Feasibility study for improving housing conditions of vulnerable populations in Tirana Municipality.

Transcription

1 Feasibility study for improving housing conditions of vulnerable populations in Tirana Municipality. Tirana, February 2017

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3 Report Feasibility study for improving housing conditions of vulnerable populations in Tirana Municipality. This document is prepared by the Ministry of Urban Development in close consultation with representatives of Municipality of Tirana, experts of local authorities, with the contribution of civil society representatives and of social housing experts. Expertise and technical assistance for preparation of the document has been provided by Urban Research Institute in the framework of the United Nations Support to Social Inclusion in Albania - UNSSIA project funded by Swiss Agency for Development and Cooperation and implemented by United Nations Development Programme - UNDP in partnership with the Albanian Government. Opinions and views expressed in this report do not necessarily reflect those of the United Nations Development Programme (UNDP) or of the United Nations (UN). Tirana, February 2017

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5 Table of Contents List of charts... II List of tables... III List of figures... IV Abbreviations... IV BACKGROUND... 1 DESCRIPTION OF WORK... 2 EXECUTIVE SUMMARY... 4 A. SUPPLY AND DEMAND ANALYSIS OF SOCIAL HOUSING IN TIRANA Existing needs for social housing in Tirana Applicants Beneficiaries Trend of needs for social housing in Tirana Population trends Applicants trends Beneficiaries trends Socio-economic characteristics of the municipality of Tirana Policy directions of the Social Housing Strategy Policy directions on social housing of the Municipality of Tirana Existing supply for social housing in the Municipality of Tirana Dwelling conditions Housing market in Tirana Financial funds available of the Municipality of Tirana Existing investment projects for social housing B. FEASIBILITY OF THE PROPOSED SOCIAL HOUSING PROJECTS The program of rented social housing in Public Private Partnership Project implementation in PPP Legal feasibility of the social housing projects Juridical and factual property status Legal support Legal Procedures Technical and financial feasibility of the social housing projects Feasibility of the social housing project on Plot I

6 Urban criteria for the development of Plot Cost estimation for the development of Plot Ways for financing the development of Plot Feasibility of the social housing project on Plot Feasibility of the development of Plot 2: Option Urban criteria for the development of Plot 2: Option Cost estimation for the development of Plot 2: Option Feasibility of the development of Plot 2: Option Urban criteria for the development of Plot 2: Option Cost estimation for the development of Plot 2: Option Comparative analysis of the options for the development of Plot Comparative analysis for the development of Plot 2 under PPP Conclusions Annex 1: Site plan of proposed plots, subject of the feasibility study Annex 2: Site plan of infrastructure in the proposed plots Annex 3: General road plan, Municipality of Tirana Annex 4: Master plan of Plot 1 - Settlement of Roma community, Shkozë Annex 5: Master plan of Plot 2 - Former Kombinati i Autotraktorëve, Option Annex 6: Master plan of Plot 2 - Former Kombinati i Autotraktorëve, Option List of Charts II

7 Graph 1. Applicants by vulnerable categories, municipality of Tirana, Graph 2. Applicants by average monthly income, municipality of Tirana, Graph 3. Applicants by social housing programme, municipality of Tirana, Graph 4. Beneficiaries by vulnerable categories, municipality of Tirana, Graph 5. Beneficiaries by social housing programme, municipality of Tirana, Graph 6. Beneficiaries - applicants by vulnerable categories, municipality of Tirana, Graph 7. Beneficiaries - applicants by vulnerable categories, municipality of Tirana, Graph 8. Trend of the population , municipality of Tirana Graph 9. Trend of applicants for social housing , municipality of Tirana Graph 10. Trend of beneficiaries of social housing , municipality of Tirana Graph 11. Trend of beneficiaries by social housing programs , municipality of Tirana Graph 12. Unemployment rate, municipality of Tirana Graph 13. Families with social assistance and benefits as source of income, municipality of Tirana Graph 14. Families with pensions as main source of income, municipality of Tirana Graph 15. Primary and lower secondary education completed, municipality of Tirana Graph 16. Residential buildings constructed from 2001, municipality of Tirana Graph 17. Residential apartments constructed from 2001, municipality of Tirana Graph 18. Families living on rented apartments, municipality of Tirana Graph 19. Vacant dwellings, municipality of Tirana Graph 20. Average number of rooms per household, municipality of Tirana Graph 21. Average size of the household, municipality of Tirana Graph 22. Housing units with no water supply system, municipality of Tirana Graph 23. Housing units with no toilet facilities, municipality of Tirana Graph 24. Financial funds for housing subsidies, , municipality of Tirana List of Tables Table 1. Average market prices for sale and rent of residential apartments, municipality of Tirana Table 2. Planned total funds for housing subsidies, , Municipality of Tirana Table 3. Urban criteria for the development of Plot 1 Table 4. Functional typology of the construction area, Plot 1 Table 5. Typology of residential apartments of the building on Plot 1 Table 6. Estimation of unit construction costs, Plot 1 Table 7. Estimation of costs for the development of Plot 1 Table 8. Data for the calculation of the % exchange of the Municipality, Plot 1 Table 9. Municipal and private investments for the realization of the social housing project, Plot 1 Table 10. Minimum % exchange of the Municipality, Plot 1 Table 11. Number of residential apartments benefited from the % exchange, Plot 1 Table 12. Cost of financial benefit of the Municipality from the social housing project on Plot 1 Table 13. Urban criteria for the development of Plot 2, Option 1 Table 14. Functional typology of the construction area, Plot 2, Option 1 Table 15. Typology of residential apartments by buildings on Plot 2, Option 1 Table 16. Typology of residential apartments in total, Plot 2, Option 1 Table 17. Construction surfaces in accordance with the construction intervention, Plot 2, Option 1 Table 18. Estimation of unit construction / demolition costs, Plot 2, Option 1 III

8 Table 19. Estimation of costs for the development of Plot 2, Option 1 Table 20. Urban criteria for the development of Plot 2, Option 2 Table 21. Functional typology of the construction surface in Plot 2, Option 2 Table 22. Typology of residential apartments, Plot 2, Option 2 Table 23. Construction surfaces in accordance with the construction intervention, Plot 2, Option 2 Table 24. Estimation of unit construction / demolition costs, Plot 2, Option 2 Table 25. Estimation of costs for the development of Plot 2, Option 2 Table 26. Comparison of the urban criteria for the development of Plot 2 Table 27. Comparison of the functional typology of the construction surface, Plot 2 Table 28. Comparison of construction surfaces according to construction interventions, Plot 2 Table 29. Comparison of typology of residential apartments, Plot 2 Table 30. Comparison of costs for the development of Plot 2 Table 31. Data for the calculation of the % exchange of the Municipality, Plot 2 Table 32. Municipal investment for the realization of the social housing project, Plot 2 Table 33. Private investment for the realization of the social housing project, Plot 2 Table 34. Minimal % exchange of the Municipality, Plot 2 Table 35. Number of apartment units benefited in % exchange, Plot 2 Table 36. Cost of the financial benefit of the Municipality from the social housing project on Plot 2 List of Figures Figure 1. Site plan of the proposed plots, Plot 1 (West) and Plot 2 (East) Figure 2. Plot 1, settlement of the Roma community, Shkozë Figure 3. Plot 2, facility of the former Kombinati i Autotraktorëve Figure 4. Scheme of the project realized in PPP Figure 5. Management cycle of the project realized in PPP Figure 6. Legal framework of the realization of the project in PPP Figure 7. Site plan of Plot 1 Figure 8. Site plan of Plot 2 Figure 9. Fragment from the Engineering Geological map, South Tirana Figure 10. Stratigraphic and lithological description of the project area Figure 11. Location of the project area within the General Road Plan, MMP Figure 12. Road access and traffic orientation of Plot 1 Figure 13. Road access and traffic orientation of Plot 2 Figure 14. Interconnection to the main water supply pipeline, Plot 1 and 2 Figure 15. Interconnection to the electricity network, Plot 1 and 2 Figure 16. Site plan of construction on Plot 1 Figure 17. Site plan of construction on Plot 2, Option 1 Figure 18. Master plan of the development of Plot 2, Option 1 Figure 19. Site layout of Plot 2 in the current situation Figure 20. Site plan of construction on Plot 2, Option 2 Figure 21. Master plan of the development of Plot 2, Option 2 Abbreviations DCM Decision of Council of Ministers IV

9 DMC GLDP IPRO LGU MMP MUD NHA PPP RA UNDP URI Decision of Municipal Council General Local Development Plan Immovable Property Registration Office Local Government Unit Municipal Master Plan Ministry of Urban Development National Housing Agency Public Private Partnership Republic of Albania United Nation Development Program Urban Research Institute V

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11 FEASIBILITY STUDY FOR IMPROVING HOUSING CONDITIONS OF VULNERABLE POPULATIONS IN TIRANA MUNICIPALITY BACKGROUND Urban Research Institute supported from UNDP has assisted the Ministry of Urban Development and the Municipality of Tirana in the preparation of a Feasibility Study of one or two areas within the territory of the municipality potentially available for the construction of housing for social purpose. The objective of the Study derives from the needs for social housing identified in the Social Housing Strategy , itself informed from a thorough needs assessment and situation analysis of the sector carried out at the national level form UNDP, prior to the elaboration of the Strategy. The right for housing is one of the essential human rights. Lack of shelter and basic services may have negative effects on future generations and the family in general. It impacts the education level of the children by reducing school attendance and their academic performance, hindering as a result their possibility of improving their living conditions in the future. Policies for social housing aim at responding to the need of those groups with restricted financial possibilities, who cannot afford to buy or rent proper and decent housing from market, and are consequently, on these terms, excluded from the society. In Albania, the traditional scheme of financial support, although a growing one, has proved not appropriate to the socio and economic challenges showing other priority needs that come as result of unemployment or as result of the need for more development opportunities. In the area of social housing has emerged the need for re-evaluating the traditional scheme and go beyond providing and managing housing stock including more wide and complex tasks, such as management of neighbourhoods, social services of renters with specific needs and a wider inclusion of vulnerable groups. The incorporation of the private sector into the schemes within the Public Private Partnerships framework, is an important opportunity for further consideration. In addition, the actual method of allocation of social housing among applicants needs re-evaluation in order to better prioritise specific vulnerable groups, such as Roma and Egyptian community, orphans, elderly people who have been disadvantaged in the traditional scheme of social housing compared to other vulnerable groups. In spite of these acknowledgements, it seems that for some further time the implementation of new policies on social housing, beyond those traditional, will remain challenging, as these are enshrined in the current laws regulating the sector. The Study at hand contains the assessment of legal, technical, and financial requirements for the future implementation of social housing programs that are affordable, beside the existing socio-economic conditions of related communities. The financial capacities of the Municipality have been considered and recommendations have been provided based on a comparative evaluation of social housing options. 1

