

assistance project-VI 23-Oct-83 INVI director Lic. Elpidio Ramirez Nunez appointed by

President Jorge BlancoI W! 24-Oct-83 INVI fires all department heads and subdirectors,

approx. 40 professional staff-NVI 01-Nov-83 INVI rehires 2 or 3 of 40 fired1EVI 15-Dec-83 INVI L y S contractor Magna Infrastructura Phase I

Request No. 2 RD$ 70,377VB 16-Dec-83 VB Supervision 4, very critical, suggests continuation

only if INVI effects changesINVI 31-Dec-83 INVI auditors are Gomez Sanchez y AsociadosINVI 31-Dec-83 INVI L y s contractor Magna 2 requests totalling RD

$158,777 for year 1983 (US$ 158,777)INVI 01-Feb-84 INVI signs INV!ICEA agreement for 1,500 homes in 15

projects using unspent Invienda fundsINVI 01-Apr-84 Director of Planning resigns allegedly over disputes

about INVTICEA projectsINVT 01-Apr-84 Ing. Maria Gaton appointed Director of PlanningINVT 02-Apr-84 INVT L y S contractor Magna suspends work complaining

of lack of removal of squattersVB 07-Apr-84 VB Supervision S, still very critical, sees rescue

possibilities if INVI effects action planVB 30-Apr-84 Form 590 signals continuing violationsVB 01-Jun-84 MD office memo request formal authority to threaten

suspensionWB 11-Jun-84 WB disburses U8$ 273,622 of which US$ 102,000 is

technical assistanceINVI 16-Jun-84 INVI L y S contractor Magna begins work again after a

60 day work suspensionVI 30-Jun-84 VB fiscal year 83184 disbursements total US$ 273,622DNVI 15-Jul-84 Saladin report issued, recommendations subsequently

formally adopted by DNVI board

- 26 -

Page 4 of 7

Inst. Date Event and descrlgtion

Dom 01-Aug-84 Invivienda Santiago and Santo Domingo projectstransferred by decree to Unidad Coordinadora

WB 20-Aug-84 1B program mission ratifies long standingpreoccupations vith project

Dom 23-Aug-84 Sec. a la Presidencia turns down USAID funds forInvivienda Santiago and Santo Domingo projects

nWNI 19-Sep-84 INVI L y S contractor Magna Infraestructura Phase IRequest No. 3 RD$ 136,898

WB 21-Oct-84 VD supervision 6 sees important Improvements andongoing concerns

VB 02-Nov-84 WB Supervision 6, Form 590INVT 09-Nov-84 INVT L y S contractor Magna Infraestructura Phase I

Request No. 4 RD$ 257,5841W/I 02-Dec-84 TNVI L y S contractor Deveaux & Brea Sewerage

treatment plant 1st Phase first requestINVI 03-Dec-84 INVI L y S contractor Magna Infraestructura Phase I

Request No. 5 RD$ 307,79113 12-Dec-84 VB disburses US$ 95,829INVI 31-Dec-84 MIVI L y S contractor Magna requests totalling RD $

826,203 for year 1984 (US $ 826,203)INVT 31-Dec-84 MEVI auditors are Gomez Sanchez y AsociadosDom 11-Jan-85 UNDP villing to continue technical assistance for US$

200,000Dom 23-Jan-85 Official devaluation from RD$ 1.00 - US$ 1.00 to

RD$3.00 = US8 1.00ws 25-Feb-85 VI disburses US$ 774,750 for off-site Infrastructure1EV? 29-Mar-85 INVI L y S contractor Magna requests contract

renegotiation due to Inflation and unforseenconditions

INVI 01-Apr-85 INVI director appoints Ing. Quilvio Rodrigues asdirector of L y S

INVI 01-Apr-85 INVI Ing. Navarrete resigns as director of L y 81W/I 09-Apr-85 INVI L y S contractor Proy. y Const. Civiles houses