12 DESCRIPTION OF WORK The Study consists of the following analysis: I. Current situation analysis of social housing and future trends II. Legal feasibility analysis III. Technical feasibility analysis IV. Financial feasibility analysis The analysis of the current situation of social housing makes a close observation, to the extent that data are available, on the following elements of social housing: i. profile and number of applicants and beneficiaries, ii. financial resources allocated for existing and future social housing programs iii. demographic and socio-economic characteristics in all administrative units of Tirana iv. dwelling conditions in all administrative units of Tirana v. market prices for rent and for sale of apartments in the city of Tirana It identifies those vulnerable groups of the municipality of Tirana mostly in need of social housing programs and the most disadvantaged through the current programs provided in the Municipality. Data of the Municipality of Tirana and INSTAT Census 2011 have been utilized, while the findings are qualitative. The legal feasibility analysis sets out laws and procedures, decisions of the government, instructions and institutional regulations in power relevant to social housing, policies, instruments and financial resources that support the implementation of the proposed projects. The technical feasibility analysis presents the architectural and engineering elements of two proposed projects for housing, including detailed information on infrastructure: water supply, waste water service, energy supply, along with a description of the geomorphology, geology, hydrogeology and seismicity characteristics of the proposed areas. Ways to increase green space, recreational, social and cultural opportunities have been explored, along with road and transportation access, employment and proper social and health support. Under this point of view, proposed projects consider the proximity to commercial and employment opportunities and efficient public transportation lines. The financial feasibility analysis contains cost estimations of the proposed projects for social housing. Estimations derive from the analysis of construction cost items according to prices defined by the Decision of Council of Ministers No. 629, as of 15/07/2015, On the approval of technical manuals of prices in construction works and their technical analysis. CMD No. 354, date , On the approval of the manual on tariffs for urban planning services, projection, supervision and maintenance, along with Instruction No.3, On the approval of the average construction cost of residential buildings from the National Housing Entity, in

13 The two areas considered for the proposed social housing projects are assets of the Municipality of Tirana, which the Municipality has designated for future development of social housing projects. Considering the complexity of the Study, URI has engaged a group of professionals from various fields of interest in order to provide a multi dimensional analysis, necessary to fulfil the objective of the project. On the preparation of the Study, the team of consultants dedicated from URI, composed of Mr. Edlir Vokopola, team leader, Mrs. Entela Kallamata, senior economist, Mr. Sokol Ngjelina, architect and other experts of this organization, worked close with experts of the Municipality of Tirana, MUD, and UNDP. The Urban Research Institute is particularly great full to Mr. Arbjan Mazniku, Deputy Major of Tirana Municipality, Mr. Joni Baboçi, Director of Urban Planning and Architecture, Mrs. Besjona Dede, Director of Economic Support and Housing, Mrs. Anisa Seferi, Director of Asset Management and Mrs. Jonida Halili, Director of Financial Management. The team of URI acknowledge the support received from representatives of MUD including Mrs. Aida Seseri, Director of Urban Services and Housing, Mrs. Diana Jahja and Mrs. Ermira Tomço, as well as the representatives of UNDP including Mrs. Entela Lako, Program Officer and Mrs. Anduena Shkurti, Project Coordinator. 3

14 EXECUTIVE SUMMARY After the Administrative and Territorial Reform implemented in the country, social housing programmes of the Municipality of Tirana will have to cover not only the needs of the city but also of the administrative units. The Municipality of Tirana does not so far have a consolidated database on homeless persons within its territory: their number, socio-economic characteristic and their geographical distribution; another factor limiting the assessment of needs for social housing is the lack of time series data, without which it is not possible to carry out a thorough analysis of trends of social housing in the municipality of Tirana. Under these limitations, the socio-economic analysis of the municipality is based on data from the Municipality and the socio-economic indicators of the Census 2011, which describe the situation at this moment of time, wherefrom qualitative conclusion on the actual situation may be drawn. In the Municipality of Tirana, for the time period , the total number of applicants for social housing is 13,200. Around 14.5 % of them have average monthly income less than 10,000 ALL and around 39 % have average monthly income of less than 30,000 ALL. Most of the applicants around 76.9 % apply for the soft loan social housing program (low-cost housing). Beneficiaries of social housing programs constitute 8.8 % of the total number of applicants Based on the data of 13,200 applicants: a. 177 applicants are persons with visual difficulties, b. 420 are invalids paraplegic and quadriplegic, c. 519 are work invalids, d. 46 are war invalids, e. 262 are orphans, f. for the remaining 11,776 applicants the category is not specified, while they constitute 89.2 % of the total number of applicants; considering this limitation, the analysis in this regard is not accurate. Due to the limitation in point f, the analysis of beneficiaries and applicants cannot be accurate, consequently, it is not possible to exactly assess the needs and prioritize categories of vulnerable groups. The Municipality should invest on the improvement of the database and assign the belonging categories to around 88% of the applicants, in order to assess their needs for social housing programs and prioritize. Within vulnerable categories, the larger gap beneficiaries-applicants is currently of persons with visual difficulties, 3.4 %, while the lower gap is of persons with the status of war invalid, 6.5 %. Within social housing programmes, the larger gap beneficiaries-applicants is currently for low-cost housing, 5.8 %, while the lower gap is for rented social housing, 13.1 %. 4

15 The number of applicants for social housing programs in the municipality of Tirana has decreased in total with 26.6 %, from 2005 to 2016, while it has been increasing since The socio-economic situation in the administrative units is difficult as compared to the city of Tirana at this moment of time, suggesting there is a large vulnerable group with incomes insufficient to benefit from the social housing programs currently provided from the Municipality. The low level of education of the majority of inhabitants in these units may be a disadvantage for vulnerable individuals who need to fulfil the documentation required for applications for social housing programs, what limits the assessment of the number of homeless, at the same time suggesting the need for information and assistance for application procedures from the Municipality, not only at the moment an interested person comes at the municipal office. Summary of proposals Plot 1: Settlement of Roma community, Shkoza Development of Plot No. 1 could generate a number of about 173 residential units, the average value of a residential unit is estimated at about 2,58 million ALL / unit or equivalent value of 18,8 thousand EUR, while the average cost for m 2 construction is estimated at 44,626 ALL / m 2 or equivalent value of 351 EUR / m 2. Taking into consideration the financing from the municipality budget or by a combination from the municipal budget and the support from the state budget (or combination with the support from a soft loan scheme or commercial loan as guaranteed by the Central Government), this project can be developed within the medium-term budget framework of about 1 to 3 years. In this context, the municipality should plan around 1.0 million EUR / year for the realization of the project in the 3-year time frame. Another possible option for the development of this project is its realization within the format of a PPP scheme. Development of Plot 1 through designating the surface of Plot 1 in exchange of an calculated % of construction surface that will be constructed over this land is one of the most interesting options for the municipality of Tirana. Based on the calculations as below, the municipality will receive a minimum value of 29% of the construction surface developed on Plot 1, or around 2,719 m 2 residential area and about 257 m 2 of service area. From the residential area, the municipality can benefit in exchange around 50 residential units out of a total of 173 that it can be built in this complex. Plot 2: Facility of the former Kombinati i Autotraktorëve From all elaborated options, the Consultant would recommend that the municipality could see with a particular interest development of Plot 2 according to Option 1. As it is detailed below, this option shall be based on the adaptations of existing facilities of former Kombinati 5

16 Autotraktorëve into dwelling units and service and social units; implementation of this option would generate about 237 apartments, the average value of a residential unit is estimated at 2.5 million ALL / unit, average cost per m 2 at 37,710 ALL / m 2. The total fund necessary for the development of this option is 666,7 million ALL or the equivalent of 4,87 million EUR. This project may be developed in the framework of a mid term budget of about 3 years, with an annual average budget financing of about 222 million ALL / year or the equivalent of million EUR / year. Alternatively, the municipality can see as a development possibility of this project in a PPP scheme as estimated under Option 2 with 6 storeys. This project will be realized through public auction to determine private entity that offers the highest % of the exchange. As the bases for the beginning of the auction would be the calculated percentage of 32%. According to this Alternative, the municipality will finance a total of 127,7 million ALL or 932 thousand EUR (excluding the amount to the effect of the land plot value). This amount will go for partial development of infrastructure and the construction of the social - cultural facility. This project can be developed in the context of a medium-term budget time term of 3 years, with an average annual budget of about 43 million ALL / year or the equivalent of 311,000 EUR / year. From the implementation of this Option the municipality would benefit around 121 residential units, in addition to social - cultural facilities and green land surfaces. Regardless of the chosen option, the relatively high construction cost and the recreational, social and cultural facilities and other areas completing the residential buildings, make the complex appropriate only for the program of rented social housing and those vulnerable groups who can afford the level of rent determined from the Municipality and the additional costs related to living in a community. 6

17 A. SUPPLY AND DEMAND ANALYSIS OF SOCIAL HOUSING IN TIRANA 1. Existing needs for social housing in Tirana 1.1. Applicants 1 In the Municipality of Tirana, for the time period , the total number of applicants for social housing is 13, Data of the time period show that around 91.4 % of social housing applicants do not own a house, 21.7 % live in poor housing conditions, and 58.6 % have small families 3. Assuming that approximate ratios apply also in , the number of social housing applicants who do not own a house is 12,061; the number of those living in poor housing conditions is 2,867; the number of those having small families is 7,735. Data on categories of vulnerable individuals and groups where the social housing applicants belong are very limited; the current database of the Municipality of Tirana provides only the following categories, which are those available for check on the application form currently in use: o persons with visual difficulties, o invalid paraplegic and quadriplegic, o work invalid, o war invalid, o orphan, o other categories. Based on this data of 13,200 applicants: a. 177 applicants are persons with visual difficulties, b. 420 are invalids paraplegic and quadriplegic, c. 519 are work invalids, d. 46 are war invalids and e. 262 are orphans. f. For the remaining 11,776 applicants the category is not specified, while they constitute 89.2 % of the total number of applicants; considering this limitation, the analysis in this regard is not accurate. The percentage of applicants by the above categories are presented in the following graph. 1 The source of data presented in the paragraph is the Municipality of Tirana, unless otherwise specified. 2 This is the number of applicants as of October 2016, while it is changing as applications are very dynamic. 3 Data and definitions from UNDP (2014): Social Housing Albania: A needs Assessment, pg

18 Graph 1. Applicants by vulnerable categories, municipality of Tirana, % 3.2% 3.9% 0.3%2.0% Applicants by vulnerable categories 89.2% People with visual difficulties Invalid PQ Work invalid War invalid Orphan Other Source: Municipality of Tirana Data of the time period show that around 61.1 % of applicants for social housing have average monthly income above 30,000 ALL, 33.2 % of them have average monthly income above 50,000 ALL, and around 14.5 % have average monthly income less than 10,000 ALL 4. Assuming that approximate ratios apply also in , in the following graph is represented the number of applicants belonging to three levels of average monthly income: less than 10,000 ALL, between 30,000 and 50,000 ALL, and above 50,000 ALL. Graph 2. Applicants by average monthly income, municipality of Tirana, Applicants by average monthly income 14.5% 24.4% 10,000 ALL - 30,000 ALL 61.1% > 30,000 ALL < 10,000 ALL Source: UNDP (2014) Applicants of the time period have applied for three social housing programmes of the Municipality of Tirana: o low-cost housing, o rented social housing, o land equipped with infrastructure for housing construction. 4 Data from UNDP (2014): Social Housing Albania: A needs Assessment, pg

19 The social housing programme most applied for is low-cost housing, with 76.9 % of applicants; a very limited number applies for land equipped with infrastructure for housing construction, around 0.8 %. The graph below presents this distribution of social housing applicants according to the programmes currently available. Graph 3. Applicants by social housing programme, municipality of Tirana, % Applicants by social housing program 22.3% 76.9% Low-cost housing Rented social housing Land with infrastructure for housing construction Source: Municipality of Tirana Based only on available data of this period on the categories of vulnerable individuals and groups who have applied for social housing, the smallest number of applicants for low-cost housing, rented social housing and land equipped with infrastructure for housing construction belong to war invalids, while the largest number of applicants for the same programs belongs to work invalids. Nevertheless, these conclusions remain very much inaccurate due to the lack of data on the vulnerable category of the majority of applicants Beneficiaries The total number of beneficiaries of a social housing programme in the Municipality of Tirana, in the time period is 1,160; they constitute 8.8 % of the total number of applicants. Data on the categories of vulnerable individuals and groups where beneficiaries belong are again limited to the following ones: o persons with visual difficulties, o invalid paraplegic and quadriplegic, o work invalid, o war invalid, o orphan, o other categories. Referring to these categories, 32 beneficiaries are work invalids, 21 are invalids paraplegic and quadriplegic, 15 are orphans, 6 are persons with visual difficulties, and 3 beneficiaries are war invalids; on the other hand, the category is not available for the remaining majority of 1,083 9

20 beneficiaries, who constitute 93.4 % of the total number. The graph below shows the relationship across different categories in percentage, wherefrom becomes clear the very low ratio of beneficiaries belonging to the above categories. Graph 4. Beneficiaries by vulnerable categories, municipality of Tirana, % 1.8% 2.8% 0.3%1.3% Beneficiaries by vulnerable categories 93.4% People with visual difficulties Invalid PQ Work invalid War invalid Orphan Other Source: Municipality of Tirana The main social housing programmes of the Municipality of Tirana from which applicants have benefited are the following: o housing bonus, o low-cost housing: 3% interest loan, o loan from ECB, o rented social housing. A total of 585 beneficiaries have benefited the program of low-cost housing, 385 the programme of rented social housing, 119 of housing bonus, and 69 have benefited a loan from ECB. The programme applicants mostly benefit is, again, the low-cost housing. Data in percentage are presented in the following graph. Graph 5. Beneficiaries by social housing programme, municipality of Tirana, % Beneficiaries by social housing programmes 33.2% 5.9% 10.3% 50.4% Other Housing bonus Low-cost housing ECB loan Rented social housing 10

21 Source: Municipality of Tirana The above data refer to beneficiaries as applicants for whom a social housing programme has been approved from the Municipality of Tirana. However, not all these beneficiaries eventually accept the programme, on the contrary, data reveal a significant difference between the two groups, with beneficiaries who accept a programme offered from the Municipality being much less than the total number of beneficiaries. On this regard, data of the time period show that less than 30 % of beneficiaries of the low-cost program have accepted it. Within vulnerable categories, data show that beneficiaries are consistently only a small part of the applicants for social housing programmes: of applicants with the status of persons with visual difficulties benefit 3.4%, of applicants with the status of invalid paraplegic and quadriplegic benefit 5 %, of applicants with the status of work invalid benefit 6.2%, with the status of war invalid 6.5%, and of applicants with the status of orphans benefit 5.7%. Beneficiaries of other categories constitute 5.9 % of applicants of other categories. The relationship is presented in the diagram below, describing more clearly the above ratios, in numbers. Graph 6. Beneficiaries - applicants by vulnerable categories, municipality of Tirana, ,000 10,000 8,000 6,000 4,000 Beneficiaries-Applicants by vulnerable categories 11,776 2, People with visual difficulties 1,083 Invalid PQ Work invalid War invalid Orphan Other Beneficiaries Applicants Source: Municipality of Tirana Based on the available data, within vulnerable categories, the larger gap beneficiariesapplicants is currently of persons with visual difficulties, 3.4 %, while the lower gap is of persons with the status of war invalid, 6.5 %. Within social housing programmes, data show that beneficiaries are, again, only a small part of the applicants. In the time period there are 2,938 applicants for the programme of rented social housing and 385 beneficiaries, constituting a ratio of 13.1 %; for the 11

22 programme of low-cost housing, there are 10,153 applicants and 585 beneficiaries, constituting a ratio of 5.8 %. Graph 7. Beneficiaries - applicants by vulnerable categories, municipality of Tirana, Beneficiaries-Applicants by social housing programmes 10,000 10,153 8,000 6,000 4,000 2, , Low-cost housing Rented social housing Beneficiaries Applicants Source: Municipality of Tirana Based on the available data, within social housing programmes, the larger gap beneficiariesapplicants is currently for low-cost housing, 5.8 %, while the lower gap is for rented social housing, 13.1 %. 2. Trend of needs for social housing in Tirana 2.1. Population trends The population of the municipality of Tirana increased 61.6 % in 2014 with the implementation of the new Administrative and Territorial Reform, whereby a large number of communes merged with the city of Tirana. After the Reform, the population trend has been generally stable, with a total increase of 2.5 % during the time period The population in the city of Tirana, with its 11 administrative units, has also followed approximately the same trend. 12

23 Graph 8. Trend of the population , municipality of Tirana Population trend of the municipality of Tirana 1,200,000 1,000, , , , , before ATR Source: Municipality of Tirana, Civil Registry 2.2. Applicants trends The number of applicants for social housing programs in the municipality of Tirana has decreased in total with 26.6 %, from 2,168 in 2005 to 1,591 in However, the trend over time has not been linear: after a period of continuous decrease until 2008, the number of applicants has increased almost continuously until 2013, although without reaching the level of 2005; a sharp decrease has followed in 2014, and after this year the number of applicants has increased again to the current level. The following graph further describes and illustrates the trend. Graph 9. Trend of applicants for social housing , municipality of Tirana Applicants for social housing over ,200 2,000 1,800 1,600 1,400 1,200 1, Source: Municipality of Tirana 13

24 Considering only the available data of this time period on categories of vulnerable individuals and groups who have applied for social housing, the lowest number of applicants for low-cost housing, rented social housing and land equipped with infrastructure for housing construction come from war invalids, while the largest number of applicants for the same programs come from work invalids. Conclusions on these indicators remain, nevertheless, not accurate due to the lack of data on the greatest part of the applicants Beneficiaries trends The number of beneficiaries of social housing programs in the municipality of Tirana has increased in total with 208 %, from 125 in 2005 to 385 in This increase has largely occurred in 2016, with significant difference with the previous years; omitting year 2016, data reveal a large total decrease in the number of beneficiaries with % from 2005 to 2015, with the only comparatively high level of beneficiaries occurring during 2010, 2011 and The graph below further describes and illustrates the trend. Graph 10. Trend of beneficiaries of social housing , municipality of Tirana Beneficiaries of social housing over Source: Municipality of Tirana In relation to social housing programs of the Municipality of Tirana offered from 2005 to 2016, the change in number of beneficiaries over the time period reflects also the change in relevance of each specific program. Namely, the housing subsidy program has been active from 2005 until 2009, after which year, almost no beneficiaries have been registered. The low-cost housing program has been active from 2005 until 2013, reaching its highest beneficiaries level in 2012, after which, a sharp fall follows in the last year. From an ECB loan applicants have benefited from 2005 until 2012, in decreasing levels. Finally, the rented social housing program has been first active in 2016, the only one after a period of 2-3 years. The graph below illustrates the above description. 14

25 Graph 11. Trend of beneficiaries by social housing programs , municipality of Tirana Beneficiaries by social housing programs in Housing bonus Low-cost housing ECB Loan Rented social housing Source: Municipality of Tirana 2.4. Socio-economic characteristics of the municipality of Tirana The most recent official and complete data of socio-economic indicators for the municipality of Tirana are available from INSTAT Census The socio-economic situation of the municipality at this moment of time, as derived from these data, may directly and indirectly suggest trends of needs for social housing in Tirana in the future. Thus, following data of Census 2011, the city of Tirana has a high level of unemployment of 22.5 % of the labour force; a considerable part of the families, around 33 %, receive pensions as their main source of income, while around 4.5 % of them receive social aid and other similar social payments. Unemployment among youth is very high, at around 47.2 %, a phenomenon which, if lasting over time, may turn into a serious disadvantage of future income possibilities of youth, and consequently, increase their need for social services. Graph 12. Unemployment rate, municipality of Tirana Unemployment rate 60% 53.9% 52.3% 50% 40% 30% 20% 22.5% 31.3% 40.1% 30.7% 15.3% 39.5% 23.5% 31.2% 32.2% 18.2% 27.4% 10% 6.0% 0% 15

26 Source: INSTAT, Census 2011 The rate of unemployment in the administrative units of the municipality of Tirana is high, the highest reaching around 54 % and 53 % in Kërrabë and Zall-Herr respectively, around 40 % in Shëngjergj and Petrelë, and between % in the units of Farkë, Kashar, Vaqarr, Kashar e Dajt. The rate is lower in the remaining administrative units, although significant, with the exception of unit Zall-Bastar, which rate of unemployment according to data is 6 %. Graph 13. Families with social assistance and benefits as source of income, municipality of Tirana Families with social assistance and benefits as source of income 50% 42.5% 40% 34.8% 30% 26.7% 20% 10% 4.5% 7.3% 5.3% 3.3% 5.2% 4.8% 9.8% 4.0% 4.6% 13.2% 8.0% 0% Source: INSTAT, Census 2011 In the administrative units of Kërrabë, Zall-Bastar and Shëngjergj the part of families whose main source of income is social assistance and other benefits varies from 26.7 % to 42.5 % of the total number of families, the range being high. In the remaining units, the part of these families is comparatively lower. Similarly, the part of families whose main source of income is pensions is also considerable in the administrative units if Tirana. The highest level is 49 %, in Kërrabë, while the lowest level in Zall-Bastar, 13.5 %. Graph 14. Families with pensions as main source of income, municipality of Tirana Families with pensions as main source of income 60% 50% 40% 30% 20% 32.9% 48.9% 20.4% 13.5% 25.8% 30.6% 20.7% 30.1% 22.8% 40.0% 20.1% 18.5% 38.0% 23.2% 10% 0% 16