1st Phase first requestINVI 02-May-85 INVI L y S contractor Magna beglas work slowdown

alleging no response to request for renegotiationWB 10-May-85 WB disburses US$ 140,000 in support of UNDP technical

assistance projectWB 19-Jun-85 WB supervision 7 recommends scaling down project,

reallocation or cancellationVB 25-Jun-85 WB Supervision 7 Form 590,INVI 26-Jun-85 INVI L y S contractor Magna Infraestructura Phase I

Requtst No. 6 RD$ (73,647)WB 30-Jun-85 WB fiscal year 84185 disbursements total U8$ 914,750INVI 09-Jul-85 INVI L y S Magna contractor renegotiated a RD$

2,113,330 increase over RD$ 1,098,000 originalcontract

- 27 -

ANNEX 8Page 5 of 7

lUst. Date Event and descrlDtion

VD 07-Aug-85 UB telex on supervision mission to INVI requestingremedial action

VD 07-Aug-8S VD office memo suggests redeploying part of troubled2104-DO to other areas

IRVI 03-Sep-85 INVI L y 8 contractor Constructora Pons Houses letPhase first request

WB 06-Oct-85 MD mission mildly critical of INVI, severely criticalof government for not providing enough funds

UB 08-Dec-85 V supervision 8 recommends cancellation of all, or atleast part of loan

UB 21-Dec-85 VD Supervision 8 Form 590lEVI 31-Dec-85 INVI auditors are Games Sanchez y AsociadosNlVI 31-Dec-85 INVI L y S contractor Magna 1 request totalling RD

$63,623 for year 1985 (US$ 63,623)Dom 07-Jan-86 GTZ covering letter indicating INYT Institution

building progressing, except Lots and ServicesINVI 12-Mar-86 INVI L y S contractor Magna Infraestructura Phase 1

Request go. 7 RD$ 38,694UB 14-Mar-86 VD office memo recommends suspension followed by

cancellation for non-performanceVD 19-Mar-86 B telex threatening suspension unless certain

conditions met by May 2, 1986Don 01-May-86 Hugo Guillermo Cury obtains extension of DVI

compliance to June 19, 1986DViT 08-May-86 INVT L y S contractor Magna Infraestructura Phase I

Request No. 8 RD$ 180,576Dom 16-May-86 Jorge Blanco's party, the PRD (Partido Revoluciona-

rio Dominicano), loses electionsDom 16-May-86 Joaquin Balaguer, PRSC (Partido Reformista Social

Democratico) wins elections.IVI 11-Jun-86 INVT sends their action plan to VIDom 12-Jun-86 WB receives letter from Sec. Tecuico to Knox

supportive of INVI action planDom 19-Jun-86 BCR-INVI mission to VD Washington secures compliance

extension to July 31, 1986WB 24-Jun-86 UB delays telex of results of June 19, 1986 meeting

spending concrete signs of supportUB 24-Jun-86 UB aide mmoire on Washington, D.C. meeting with INVT

and Government promises counterpart fundsVB 24-Jun-86 MD Form 590 (after Washington meeting with INVI-BCR

officialsVB 30-Jun-86 VB loan financed other costs for US$ 1,432,103UB 30-Jun-86 VD special account reduced to US$ 826,953UB 30-Jun-86 VB loan financed construction related costs for US$

1,722,281VD 30-Jun-86 VB disburses four times during year for a total of US

451340WB 07-Jul-86 VD telex indicating confirming letter delayed to

July 14, 1986UB 15-Jul-86 UB Internal discussions result In another delay in

issuing telex confirming results of Wash. meetings

- 28 -

ANNEX 8Page 6 of 7

Inst. Date Event and descrigtion

VD 11-Aug-86 WB sends telex extending compliance deadline to August30, 1986

Dom 16-Aug-86 President Joaquin Balaguer takes officeINVI 27-Aug-86 TNVI director Arq. Conrado Asencio Torres appointed by

President BalaguerINVI 29-Aug-86 INVI cables request for further extension of

August 30, 1986 compliance deadlineWB 08-Sep-86 WB grants extension to September 30, 1986, but

promised funds not arriveDom 15-Oct-86 Oficina Coordinadora created by president, replacing