27 Source: INSTAT, Census 2011 Another significant perspective of understanding the current socio-economic conditions in the municipality of Tirana is the level of education of its inhabitants. Within the city, the major part of the inhabitants have completed upper secondary, university and post university education, however, in the administrative units the major part of the inhabitants have completed only primary and lower education, practically only the obligatory level. In some of these units, this part exceeds 70 % of the inhabitants. Graph 15. Primary and lower secondary education completed, municipality of Tirana Primary and lower secondary education completed 80% 70% 60% 50% 40% 30% 25.7% 55.1% 73.6% 70.7% 64.0% 56.0% 37.2% 68.2% 56.3% 69.9% 40.1% 45.4% 51.9% 70.3% 20% 10% 0% Source: INSTAT, Census 2011 After the Administrative and Territorial Reform implemented in the country, social housing programmes of the Municipality of Tirana will have to cover not only the needs of the city but also of the administrative units. The Municipality of Tirana does not so far have a consolidated database on homeless persons within its territory: their number, socio-economic characteristic and their geographical distribution; another factor limiting the assessment of needs for social housing is the lack of time series data, without which it is not possible to carry out a thorough analysis of trends of social housing in the municipality of Tirana. Under these limitations, the socio-economic analysis of the municipality is based on socioeconomic indicators of the Census 2011, which describe the situation at this moment of time, wherefrom qualitative conclusion on the actual situation may be drawn. These indicators illustrated graphically above, describe a difficult socio-economic situation in the administrative units as compared to the city of Tirana at this moment of time, suggesting there is a wide vulnerable group with incomes insufficient to benefit from the social housing programs currently provided from the Municipality; the low level of education of the majority of inhabitants in these units may be a disadvantage for vulnerable individuals who need to fulfil the documentation required for applications for social housing programs, what limits the assessment of the number of homeless, at the same time suggesting the need for information 17

28 and assistance for application procedures from the Municipality, not only at the moment an interested person comes at the municipal office Policy directions of the Social Housing Strategy The Social Housing Strategy of the Ministry for Urban Development determines as its main strategic priority for the 10 following years to support the most disadvantaged of vulnerable groups, changing the orientation of current social housing programs toward groups with income insufficient to afford any of the programs currently provided from municipalities in the country. The following strategic objectives have been determined: (1) Consolidation of data on social housing and local capacities; (2) Improvement of the legal, institutional and regulatory framework; (3) Strengthening of financial instruments to the support of the most disadvantaged groups; (4) Extension and reorientation of social housing programs. Indicators on the municipality of Tirana presented in this analysis lead to this same conclusion on social housing within its territory, which means that local and central long-term policies in line with one another may constitute a reinforcing factor toward the fulfilment of the respective strategic objectives. The proposal set out in the Feasibility Study, which draws on this conclusions, serves the most disadvantaged groups in terms of the income level Policy directions on social housing of the Municipality of Tirana The most negative indicator of social housing in the Municipality of Tirana is the very low rate of beneficiaries in relation to applicants. The Municipality has designed several programs which aim at maximising this rate in the future within the municipal financial possibilities. One of them is based on the public private partnership for rented social housing. The Program for Social Credit in Public Private Partnership (PPP) aims at utilizing free capacities of unsold apartments of private constructing companies, who agree to offer them for the rented social housing program. Private constructing companies would offer for rent their unsold apartments situated in the suburb areas of the city at an affordable price. The amount of rent will be partly paid partly by families and partly by the Municipality. Through this program, the Municipality intends to support the vulnerable groups with limited incomes. In the next 3 years, within the mid-term budget, the Municipality will continue to support families without shelter through two main programs: 1. Social renting bonus; and 2. The new initiative on Soft loans for low cost social housing 18

29 3. Existing supply for social housing in the Municipality of Tirana 3.1. Dwelling conditions In the time period constructions for residential purposes have taken place at various extents across former communes, which merged into the municipality of Tirana with the Administrative and Territorial Reform. The administrative unit Farkë has the largest number of residential buildings relative to the total number for this time period, around 43 %, whereas administrative units Shëngjergj the smallest number of around 2.5 %. In the city of Tirana, around 17.5 % of all residential buildings have been constructed during e Graph 16. Residential buildings constructed from 2001, municipality of Tirana Residential buildings contructed from % 42.9% 40% 30% 20% 10% 0% 17.5% 11.4% 31.4% 3.1% 26.4% 2.5% 24.2% 24.5% 17.0% 32.7% 30.3% 13.8% 14.7% Source: INSTAT, Census 2011 The majority of the residential buildings in these administrative units are houses 5 ; the number of apartments is considerably smaller, however, there are variations across them. The largest number of residential apartments relative to the total number of residential buildings belongs to Tirana, 12 % of residential buildings, in Farkë around 9.8 %, in Kashar around 8.2 % and in Dajt around 5.3 %. The remaining administrative units have e smaller number of residential apartments, while the largest number of houses. 5 Following the definition of INSTAT for house: detached house, semi-detached house, row or terraced house. 19

30 Graph 17. Residential apartments constructed from 2001, municipality of Tirana Residential apartments constructed from % 12% 10% 8% 6% 4% 2% 0% 12.0% 3.4% 0.6% 0.2% 0.2% 0.1% 9.8% 0.1% 1.6% 0.3% 8.2% 5.3% 2.4% 0.1% Source: INSTAT, Census 2011 The administrative units with the largest number of residential apartments are those with the largest number of families living on rent; in Kashar around 15.8 % of the total number of families, in Tiranë around 13.5 % of families, in Farkë around 9.9 % and in Dajt around 9.4 %. In the remaining units, the number of families living on rent is comparatively very small. Graph 18. Families living on rented apartments, municipality of Tirana 20% Families living on rented apartaments 15% 13.5% 15.8% 10% 9.9% 9.4% 5% 0% 2.1% 0.6% 1.0% 0.8% 2.4% 0.4% 0.1% 0.6% 0.9% 0.6% Source: INSTAT, Census 2011 The administrative units of the municipality of Tirana have a considerable number of vacant dwellings, which constitute residential houses or apartments not yet sold. In Kashar, which is one of the units with the largest number of residential apartments, around 43 % of residential buildings are vacant; in Dajt around 39.7 % of them, and in Farkë around 36.8 % of them. In 20

31 Tiranë, in spite of the large number of residential apartments, the number of vacant dwellings is 15.2 %, which is not particularly large in comparison to the above rates. The units Shëngjergj, Petrelë, Vaqarr and Zall-Herr have the lowest rates of vacant dwellings in relation to the total number of dwellings. Graph 19. Vacant dwellings, municipality of Tirana Vacant dwellings 50% 40% 36.8% 43.0% 39.7% 30% 20% 10% 0% 15.2% 13.9% 7.8% 15.3% 7.5% 1.1% 11.1% 6.9% 23.6% 19.9% 25.1% Source: INSTAT, Census 2011 The characteristics of the dwellings in the municipality of Tirana are described from the following indicators. While the average size of the household varies from 3.5 to 4.9 members, the average number of rooms per household varies from 2.8 to 3.4 rooms. In no case, does the average number of rooms exceed the average size of the household, which means that in all the administrative units every member of a family disposes on average of less than a room. Graph 20. Average number of rooms per household, municipality of Tirana Average number of rooms per household Source: INSTAT, Census

32 The city of Tirana in particular has the smallest average size of household with 3.5 members and also the smallest average size of number of rooms per household, 2.8. The average number of rooms per family member is 0.8, constituting the highest average in the municipality. Graph 21. Average size of the household, municipality of Tirana Average size of household Source: INSTAT, Census 2011 Concerning infrastructure, the indicators on dwelling conditions in the municipality of Tirana are generally positive; in every administrative unit, only a small number of housing units have no toilet facilities, also only a small number have no water supply system; however, lack of water supply infrastructure is relatively frequent, and in several administrative units at considerable levels.. Graph 22. Housing units with no water supply system, municipality of Tirana Housing units with no water supply system 30% 25% 25.8% 20% 15% 10% 5% 0% 0.9% 2.9% 7.5% 6.3% 1.7% 4.1% 4.0% 2.1% 8.5% 1.5% 1.5% 0.4% 3.6% Source: INSTAT, Census

33 A special case concerning dwelling infrastructure conditions is the administrative unit of Zall- Bastar; here the above indicators are at a considerable larger level, indicating poor dwelling conditions in terms of water supply and toilet infrastructure. On the contrary, dwellings lacking this infrastructure in the city of Tirana constitute only a small part of the total number. Graph 23. Housing units with no toilet facilities, municipality of Tirana Housing units with no toilet facilities 12% 10% 10.6% 8% 6% 4% 2% 0% 0.2% 0.0% 0.4% 1.5% 1.3% 0.4% 0.3% 1.9% 1.4% 0.3% 0.3% 0.0% 1.9% Source: INSTAT, Census Housing market in Tirana The following table presents sale and rent market prices of residential apartments in Tirana, of modules 1+1 and 2+1, comprising areas of the city and administrative units with the largest construction of residential apartments. The east area of the city, including city s regional unit Shkozë is among the cheapest areas, along with the west area, represented here with Misto Mame buildings, Malajziane buildings and buildings around Unaza e Re. In general, dwellings of module 2+1 are sold at a lower price then module 1+1; the opposite is observed for renting, in which case, the price of rent is higher for module 2+1 and cheaper for module 1+1. Table 1. Average market prices for sale and rent of residential apartments, municipality of Tirana Municipality of Tirana Price for sale EUR/m² Price for rent EUR/m²/month City of Tirana: East Area Shkozë City of Tirana: North Area 23

34 Municipality of Tirana Price for sale EUR/m² Price for rent EUR/m²/month Don Bosko Laprakë Former train station Area 1, Hipoteka Area 830 City of Tirana: West Area Yzberisht (Misto Mame) Buildings Malajziane 525 Unazë e Re City of Tirana: South Area Komuna e Parisit Former Botanic Garden 662 1, Administrative units Dajt Farkë Kashar 108 Source: Market price from the newspaper Çelësi, December Financial funds available of the Municipality of Tirana The Municipality of Tirana offers currently three main social housing programmes: 1. Low-cost housing: soft loan 2. Housing subsidy Soft loan for low-cost housing program offers the partial payment of the interest on the house loan of applicant families. The Municipality agrees with a second level bank on offering house loans on lower interest percentages, therefore likely more affordable for families and the Municipality. Through this program, the Municipality aims at meeting the social housing needs of vulnerable groups of relatively high income. The financial fund planned for the midterm period is 95,000,000 ALL, the complete amount to be expended in If the Municipality will implement this program, it will be 24

35 committed to it for at least the next 20 years, starting form 2018, with a financial fund of approximately the same level. Housing subsidy is a programme supporting families who live in rented apartments in the municipality of Tirana and cannot financially afford the market house rents. Eligible applicants for a housing subsidy are: a. expropriated families, b. families affected from public investments, c. families settled in the area of the Sharra landfill, d. families settled in the River bank area, e. families who have occupied public institution premises (kindergartens, schools etc.), f. families with social difficulties (blood feud, severe health problems etc.). For the time period , the Municipality plans to support with housing subsides a total number of 200 families in the new territory of Tirana, including the administrative units. The source of the fund are the annual own revenues of the Municipality. Table 2. Planned total funds for housing subsidies, , Municipality of Tirana Number of beneficiaries (families) Budget ALL/month Budget ALL/year Source: Municipality of Tirana 200 3,374,000 40,488, ,374,000 40,488, ,374,000 40,488,000 TOTAL 121,464,000 The financial fund planned for the time period is 81.6 % higher than the previous midterm period; specifically the financial fund for housing subsidies over years is presented in the following graph. Graph 24. Financial funds for housing subsidies, , municipality of Tirana 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5, ALL Financial fund for housing subsidy, *

36 Source: Municipality of Tirana * from the realised budget; from the planned budget 3.4. Existing investment projects for social housing During 2016 the Municipality of Tirana initiated the implementation of 2 investment projects for social housing, which aim at meeting the need of around 120 households of the Roma community, who live in poor living conditions or unsafe residential buildings. Rehabilitation of Roma Community Settlement in Shkozë This Project is intended to be developed in the current settlement in Shkoza, a reginal unit of the city of Tirana, of 60 household of the Roma Community. The Project consists of the rehabilitation of existing buildings and the provision of services and road Access for the 60 households. It is extended in a surface of 6,900 m 2 wherefrom a residential area of around 2,095 m 2 will be derived, of modules: 1+1, 2+1, 3+1 and studio apartment. The total cost of this Project has been estimated 83,000,000 ALL, with an average unit cost of 39,637 ALL/m 2 or 291 EUR/m 2. The total cost consists of the following items: i. 60,000,000 ALL rehabilitation of buildings and recreation areas; ii. 23,000,000 ALL supporting infrastructure, comprising: residential buildings, supporting service infrastructure and recreation areas. The Project is co-financed from the Government of Italy as part of the Italian Albanian Debt for Development SWAP Agreement (IADSA), and the Municipality of Tirana Rehabilitation, Construction of Buildings in former Cantonment 8837 in Shkozë The Project will be developed on the territory of the former Cantonment No.8837, located northeast of the city of Tirana, in the unit of Shkoza, street "Lekë Gjiknuri". The object has an overall surface of 16,707.1 m 2. In this corridor are situated 5 buildings, 4 of which will be rehabilitated into residential buildings of 20 units, while 10 additional buildings will be constructed, of a total of 40 units; overall, under the Project 60 housing units will be constructed, where 61 households of the Roma community will be accommodated. Housing modules will be of the types: 1+1, 1+2 and 1+3. The surface of the area to be developed is around 11,699 m 2, while the overall projected residential building is around 2,428 m 2. The total cost of this Project has been estimated 83,000,000 ALL (not including cost of the supporting infrastructure), of an average unit cost of 33,000 ALL/m 2 or 242 EUR/m 2. 26

37 The Project will be financed from the Municipality of Tirana. Additional Works for the rehabilitation of the river Lana bank in the southern part of the area will be financed from UNDP. B. FEASIBILITY OF THE PROPOSED SOCIAL HOUSING PROJECTS 4. The program of rented social housing in Public Private Partnership Tirana Municipality as part of its mission for social housing sector, has decided to create and enable the implementation of projects for social housing to support groups with limited resources and specific living conditions who cannot access the private construction market, and neither can build with what they earn or through their opportunities. To achieve this mission, the municipality has elaborated a long-term goal that aims to addressing social housing problem through: Enabling housing opportunities for all homeless categories in order to achieve a sustainable solution to increase living standards in the community, improve behaviour of the community coexistence in collective accommodation conditions and to strengthen the management capacities of municipality to implement projects with different funding sources, including the development of PPPs. Figure 1. Site plan of the proposed plots, Plot 1 (West) and Plot 2 (East) 27

38 To facilitate the realization of this mission and long-term objectives, the municipality has planned to engage efficiently its capital resources in various forms including the possibility of developing Public and Private Partnership financing scheme. In this way, the Municipality believes that it will simultaneously increase the value of its own public asset and fulfil social housing needs by engaging direct public and private investments. To address these needs, the municipality of Tirana has thought and is planning to activate the "Social Housing Rental Program". Tirana Municipality has estimated that currently has two public assets or land plots, respectively Plot No. 1 with an area of 6,600 m 2 and Plot No. 2 with an area m 2 and existing facilities which are built on the land of plot No. 2, which can be used for the purpose of developing social housing programs. Figure 2. Plot 1, settlement of the Roma community, Shkozë 28

39 Figure 3. Plot 2, facility of the former Kombinati i Autotraktorëve These plots are specified as: Plot 1: Current settlement of Roma community in Shkozë, Tiranë with an area of 6,600 m 2 Plot 2: The territory of the former Kombinat Autotraktorëve, with an area of 27,105 m 2, actually occupied partly by the Company of Spare Parts for Vehicles. The photos above illustrate the current state of two land plots proposed for this project. The municipality plans to use these public assets for the purpose of social housing programs through engaging in Public Private Partnership projects or to engage other financial opportunities that will make possible the efficient management of these assets and realization of the objectives in the housing sector Project implementation in PPP The Municipality has analysed that using a PPP scheme might create a real possibility to realize a rental based Social Housing Programme. A Public Private Partnership in the area of social housing might be realized as in the following scheme. 29

40 Figure 4. Scheme of the project realized in PPP As used in this study and in general terms, with the PPP instrument, the municipality understands forms of cooperation between public authorities and the private sector which aims to raise funds, build, refurbish, manage or maintain a public infrastructure or providing a public service. As it has become understandable in this Feasibility Study, the PPP aims at re-operation or revitalization of public assets for the purpose of housing and other public services to the community. Zbatimi i kontrates Publikimi i projektit dhe dokumentave Monitorimi Post vleresimi Ekzekutimi Objekti i projektit Vleresimi ekonomik Vleremi i interesit publik Struktura menaxheriale Planifikimi Ftese per ankand Rivleresim i Interesit Publik Vleresim i impakteve Negocimi Kontratat Informimi Kuadri legal dhe financiar i kontrates Percaktimi i termave dhe klauzolave Propozimet Dokumentimi Dokumentat Specifikat teknike & financiare Rivleresim i situates Indikatoret e perzgjedhjes 30

41 Figure 5. Management cycle of the project realized in PPP The management of a PPP project cycle will include, planning steps, information, preparation of technical documents, procurement and bid evaluation, contract negotiation and execution of the project. At overall, the life cycle for the implementation of this project must be deployed in five stages as follows: 1. The initial phase, planning, evaluation of public interest and feasibility of the project; 2. Information, impact assessment and project implementation; 3. Invitation for auction, procurement, evaluation of bids, documentation of best bid and announcement of the winner; 4. Contract Negotiation; 5. Implementation, supervision and monitoring of the project. To realize the Renting Social Housing Program with Pubic Private Partnership (PPP) instrument, the municipality will make available public properties or assets (plots) as above specified, which will be equipped with infrastructure with public investments 6. Financing of equipment with infrastructure of the proposed land will be accomplished in part with funds from the municipal budget, funds from the state budget through the unconditional transfer or with destination to social housing, and partly (for the infrastructure of the sewer and road network on housing function) from private investor. Once the stage of Feasibility Study is completed, the municipality needs to organize open discussions on the proposed project with stakeholders who may be, but not limited to: Chamber of commerce and businesses interested in this scheme; Association of the Builders; Association of Architects; Representatives of civil society Within this stage, the executives of the municipality will seek from the Municipal Council the approval of the project in principle, the management instrument of the public assets and financing resources; to open the road for organizing the competition for the design and the construction of the residential complex and the services to be provided in for social housing purpose. The following Feasibility Study for the purpose of developing two proposed land plots will include: (i) legal analysis and legal procedures; and (ii) technical and economic analysis. 6 Equipment of the plots with infrastructure is a legal prerequisite determined in DCM no. 35, date , On the procedures and forms of selling public land equipped with infrastructure for market purposes. 31

42 5. Legal feasibility of the social housing projects Legal assessment in this study shall consist in the analysis of the legal context and the legal possibility for the realization of a Public Private Partnership scheme or other forms or resources for financing construction of social housing for renting purposes for the municipality of Tirana in either one or two land plots that have been designated for the project (Plot 1 and Plot 2) Juridical and factual property status Under this analysis it has been considered that the process for transfer of proposed immovable properties designated for the project has happened and are already registered in the IPRO in the name of the Municipality of Tirana. For this purpose it is necessary to specify that the land plots are under ownership of Municipality and without any limitation in use, which have been received based on a special Decision of Council of Ministers. The analysis will consider as given the fact that development of the proposed plots has been approved as such in the General Local Development Plan (GLDP). If conditions are not met as above specified, then the municipality should: 1. Carry out the transfer of these assets owned by the municipality with a special Decision of the CM; 2. To verify that over the properties are not placed limitations regarding the utilization and alienation for public needs. This means that the property is free and can be used for public purposes and alienated by the decision of the municipal council without restrictions. 3. To confirm the availability of assets from the Agency for Treatment Properties that on the municipal property there is no legal claims for refunding and is not intended for compensation. 4. To obtain a certificate of ownership from IPRO Tirana, after completing registration procedures. The municipality has conducted a detailed study for the area, which has been approved by the municipality as part of the GLDP of municipality. The study defines the area with residential purpose by combining residential with commercial and social facilities, as well as other ancillary facilities, including roads, streets, public parking, and greenery. Currently the land plot or Plot no. 1, which is located close to the existing municipal social housing complex in Shkoza is free and without any restriction. However, the municipality has drawn up a project to develop this land through a low-cost housing project for Roma community. While, the other land plot or otherwise Plot No. 2 specified as the territory of the former Kombinat Autotraktorëve is occupied by buildings of this facility which are currently 32

43 administered by the "Company of Spare Parts for Vehicles ". The enterprise is a state entity with an independent budget (self - financed) under a double dependence from the Tirana Municipality and the Ministry of Economic Development, Tourism and Entrepreneurship. Three of the four facilities of this enterprise (former foundry of ferrous metal (1), former foundry of cast-iron (2) and former factory of spill precision (1), are not in use, while one of them and specifically one of the former facilities of foundry of ferrous metal, is currently used as a mechanical factory from the Company of Spare Parts for Vehicles Legal support Local Government Units (LGUs) are created and operate on the basis of the Constitution of the Republic of Albania and of the Law 139/2015 "On local self-government". Thereby LGUs should be responsible for the rights and obligations in civil and legal field the same as for all other legal either state or, private entities (e.g. to buy / to sell, to enter into agreements and contracts, to sue and be sued, to obtain loans, etc.) 7. Legal basis established by the Constitution is supplemented with other specific laws. For this reason, the analysis will include the following laws: 1. Law no. 139/2015 "On local self-government", 2. Law no dt '"On social programs for housing for the residents of urban areas. "; amended by law no. 9719, dated , amended by law no. 54/2015 "On Social Housing programs", and: 3. DCM no. 35, dated , "On the procedures and forms of selling the land equipped with infrastructure for market purposes"; 4. Instruction no. 6, dated , "The methodology for calculating the surface of housing for market purpose of land equipped with infrastructure". 5. Law No Dt "On the transfer of immovable property of the state to local government units" 7 For an accurate description, see the following paragraph on The rights of a legal person. 33