Oficina de PlaneacionUB 02-Nov-86 Dominican government formally requests cancellation of

balance of unused fundsWB 05-Dec-86 World Bank cancels balance of undisbursed loan, US$

21.4 of a total of US$ 25.4 millionnWI 12-Dec-86 TNWI employees read about VD loan cancellation in the

newspapersWB 16-Dec-86 Aide memoire on closing proceduresVB 17-Dec-86 'B supervision 9, final supervision, Form 590VB 17-Dec-86 IWB supervision 9, final supervision mission, outlines

closing proceduresINVI 31-Dec-86 INVI L y S contractor Magna 3 requests totalling RD

$240,768 for year 1986 (US$ 80,256)IW! 31-Dec-86 INVI auditors are Turbides Ramirez & AsociadosVB 14-Jan-87 WB cable confirming December 16, 186 Aide MemoireDom 15-Jan-87 President though Oficina Coordinadora requests 30

houses for fire victimsINVI 30-Jan-87 INVI L y S Magna requests 42? labor cost increaseDom 11-Feb-87 Decree 80-87 prohibits autonomous institutions from

donating assets1nVI 24-Feb-87 INVI L y S agrees to a 30S increase in labor costsINVI 25-Feb-87 INV L y S last reimbursement request for US$ 173,047

reduces special account to US$ 826,953INVI 02-Mar-87 INVI L y S contractor Ganei water storage tank first

and only request RD$ 156,659 (US$ 52,220)INVI 03-Mar-87 INVI L y S contractor Magna Infraestructura Phase I

Request No. 9 RD$ 146,736DNI 15-Mar-87 INVI director unofficially transfers lots to Oficina

coordinadora under presidential pressureINVI 15-Mar-87 INVI L y S director estimates a RD $ 15,241 cost off

finished house Sabana PerdidaINVI 01-Apr-87 INVI L y s contractor Omega Electrica Electric

installation 1st Phase first requestINVI 11-Apr-87 INVI L y S contractor Magna last request No. 11INVI 28-Apr-87 ZIWI L y S contractor Magna Infraestructura Phase I

Request No. 10 RD$ 190,131INYI 29-May-87 INVI L y S contractor Deveaux & Brea Sewerage

treatment plant 1st Phase last request No. 9 finalUB 17-Jun-87 VB cable requesting disbursement of or return of

Special Account dollar accountINVI 22-Jun-87 Auditors issue December 1986 financial statementsUB 30-Jun-87 UB special account at US$ 826,953

- 29 -

Page 7 of 7

Inst. Date Event and description

1KVI 20-Aug-87 INVI director Ing. Miguel Angel Pimentel Karelappointed by President Balaguer

WB 03-Nov-87 WB cable reclaiming PCRINVI 04-Nov-87 INVI L y S contractor Magna Infraestructura Phase I

Request No. 11 RD$ 88,9951IVI 11-Nov-87 INVI L y S contractor Omega Electrica, Electric last

request No. 2, Total RD$ 63,224 (JS$ 21,078)INVI 14-Nov-87 tNNV L y S contractors complain of lack of cement at

official pricesINV 15-Nov-87 INVI L y S Magna stops working alleging slow paymentINVT 16-Nov-87 INVI L y S contractor Proy. y Const, Civiles houses

1st Phase last request (No. 6)total RD$ 467,808INVI 18-Nov-87 INI L y S contractor Constructora Pons Houses last

request No. 7, total RD$ 750,666nVI 15-Dec-87 INVI director verbally requests Magna to stop working

for lack of fundsVI 28-Dec-87 IV! sends Spanish PCR prepared by Arq. Quiroga UNDP

full time consultantIKVI 31-Dec-87 INVT L y S contractor Magna 3 requests totalling RD

$474,482 for year 1987(US$ 158,161)DMV! 31-Dec-87 INVI auditors are Turbides, Ramirez & AsociadosVD 27-Jan-88 VB telex informing INVI of PCR missionDon 10-Feb-88 INV$ receives a 1,100 bag cement allotment (Jan.