44 6. Civil Code of the Republic of Albania; Law no. 139/2015 "On local self-government" The LGUs are thereby public legal persons and as such they have the right to participate in civil and legal circulation. Article 4: The basic principles of local self-government Item 3 of the preceding article reinforces the constitutional provision on the right of the LGUs as legal persons. In this sense LGUs become effective in terms of administrative and civil rights to act and function as any other legal private or public person. Article 9: The rights and responsibilities of local government units Article 9, point 1.6 "The right of a legal person": As a legal person, the municipality has and Constitution of RA: The Constitution defines the principles and main dispositions with regard the bases for functioning of LGUs: Article 13 Local government in the RA is established based on the principle of the decentralization of the power and is exercised according to the principle of local autonomy. Article 111, item 1 Local government units have the status of legal persons Article 113, item 1/b Municipal councils and regional councils: b) exercise the rights of ownership and administer indipendently the revenues they create and exercise the right to undertake economic activities. In this point of view, the municipality of Tirana is a public juridical person and decideds on an indipendant way the way to administer its own properties, and with regard to this project, dedication of its own properties for the purpose of developing social housing programs. may exercise all the rights set out in the Civil Code of the Republic of Albania and other legislation in force, including: a. the right to conclude contract; b. the right to establish other legal persons; c. the right to bring a civil suit; 34

45 d. the right to keep accountability; e. Other rights to perform the functions on the basis and in accordance with laws and regulations. Types of contracts that can be used by LGUs and as they are foreseen in the Civil Code may be as follows: a. Selling/Buying (Article 705) b. Exchange (Article 757) c. Donation (Article 761) d. Emphyteusis (Article 784) e. Rent (leasing) Article 801 / Article 849 f. Entrepreneurship (Article 850) Properties of local government units. Legal acts with which LGUs exercise their right to property and which are currently enacted, include the; - Law no dated "For immovable property of the state", and the - Law no. 8744, dated "On the inventory and transfer of immovable property of the state to local government units". Under the legislation, the Municipal Council is the only organ in the local government which may decide to exercise proprietary rights in connection with the creation, use or property transaction. The properties of the local government units are registered in the "Register of immovable properties" (in accordance with Law 33/2012 "On the registration of immovable properties"). Registration in IPRO is carried out only by the decision of the council of the local government unit. The function of Social Housing Law No. 139/2015, Article 24, points 1 and 2 stipulate that: Municipalities are responsible for: - Construction and housing management of social housing, in the manner prescribed by law. In this context, Tirana Municipality will get committed for the purpose of fulfilling this function on the basis of the specific law no. 9232, dated , amended by Law 9719, dated and Law 54/2012 for social housing programs "(Law on Housing) 35

46 The Law on Housing is the specific law which gives full legal basis and allows the Municipality of Tirana to use the land for social housing purposes. This law is followed by DCM no. 35 dated "On the procedures and forms for the sale of land equipped with infrastructure for market purposes", as well as the Regulation No. 6 on the application of item 15 of this Decision. This package provides procedures on the basis of which, Tirana municipality can realize the project for the construction of social housing in partnership with the private sector Pursuant to the Law, "" On the social housing programs ", as amended, the municipality operates in one of three ways provided respectively with: 1. The programme of rental social housing; 2. The program of low-cost housing; 3. The program of equipping the land with infrastructure. Financing of the above can be done from the following sources provided for by Article 30 of the Law: - With state budget funds; - With donor contributions; - With own funds or local budget; - In private public partnership. Law on Housing provides for the obligation but also the availability for using municipal own land plots for the purposes of housing function. In a specific way, this is provided as for the article 7 Construction of social housing. "Each municipality provides that within the territory under its jurisdiction, land plots are designated for construction of a sufficient number of social housing, based on the number and the composition of the population, and in accordance to social groups defined as in section 5 of this law". Article 22, Equipment of land with infrastructure specifies that: The equipment of land plots with infrastructure, depending on the location, price and its ownership, is made for social housing purposes or for sale in the private market. The programs of equipping the land plots with infrastructure are financed and managed by municipalities. Article 35, Functions of municipalities defines that: For the management of social housing programs, municipalities under this law, perform the following functions: a. Identify needs for housing, according to the programs developed under this law for population under their territorial jurisdiction; b. Design 10-year programs for housing and three-year projects based on the financial resources they possess; 36

47 c. Secure construction sites and equipping land with infrastructure, based in implementation of housing programs, developed under this law; Following the above reasoning, we would conclude that Municipality has not legal barrier to exercise its right as owner for using proposed land plots. In particular the availability of properties (land plots) by the Municipality of Tirana for the purpose of social housing function, according to The Law on Housing, is provided as one of the forms that can be used to address and solving part of the housing problems Legal Procedures Taking into consideration the above legal analysis and based on the economic analysis, it is identified that one of the most interesting options for the Municipality of Tirana to address housing problems, is to make available land plots as of Plot No. 1 with about 6,600 m 2 and Plot no. 2 with around m 2 in exchange to the % of construction surface that will be acquired / constructed on these land plots form a private investor. Based on these findings / definitions, possible legal ways to finalize the project will therefore consists in two alternatives: The difference among two legal alternatives stands on the legal basis for the procedure / ways to be followed in the selection of private entity. Choosing an alternative in this case is the competence of the Municipal Council, which is the only authority to exercise the right of ownership for properties of the Municipality. Both alternatives stem from the same law and specifically from the Law on Housing and differ only in reference with specific articles from which two alternatives take or become effective. Alternative 1 The first alternative is based on the Article 22/1 of the Law on Housing. As it is above specified, this article has triggered the design and approval of DCM Mr. 35/2007 that establishes procedures and the form for the sale of land equipped with infrastructure, which is carried out through a public competition (an auction). The winner of the competition will be the bidder who offers the highest price in exchange of land equipped with infrastructure. The CMD defines also the manner of determining the initial price at which the auction will open for offers. According to item 14 of the CMD 35/2007, the price may be paid in monetary value ore in exchange of a % equivalent with the proposed price. Taking into account the proposed project from the Municipality of Tirana, the provision set out in letter b) of item 14 of DCM No.35 / 2007, is the most convenient solution for the Municipality and would be the most efficient way from the economic and legal perspective to be applied by Municipality. The legal solution as above specified, will be implemented by the Municipality of Tirana, by completing conditions as set forth from the Instruction no. 6 dated , on "Oriented methodologies for calculation of the surface for housing for purposes of sale of land equipped 37

48 with infrastructure". This Instruction completes the legal basis and would open the way for Municipality to finalize the process, following rules as set out in these legal acts. The Instruction no. 6 defines all procedures and steps that the Mayor of the Municipality and the Municipal Council shall take to proceed with the implementation of the Project. Alternative 2 The second alternative is the solution when the CMD 35/2007 and the relevant guidance in the implementation of this CMD does not apply. This alternative assumes that the Municipality of Tirana takes the implementation of the project on a PPP format, based on Article 7 and 35 of the Law on Housing, as amended by Law 9719, dated and Article 757 of the Civil Code (exchange contract), and the Decision of the Municipal Council. Article 7 establishes the authorization and the obligation for municipalities to make available land to build social housing for rent. Based on the articles as above, the Municipality of Tirana will dispose the relevant land for construction of "a sufficient number of flats". On the same philosophy, even the Article 35 of the Law on Housing as amended by Law 9719, sets out the functions of the municipality in the implementation of this law. Both articles will also provide the Municipality of Tirana to dispose the land plots in exchange of a % a construction surface. Given that the Municipality is a legal person with the ability to enter into e contract according to the Civil Code ; in this case will find application «an exchange contract» relevant to article 757 of the Civil Code. As a conclusion, the final result of this alternative will have the exchange of land plot surface of the Municipality of Tirana with the greatest amount of construction surface otherwise social housing, expressed in % or in m 2, in the facilities that will be constructed on these land plots by the PPP project. 38

49 1. General legal bases: - Constitution of RA - Civil Code of RA - Law 139/2016 Local Self government - Law 9232/2004 On social programs for housing of habitants in urban areas, amended. - Alternative 1 Alternative 2 2. Specific legal bases: - Article 22, Item 1, Law 9232/ DCM 35/ Instruction Nr. 6, dt Procedural legal basis: - Instruciton - DMC - Order of Mayor - Administrative acts of evaluation commission of the auction 2. Specific Legal basis: - Article 7 and Article 35, Law 9232/ Article 757 of Civil Code - DMC On approval of rules and procedures and documentation for realization of PPP. 3. Procedural legal basis: - DMC - Order of Mayor - Administrative acts of evaluation commission of the auction Figure 6. Legal framework of the realization of the project in PPP In order to realize the whole procedure up to the signing of the exchange contract, the Council of the Municipality shall determine the manner and procedure of realization of the project together with choosing the procedures that are required for the selection of the entity that will acquire the right to realize the project. In the case presented under the second alternative, which essentially provides exchange and not sale, in principle, does not apply the provisions of Law 9874/2008 "For public Auction" used when dealing with the sale of public assets. However, to maintain transparency and to maximize public benefits, the Municipality of Tirana has to adapt to the maximum where it is possible, the procedures of public bidding in the selection of the entity, which will implement the project and will provide the higher %, of construction surface, therefore the highest 39

50 profitability for the number of apartment units to be held by the municipality through the exchange program. For both alternatives are applicable the following procedures: 1. The mayor will represent to the Municipal Council: a) The proposed project idea including basic documents such as the Feasibility Study including other complementary documentation ; b) A draft decision of the Municipal Council For the approval of rules and procedures and the complementary documentation for the realization of the PPP project ; c) Composition of the Commission for the Evaluation of Bids; d) A document that authorize the Mayor to start the procedures for the selection of the entity that shall implement the project 2. Mayor of Municipality based on MCD as above shall: e) Starts the procedures for the preparation of auction (File Auction: Auction Process based on MCD) f) After the selection of the winners of the auction, conducts negotiations on the final details of the contract and the project that is part of the Contract; (The contract contains all the provisions on the rights / obligations of each party and the respective deadlines of the project.) g) Represents to the Council for approval the "Contract for Implementation of PPP" part of which is also the exchange contract for the land that will be set available for this project. 3. Municipal Council approves: h) The "Contract for Implementation of PPP"; i) Authorize the Mayor to conclude the contract and monitor its implementation; 4. The Mayor of Municipality shall: j) Conclude a contract with the winner entity; (After notarization, contracts become effective and its implementation begin); k) Monitor the implementation of the contract (the phase of project development); l) At the end of the project and contract, submit to the Council final approval of the project implementation phase. 5. The Municipal Council at the end of the Project shall; m) Approves the completion of implementation of the project; n) Authorize the Mayor of Municipality to register to ZRPP in Tirana, apartments and other surfaces obtained by "exchange contracts" o) Approves, the conclusion of the fulfilment of the contract as above, allowing the 40