request) sufficient for 5 housesDon 15-Feb-88 Official controlled price of a bal of cement rises

irom RDS 8.27 to RD $ 14.60Dom 15-Feb-88 Street price of a bag of cement reaches RD $ 24.00VB 21-Mar-88 WB PCR mission arrives in Santo DomingoVB 30-Apr-88 WB special account at US$ 826,953

- 30 -

AMNE 9Page 1 of 2

DOMINICAN REPVBLIC

SITES AND SEICES PROJECT LOAN (2104ZD_


PrSinciial Report Resources

Ref. Description or title Date

A. World Bank resources

3639-C Staff Appraisal Report Mar 1982

6DOKUUO1 Project BriefFirst issued Dec 1979Brief update Nov 1980Brief update Apr 1981Brief update Jun 1981

P3163DO Report and Recommendation of thePresident Mar 1982

2104-DO Project Agreement between Bank and INV Apr 1982

2104-DO Loan Agreement between the Bank and theDominican Republic Apr 1982

6DONUUOl Project filesCorrespondence, memos, telexesConsultants' reportsSupervision reportsReports of other missionsProgress reports prepared by IWI

B. Other resources

Gov't Banco Central de la Republica, BoletinMensual, country statistics Aug 1987

TNVI Informe de Terminacion del Proyecto byArq. Hiram Quiroga, UNDP consultant,Spanish language Project CompletionReport submitted by INV Feb 1988

INVI Proyectos Urbanos de Lotes y Servicios,project proposal report prepared by INIProject Preparation Unit Jun 1982

- 31 -

Page 2 of 2

Ref. Description or title Date

SNVI M4moria de Labores, 1982-1986 1982-86

SNVI Audited financial statements 1981-1987

Gomez Santos & Asociados, (ToucheRoss) December 31, 1981 toDecember 31 1985 1981-85

Turbides, Ramirez & Asociados,December 31,1986 and June 30, 1987 1986-87

SNVI Estadisticas Basicas del Sector Vivienda1980-1985, Basic housing statisticsprepared with help of UDDP consultant Aug 1987

C. Key interviews Dominican Republic March 1988

Arq. Conrad AscencloVI director August 1986 to August 1987

Ing. frida Aybar de SanabialEVI director August 1979 to August 1982

M4iguel Angel PimentellEVI director August 1987 to date (May 1988)

InS. Quilvio RodriguezCurrent head of INVI Lots and Services Division

In8. Maria GatonCurrent INVI Director of Planning

Ing. Chris LewinGTZ country director, Dominican Republic

- 32 -

ANNEX 10Page 1 of 2

COMMENTS FROM THE BORROWER

1. Attachments 1 and 2 include the English translation and the Spanishversion, respectively, of the comments received from the Technical Secretariatof the Presidency of the Dominican Republic regarding the PCR for the Sites andServices Project. These comments do not require changes in such report. A briefcomment on each of the paragraphs of the Borrower's remarks on the report(Attachments 1 and 2, page 1) is shown belows

Paras. 1 and 2: The records of the special ac:count are still beingrevised by the Central Bank in order to reconcile itsbalance with the Bank's. No scheme has been establishedyet to solve the problem of the unused balance of thespecial account. There is no change on what it ismentioned in the report regarding this account.

Paras. 3 and 4: Based on partial disbursements data, the Borrowetconcluded that the Government counterpart funds to theProject exceeded the external financing. However, Bank'sdocumentation and correspondence indicate that the fundsprovided by the Government and INVI's own resources wereinadequate. On the other hand, the loan proceeds werealways available during all the time the loan remainedeffective, large part of which (US$21.4 million), INVIdid not utilize and was cancelled.

Para. 5: There is agreement of the fact that the land sites wereconsidered by INVI and the Bank as the best locationsfor the Project at the time of appraisal.

Para. 6s The Borrower claimed that it was the soil, not the landacquisition which posed the main problem for theexecution the Project. However, the Bank's recordsindicate that the site for Haina was never acquired andthe construction never started. No soil problem wasdetected there. However, there was a minor soil problemin the construction of the sewerage system in SabanaPerdida, which could have been solved timely ifcounterpart funds for the Project had been available.l

Para. 7: The counterpart funds includes the costs of the landacquired for the Project as of June 1987, according withINVI's accounting record.

Paras. 8 to 10: The housing projects that the Government WorksCoordination and Supervision Office (Oficina Coordinadoray Fiscalizadora de Obras del Estado) has been buildingsince 1987 in Sabana Perdida, are not part of the

- 33 - ANNEX 10Page 2 of 2

Project, and does not follow the concept of sites andservices. At the time of the PCR's mission to SantoDomingo (March 1988), INVI had 250 homes underconstruction, which it planned to complete according withfunds availability. 1

1 A letter was sent to the Borrower explaining this point.

_34 _AMNg 10Attachment 1Page 1 of 5

REMARKS ON THE sITES AND SERVICES PROJECT REPORT(LOAN 2104-DO)

MAIN POINTS

1. Approval for disbursements: In accordance with the variousinvestment categories, the Technical Setretariat of t4e Office of thePresident approved 16 payments from Banco Central Special Account No.2262-00-00-00-00-04 (from Nos. 1 through 19, excluding Nos. 16, 17 and 18).These totaled US$1,799,633.44 (see Annex I), this being equivalent toRD$3,281,841.45. Because Barco Central has not completed the reconciliationprocess, we have not yet received a statement for this Account.

2. In March 1989, the World Bank informed the Governor of Banco Centralthat it was willing to accept his suggestion that funds in the Special Accounttotaling US$826,953.04 be transferred to the Third Road Construction Project(Loan 2609-DO) as soon as the payment instructions to be submitted by thatagency had been signed, since this would provide a means of solving theproblems affecting the balance in that account (see Annex 2). To date, thesehave not been signed.

3. Disbursements for the Sites and Services Project totalUS$5,677,543.76, excluding direct payments (details not available), withUS$1.8 million (31.72) in external financing and US$3.9 million (68.3S) incounterpart funds. Data from the National Budget Bureau show that, since theProject was launched, government counterpart disbursements to INVI haveexceeded external financing (see Annex 3).

4. Project Department reports show this also to be true of previousyears. For example, in 1984 the counterpart funds allocation wasRD$2.4 million, but in fact execution totaled RD$2.6 million, thus exceedingthe target.

5. The INVI legal consultant's report (No. 384, November 1981) refersto the legal aspects of land acquisition. These were selected after both theWorld Bank and INVI had carried out the necessary studies for adopting theoptimum means of choosing the best locations with respect to productioncenters, access to main highways, and health.

6. At INVI's request, the Government issued Decree Nos. 2607 and 2608of July 23, 1981, declaring sites in Districts Nos. 8, 10 and 17 to be ofpublic utility. At the time of the report, their status was as followss

(a) Sabana Perdida: Most of the sites in this area belonged to IAD (theDominican Agricultural Institute), and only lots Nos. 166 and 42belonged to individuals. Nevertheless, INVI bad acquired almost allthis land through a grant from the Dominican State or throughpurchases from individuals. The area was 102.5 ha, and the cost sofar was RD$258,243.02.

(b) Raina: All the land in this area belonged to individuals, andtherefore INVI would have to purchase 59 ha for aboutRD$586,350.00. By that time, INVI had acquired land at a total costof RD$8,898.00. This had been expropriated by the Government forthe construction of public housing. liis component was notexecuted, mainly because of problems posed by the terrain.

ANNEX 10- 35 - Attachment 1

Page 2 of 5

7. It should be noted that, as stipulated in the Loan Agreement, thecounterpart funds included the total cost of land.

8. Currently, the Dominican Government is using domestic resources toimplement (since 1987) the "Sites and Services: Sabana Perdida" Projectthrough the Government Works Coordination and Supervision Bureau. ThisProject comprises the construction of 1,556 housing units, streets, sidewalksand curbs, together with drinking water and electric power supply.