51 winning subject to register to ZRPP Tirana, apartments and other facilities obtained by the winning subject pursuant to a contract with the Municipality of Tirana. As a conclusion of this analysis, we explain that the realization of the PPP project for social housing in the Municipality of Tirana is possible to be carried out according to both alternatives, and the final choice is full authority of the Municipal Council. 6. Technical and financial feasibility of the social housing projects Technical and economic analysis of the Project involves assessing the location / positioning of land plots proposed for this project, the assessment of geological, hydrogeological, topographic and construction costs including the apartments to be used for social housing programs and the supporting infrastructure. The total amount of costs will include the costs for the detailed design of the project for implementation of the project. The cost analysis of the development of the proposed areas shall be based on the analysis of construction cost items according to prices defined by the Decision of Council of Ministers No. 629, as of 15/07/2015, On the approval of technical manuals of prices in construction works and their technical analysis. CMD No. 354, date , On the approval of the manual on tariffs for urban planning services, projection, supervision and maintenance, along with Guideline No.3, date On the approval of the average construction cost of residential buildings from the National Housing Entity, in Location of Assets / Land Plots Designated for the Projects Plot 1: The settlement of Roma community in the area of Shkoza in Tirana Land Plot 1 is located in the south of social housing block in Shkoza, which was built with funds from the CEB. The plot represents an unoccupied free land plot, which is divided by social housing complex by a road (north) whereas in the south is bounded by the new ring road of Tirana which is under construction. 41

52 Figure 7. Site plan of Plot 1 Plot 2: The facilities of the former Kombinati i Autotraktorëve, Tiranë The former Kombinat Autotraktorëve in Tirana is transformed into a group of public and private enterprise. A part of these structures (as shown underlined in the plan below) is owned / used from Tirana municipality. Ownership status is verified and based on the ownership documents include certificate and property cartel issued by ZRPP. This part of the Kombinat includes the following facilities; 1. Former unit of aluminium foundry, 2. Former unit of caste-iron foundry, and 3. Former unit of the precise spill. The area includes several other buildings which have served as warehouses for the other units. 42

53 Figure 8. Site plan of Plot 2 The structures were built in 1978 and was designed to function by the year Building no. 1 (at the entrance of the facility) is still functional as the mechanical unit managed by the "Company of Spare Parts for Vehicles ". The Company is a non-state funded or selfsufficient one that is reported to having double dependence from the Ministry of Economic Development, Trade, Tourism and Entrepreneurship and the Municipality of Tirana. Geological and hydrogeological description of the area Both proposed land plots, being close to each other, are situated on the same geological and hydrogeological formations. Geomorphology From the Geomorphological point of view, the area under study, is included in "Hilly Morphological Unit" of the region of Tirana. This area lies in the south-east part of the capital city or in the northern area of Erzen range of hills of Sauk - Freat Farka - Linza. Hills have a height above sea level that varies from 150 to 375 m, with a slope from 5-10 Geology 43

54 In geological terms, the area is characterized by surface layers composed of "clay, sand, gravels" which is followed by layers of " alevrolito molassic sandstone rocks, N1 3 (d) ", under which are placed "massive molassic sandstone rocks with a combination of thin clay layers, N1 3 (c) of the Neogene period. (See section on the map geological - engineering in the following figure). Figure 9. Fragment from the Engineering Geological map, South Tirana Hydrogeology In hydrogeological terms, the study area is part of the molassic and flishes rock complex. In relation with the water retention these formations are poor. Generally waters in this complex are linked with sandstone and conglomerates. A few rare water sources with lesser yield up to 1 l / sec are found in this rock formations. The ground water levels in these formations meets under 15 m. Seismicity On the basis of seismic regionalization of all land in Albania, as it estimated by the Seismic Institute in Tirana, the land plots in the study are part of the area with an intensity of 7 degrees of Mercalli scale. 44

55 Figure 10. Stratigraphic and lithological description of the project area Description of public infrastructure in the area The area selected for the development of the proposed project is positioned in such a way that it provides for easy access to road infrastructure, water supply discharge of waste waters and electricity supply. The following map shows the position of the study area within the road network of Local General Plan of the capital city. Figure 11. Location of the project area within the General Road Plan, MMP 45

56 Road access Regarding Land Plot No. 1, road access is realized through Ali Demi Street through the main entrance and exit from Social Housing Complex The circulation within the block will be done with a unique sense. The project proposes the extension of the road on the west side of the existing complex at the same standards of the entrance road. The project also proposes the possibility of expanding the access road on the west side. (See the General Plan, Scale 1: 1000). The entire complex, including the part in this study, has good road access through the developing in road as proposed in the General Local Plan of Tirana (GLP) and approved form Municipal Council. Figure 12. Road access and traffic orientation of Plot 1 46

57 Figure 13. Road access and traffic orientation of Plot 2 Water Supply and Sewerage Network Water supply will be realized through connection with 700 mm main pipeline of Selita. For further advancement the permission for a connection point will be require from the municipality to Water and Waste Water Company of Tirana. Alternatively, water supply can be done by using the network of the existing housing complex. 47

58 Figure 14. Interconnection to the main water supply pipeline, Plot 1 and 2 Currently the area lacks a sewage network and a main pipeline for collection and disposal of these waters. Consequently, the project proposes the connection of new buildings with the existing network of the housing complex and the construction of a new treatment plant so that used water of these complexes can be discharge clean in the river that crosses the southern part of the plot. Electricity Supply The substation of Uzina Traktori is located close to the existing housing complex and to the proposed Plots, which unit can serve as a connection points to the network of either 6 or 20 kw for the power supply of residential buildings proposed in this project. (See General Plan of Existing Network, Scale 1: 2500). Each land plot will have an electric cabin that will serve to all residential and service units to be built under this project. 48

59 Figure 15. Interconnection to the electricity network, Plot 1 and Feasibility of the social housing project on Plot 1 The consultant has proposed two different approaches to be applied for each one of land plots offered by the municipality of Tirana for this feasibility study. Urban criteria for the development of Plot 1 Because of the positioning, the Consultant has considered that land Plot 1 might be seen as a continuation of the territory where the existing social housing complex is developed with funding from the CEB. Consultant proposes that in this plot collective apartment buildings with 1, 4 and 6 residential storeys shall be constructed as presented in the Layout as follows. The plot will be developed based on the same criteria for the development as used for the existing housing complex. 49

60 Urban criteria for development of Plot 1 Surface of the land plot 6,600 m² Surface of the area occupied from construction buildings 1,903 m² Usage coefficient for development of the land plot 29% Total construction surface over the land 10,193 m² Construction intensity 1.54 Maximal height of the construction structures 20 m Green and recreation surface 2,197 m² Greening coefficient 33% Surface of roads, squares and parking lots (roads within the study area) 2,500 m² Roads and squares coefficient 38% Table 3. Urban criteria for the development of Plot 1 The entire territory of the plot is about 6,600 m 2, so, according to Option 1, the usage coefficient of land plot is estimated at 29 %, greening coefficient at 33 % and the road, sidewalks and public parking coefficient at 38 %, while the construction intensity is estimated at 1.54%. The surface 6,600 m 2 of Plot 1 constitutes the area under study for the development of the social housing project 8 ; internal roads of the area are not part of the study and their surface of 1,925 m 2 is considered outside the study area 9. Figure 16. Site plan of construction on Plot 1 8 The study area is marked out in the site plan on Figure 16 with red small-dotted lines. 9 The study area including internal roads are shown in the site plan on Figure 16 within a second larger frame marked out with red big-dotted lines. 50

61 On the basis of these development criteria, the functioning typology of the area offered in this plot, is presented in the following table. Functional typology of the construction area, Plot 1 Service facilities 880 m² Living Spaces 9,313 m² Total 10,193 m² Table 4. Functional typology of the construction area, Plot 1 By considering the functioning typology of the surface and on the basis of the proposed development criteria taking also in consideration the rates of housing for m 2 per resident 10, the construction and development of the proposed land plot will generate a number of apartments of about 173 residential units that can be divided into studios, apartments of and as in the following table: Typology of residential apartments, Plot 1 Studio Apartments 18 10% Apartments % Apartments % Total residential apartments % Table 5. Typology of residential apartments of the building on Plot 1 On the basis of the above organization, through the development of this complex, the municipality can provide housing for about 173 families in need within the rental social housing programs. Cost estimation for the development of Plot 1 The evaluation of the costs of construction for the development of Plot No. 1, is based on the unit cost of ALL / m 2 according the Instruction no. 3, dated , "On the approval of the average cost of housing construction by National Housing Agency for 2016", along with the criteria on urban development, the detailed plan and the ratios amongst construction, recreation, squares, streets, public parking surfaces etc. The other unit costs have been calculated referring to CMD 629, dated , also based on the current situation in the field 11. In the following table are presented the construction unit costs, including cost for housing construction, auxiliary facilities and infrastructure. 10 CMD No. 184, date , On housing norms for families benefiting from social housing programs 11 For instance: the unit cost for roads, squares, parking lots etc. accounts for the existing layers of the road s foundation. 51

62 Estimated unit construction costs of Plot 1 Construction unit cost/m² (Publication of the NHA) 38,881 ALL/m² Surfaces of internal roads (outside the study area) Surfaces of roads, parking lots and squares (roads within the investment area) 1,925 m² 4,425 m² Cost for roads, squares and parking lots 4,500 ALL/m² Greening cost 1,000 ALL/m² Sewerage network and water supply 2,000 ALL/m² Electric network 300 ALL/m² Telephone 100 ALL/m² Table 6. Estimation of unit construction costs, Plot 1 Based on unit costs as in the table above and the volume of construction works, including infrastructure construction costs and the designing and research costs, calculations are made to determine the entire value of the project, which is presented in the following table. The cost of water supply and sewerage, electric network and telephony infrastructure is calculated referring to the surface of roads within the study area, squares and parking lots of 2,500 m 2. On the other hand, the investment necessary to make functional the social housing project includes the internal roads of the area; on this basis the cost of road infrastructure is calculated referring to the surface of roads within and outside the study area, squares and parking lots of 4,425 m 2 ; this area is defined as the investment area. Estimation of costs for the development of Plot 1 A. Value of land 0 ALL B. Construction cost of buildings 396,314,033 ALL C. Total infrastructure cost 28,609,500 ALL Roads 19,912, ALL Water Supply and Sewerage 5,000, ALL Electric network 1,250, ALL Telephone 250, ALL 12 Cost is calculated by multiplying the surface of roads within the investment area, squares and parking lots (4,425 m 2 ) with the cost per m 2 of roads, squares and parking lots. 13 Cost is calculated by multiplying the roads, squares and parking lots (2,500 m 2 ) within the study area with the cost per m 2 of water and sewerage network. 14 Cost is calculated by multiplying the roads, squares and parking lots (2,500 m 2 ) within the study area with the cost per m 2 of electric installations, adding the total cost of the electric cabin of 500,000 ALL. 15 Cost is calculated by multiplying the roads, squares and parking lots (2,500 m 2 ) within the study area with the cost per m 2 of telephony. 52