9. The total cost of the Project is RD$59,431,071.22 (US$9.4 million).It is divided into two stages, with RD$28.2 million for the first andRD$31.2 million for the second.

10. The Dominican Government has disbursed a total of RD$26.2 millionfor the above Project.

COUNTERPART PJIIS: US810.5 mItIIon

S877 AND SERVICES PROJECT: DISBURSEMOINSAPPROVED BY THE TECHNICAL SECRETARIAT

OF THE OFFICE OF THE PRESIDENTMMANCO CNRAL SPECIAL ACCMJN NO. 2282-0CO0 0-00CO 4 C)

188-7

AMOUNTDIS8URSEMNT COMI.DWNICATION - EXCIAME

NO NO DATE RD$ USS RATE

1 2284 1-07-88 82889.25 8289.26 1.002 2649 12-068 27800.00 27300.00 1.008 8551 18-10-88 48487.80 46487.80 1.00

SUBTOTAL 1908 156076.65 158076.85

4 871 19-084 52782.47 52782.47 1.005 6S54 12-06-84 774760.00 774760.00 1.006 6847 24-10-4 9828.67 95828.87 1.00

SUBTOTAL 10184 28861.14 028861.14

7 286 22-02-85 117164.08 85826.92 8.278 408 12-08-88 266085.29 80645.10 8.81

DIF.OF 7 619 12-04-86 88164.86 19482.26 8.259 004 10-05-895 P6794.98 84805.86 8.16

10 804 10-05-86 25848.91 7906.78 8.18 11 1297 19-07-65 66577.88 1896.68 2.9612 1514 27-08-85 162000.00 8069.57 2.0918 1767 08-10-85 184762.10 62007.42 2.9014 8409 26-11-85 190719.06 68289.09 8.00

SUBTOTAL 1906 1862651.50 4386781.78

1S 184 29-01-88 808228.26 106658.88 2.89

SUBTOTAL 1986 808228.26 108685.88

19 161 06-02-87 529528.70 1747M0.80 8.08

SUBTOTAL 1067 520528.70 174780.80_ ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~e

TOTAL 8201641.46 179988.45 wri

Ul

- 37 -

90E0436 January 23, 1990Spanish (Dominican Republic)LATTV RP:mec

ANNA 10ANNEX 3 Attachment 1

PAYMENT INSTRUCTIONS Page 4 Qf 5(Loan 2609-DO)

TO: World Bank

FROM: Dominican Republic

RE: Loan 2609-DO (Third Road Construction Project): Application forDrawdown No. ; Loan 2104-DO (Sites and Services Project):Repayment of outstanding balance in Special Account (US$826,953.04).

1. Please refer to Application for Drawdown No. _ _[TN: Leftblank in original], totaling US$826,953.04. With respect to this Application,we the undersigned, Marco A. Subero Sajiun, the borrower's representative forLoan 2609-DO, and Guillermo Caram, the borrower's representative for Loan2104-DO, wish hereby to instruct you to withhold the amount of US$826,953.04from the proceeds of Loan 2609-DO, which were to be transferred to theDominican Republic in accordance with the Loan Agreement and the Applicationfor Drawdown, taking this amount in repayment of the undrawn balance in theSpecial Account, which is owed by the Dominican Republic under the terms ofLoan 2104-DO.

2. We enclose documentation justifying expenditures relating to Loan2609-DO, in the amount indicated in the Application for Drawdown.

3. As you know, financing additional to the US$826,953.04 equivalentwas provided for the Third Road Construction Project. Consequently, yourapproval of this payment instruction will not result in any subfinancing forthe Project, which will be executed with the proceeds of Loan 2609-DO.

4. With respect to said Application, please deposit any amount owed inexcess of this amount (US$826,953.04) in our Account No.in _

5. We understand that all actions relating to this payment instructionwill be taken in accordance with the relevant provisions of Loan Agreement2609-DO, and that such actions shall in no way be interpreted as constitutinga waiver of any of the Bank's rights under the Agreement or the Bank's GeneralConditions Applicable to Loan and Guarantee Agreements.

6. Please acknowledge receipt of the amount repaid (US$826,953.04)pursuant to this payment instruction.

Yours, etc.

Guillermo Caram, Marco A. Subero Sejiun,Secretary to the Office of the President, Secretary for Public Works,Authorized Representative of Authorized Representative ofthe Dominican Republic for the Dominican Republic forLoin 21"' DO A PO

LOAN AW4T 1/ COWITEPARt FUIDS 2/

DISSURSEBNT COiANICATION -- EXcHANGE ----------------- EXCHANGE

No No DATE 1 ROt RATE DATE US I)t RATE

1 2284 18-07-83 82388.25 8288s.25 1.002 2e49 12-0-83 27300.00 27300.00 1.003 85a1 18-10-8 48487.60 48487.60 1.00 81-12-83 800000.00 300000.00 1.00

SUBTOTAL 1088 15907.85 158076.85 S00.00 300000.00

4 871 10-08-84 2732.47 52782.47 1.00 #1-0344 176000.00 175000.00 1.0080-04 2a88ss.00 2sa83u.00 1.0080-06-84 1083333.00 10o3338.00 1.00

6 1654 12-06-84 7747.00 774750.00 1.00 S3006-84 283133.00 283388.00 1.0030-84 288333.00 283388.00 1.0080-08-84 288833.00 283888.00 1.00

* 6347 24-10-84 96828.67 06828.67 1.00 81-12-84 800000.00 300000.00 1.00

SUBTOTAL 164 923381.14 92331.14 2641665.00 2841666.00

81-0-8 51124.85 1e6666.00 8.267 236 22-02-85 85826.92 117154.03 3.27

2s-02-s5 50f658.66 166667.00 8.28

8 408 12-08-85 80646.10 2e8895.29 8.31 2

DIF.W 7 619 12-04-85 18482.26 6818U4.85 3.25 814-0a 85 0240.96 200000.00 8.3230-04-85 51821.18 16667.00 8.21

8 804 10-06-85 84804.86 267884.98 3.101o 804 10-06-86 7869.7n 26848.91 3.18

o30-09-s5 5259.00 162500.00 8.09

11 ~1297 19-075 18085.68 56577r.u3 2.8881-07-P6 58084.75 182500.00 2.s5

12 1514 27-08-85 6s089.57 182000.00 2.9 U1-06-5 79697.99 287600.00 2.8#80-09-85 66086.67 200000.00 8.00

13 1767 03-10-8 62007.42 184782.10 2. #30o-0-s 6666.67 200000o.00 3.00

14 3060 26-11-85 6e2ss."0 188710.06 8.0081-12-8S 68027.21 200000.00 2.84

SUBTOTAL 1885 436781.78 1802651.50 802877.94 8/ 1S62SO1.00

15 184 20-01-86 10665.86 806228.26 2.68 81-01-86 s6551.72 280000.00 2.90U1-08-s6 71428.57 200000.00 2.8080-"4-W 70671.38 200000.00 2.s8U1-05-88 70175.44 200000.00 2.e5806-1e-6 72468.77 20000o.00 2.7631-06-86 71428.57 200000.00 2.60

SUBTOTAL 186 106658.38 308228.26 452719.45 1280000.00

19 161 06-0-87 174780.80 No862m.70 8.03

SUBTOTAL 1887 174780.80 5s1s5.70

TOTAL 1790638.45 3281841.45 s387os2.3i 8/ 6206416.00 !II1/ Eitcludlng direct peymafit2/ Including revenue nenivod by PL-480 *nd othor soures.3/ This addition des not atcl with the flgur lincluded in the original tablo st by the Borrowr.

Documents

World Bank Document · douewnt of the world bank for omcial use only repwt no. 8453 project completion report dominican republic sites and services project (loan 2104-do) march 19,