63 Greenery 2,197, ALL D. Total cost of construction 424,923,533 ALL E. Study and design cost 22,661,008 ALL Urban study 480,000 ALL Design cost 14,639,466 ALL Supervision and takeover cost 7,541,543 ALL Total (A+D+E) 447,584,541 ALL Total (A+D+E) 3,267,040 EUR The average cost housing unit 2,587,194 ALL The average cost housing unit 18,885 EUR The average cost m 2 residential area 48,060 ALL The average cost m 2 residential area 351 EUR Table 7. Estimation of costs for the development of Plot 1 Including investments in infrastructure, cost for realization of the whole project on Plot 1 is estimated to the amount of 447,6 million ALL or equivalent value of 3,27 million EUR. For a number of about 173 residential units, the average value of a residential unit is estimated at about 2,58 million ALL/unit or equivalent value of 18,8 thousand EUR, while the average cost for m 2 construction is estimated at 48 thousand ALL / m 2 or the equivalent value of 351 EUR / m 2. Ways for financing the development of Plot 1 The way of financing this project is associated with the destination of residential units that can be built in this complex. The quality and unit costs (for a residential unit or unit cost for construction in m 2 ) suggest that these housing units can be designated for the program "rental of social housing" through "contract for social renting" to those homeless categories that are insolvent to ensure cheap accommodation in the housing market. In this context, it is not recommended that these apartments are used for people in need with limited economic opportunities, such as might be Roma, Egyptian community, etc. The development of the project on Plot 1 can be realized being funded from a single source or in combination including: - With own municipal funds, including funding from municipal budget, the state budget, loans or donations, or combination of these sources of funding, or in an exchange contract with private investor: 16 Cost is calculated by multiplying the green surface (2,197 m 2 ) with the unit cost per m 2 of greenery. 53

64 - With its funding, including funding from the municipal budget, the state budget, loans or donations, or a combination of funding from these sources, in contract with public entrepreneurs, including municipal public enterprise; - In public-private partnership with a private investor. A. Financing from the municipal budget or in combination with state budget and soft loans Taking into consideration the financing from the municipality budget or by a combination from the municipal budget and the support from the state budget (or combination with the support from a soft loans scheme or commercial loan as guaranteed by the Central Government), this project can be developed within the medium-term budget framework of about 1 to 3 years. In this context, the municipality should plan around 1.0 million EUR / year for the realization of the project in the 3-year time frame. B. Financing through the Public Private Partnership Another possible way to develop this project is its realization within the format of a PPP scheme. Chapters as above delineated, provide a detail realization scheme and detailed legal analysis for the development of the social housing program within a PPP format. Based on this observation, with regard legal aspects, the project can be developed based on either Alternative 1 or 2, depending on the choice of the Municipal Council. Given the legal analysis as above and based on the economic analysis, realization of "Alternative 2" is recommended as one of the most interesting options for the Municipality of Tirana. This alternative assumes that by providing the proposed land plot, the municipality of Tirana will receive in exchange a certain % of construction surface that will be acquired / constructed over this land plot. The % of exchange that the municipality shall receive through an open auction will be estimated on the following criteria: i. The land plot surface that will be in function of the project; ii. The sales price of the land and the land and the total value of the land plot according to DCM 89, dated "On approval of the land value map in RA"; iii. The value of the fund intervention in municipal infrastructure; and iv. The approximate exchange value, according to the free market in the respective area. Calculation of the % rate based on the following general information: Data for the calculation of the % exchange of the Municipality, Plot 1 Surface of the study area 6,600 m 2 Land plot surface subject of exchange 4,403 m 2 Total construction surface 10,193 m 2 Surface of social/service facilities 880 m 2 Residential area 9,313 m 2 Total investment cost (financed from the private investor) 396,314,033 ALL 54

65 Cost of the study - design (financed from the private investor) 15,119,466 ALL Infrastructure cost (funding from the Municipality) 20,644,500 ALL Infrastructure cost (funding from the private investor) 7,965, ALL Supervision cost (funding from the Municipality) 7,541,543 ALL Price of the land per m 2 according to value map as of ,878 ALL/m 2 Construction cost per m 2 48,060 ALL/m 2 Average selling price of apartments in the area (market estimation) 60,965 ALL/m 2 The average sales price of the service facilities 123,300 ALL/m 2 Table 8. Data for the calculation of the % exchange of the Municipality, Plot 1 On the basis of these data the respective private and public investment for the development of PPP project on Plot 1 will be summarized as follows: Municipal investment 135,987,250 ALL Land plot value 128,322,834 ALL Infrastructure investment 7,664,416 ALL Private investment 419,398,499 ALL Construction cost 396,314,033 ALL Infrastructure investment 7,965,000 ALL Design cost 15,119,466 ALL Total investment (public + Municipality) 592,346,375 ALL Table 9. Municipal and private investments for the realization of the social housing project, Plot 1 Taking into consideration the above data, the % of the exchange which the municipality will benefit from the project will be calculated as a % of investment of the municipality in relation to the total investment of the project. On the basis of this method, the municipality will receive a minimum value of 29 % of the construction surface developed on Plot 1. This % will constitute the lowest base from which the municipality will open public bidding for the development of the PPP project. % exchange of the Municipality, Plot 1 Threshold of the % of exchange of Municipality 29% m 2 residential area over % of exchange 2, m 2 service area over % of exchange Table 10. Minimum % exchange of the Municipality, Plot 1 The municipality will receive a minimum of around 2,719 m 2 residential area and 257 m 2 service area. From the residential area, the municipality can benefit in exchange around The financial contribution in infrastructure of the private investor constitutes 40% of the total cost of roads that afford access to the buildings. 55

66 residential units out of a total of 173 that it can be built in this complex. These residential units can be distributed as in the following table: Number of residential apartments from the % of exchange 50 Studio Apartments 5 Apartments Apartments Table 11. Number of residential apartments benefited from the % exchange, Plot 1 Given the market prices of private construction in the area under the study, the cost benefit of the municipality from this project will be about million ALL as compared to 173 million of current asset value, otherwise an added value of about 24.5 million ALL or as 17% of the initial investment (in exchange of the land plot value and investment in infrastructure). Total cost of the benefit 197,451,434 Cost of benefit from residential surface (on basis of the market selling price) 165,771,429 Cost of benefit from service surface 31,680,005 Difference between investment and total cost of the benefit 24,503,557 Table 12. Cost of financial benefit of the Municipality from the social housing project on Plot Feasibility of the social housing project on Plot 2 The consultant has proposed two different approaches as part of the feasibility study for the development of Plot No. 2, otherwise the land plot or former Kombinat Autotraktorëve, which include: 1. Partial demolition and conversion of some of the existing buildings of the former Kombinat Autotraktorëve for social housing and social - cultural facilities. 2. Demolition of all existing buildings of the former Kombinat Autotraktorëve and construction of new housing buildings, services and social - cultural facilities; Adoption of one or another approach will be subject to the decision-making of the municipality based on the scheme which provides the greater cost benefit from funding for the development of this project. 56

67 Feasibility of the development of Plot 2: Option 1 Urban criteria for the development of Plot 2: Option 1 Geological - engineering aspect, infrastructure and road access are the same as of those given for Plot 1. Urban criteria for the development of the Plot 2 under Option 1 are summarized in the following table. These criteria refer to the criteria for development the existing social housing complex. Urban criteria for development of Plot 2, Option 1 Surface of the land plot 27,105 m² Surface of land occupied with constructed buildings 6,450 m² Coefficient for land use 24% Total construction surface over the land plot 18,015 m² Construction intensity 0.67% Maximal height of constructed structure 14.5 M Recreational and green land surface 12,540 m² Greening coefficient 46 Surface of roads, squares and parking lots (roads within the study area) Surface of roads affording access to the area (outside the investment area) Surface of roads, squares and parking lots (roads within investment area) Roads coefficient 30% Table 13. Urban criteria for the development of Plot 2, Option 1 8,115 m² 2,344 m² 5,771 m² The entire territory of Plot 2 is about 27,1 ha, from where, under Option 1, the land use coefficient for the development of the plot is estimated at 24%, greening coefficient at 46% and the road, sidewalks and public parking coefficient at 30%, while intensity of construction at 0.67%. The total surface 27,105 m 2 of Plot 2 constitutes the area under study for the development of the social housing project; roads affording access to the area, of 2,344 m 2, are part of the study and their surface is included in the surface of roads within the study area 18. These definitions apply to both options for the development of Plot The study area is marked out in the site plan on Figure 17 with red dotted lines. 57

68 Figure 17. Site plan of construction on Plot 2, Option 1 In the layout above are defined existing facilities that will be demolished (yellow colour) as well as objects that will remain and which will be transformed into residential units. On the basis of the criteria for development, the function typology of the construction surface offered in this land plot, is presented in the following table. Functional typology of the construction area, Plot 2, Option 1 Service facilities 2,420 m² Living Spaces 15,595 m² Total construction area 18,015 m² Table 14. Functional typology of the construction area, Plot 2, Option 1 On the basis of criteria for the development and on the function typology of the construction surface, including rates of housing in m 2 / capita 19, the development of Plot No. 2 will generate a number of apartments of about 237 residential units which can be divided into, studio, apartment and as in the following table: Building Number of storeys Typology of apartments Number of apartments Building 1 2 Apartment Studio 8 19 CMD No. 184, date , On housing norms for families benefiting from social housing programs 58

69 Apartment Apartment Apartment Total Building 1 30 Building 2 3 Apartment STUDIO 9 Apartment Apartment Apartment Total Building 2 42 Building 2/2 Apartment STUDIO 3 Apartment Apartment Apartment Total Building 2/2 9 Building 3 3 Apartment STUDIO 9 Apartment Apartment Apartment Total Building 3 42 Building 4 3 Apartment STUDIO 9 Apartment Apartment Apartment Total Building 4 42 Building 6 4 Apartment STUDIO 4 Apartment Apartment Apartment Total Building 6 36 Building 7 4 Apartment STUDIO 4 Apartment Apartment Apartment Total Building 7 36 Total of the project 237 Table 15. Typology of residential apartments by buildings on Plot 2, Option 1 The following table summarizes the number of apartments as well as the surface that occupy those in the whole buildings. 59

70 Typology of apartments No. of apartments % surface Total surface (m 2 ) Apartment STUDIO 46 19% 1, Apartments % 5, Apartments % 7, Apartments % Total number of apartments % 15,595 Table 16. Typology of residential apartments in total, Plot 2, Option 1 Apartment surface (m 2 ) Given that this option provides for the adaptation of existing buildings, the maximum height of buildings will be at 14.5 m and the number of storeys will range from 2, 3 and 4. Figure 18. Master plan of the development of Plot 2, Option 1 As it is seen in the layout of the urban study above, in this land plot, 7 of existing buildings will be converted into buildings with residential destination and only one object will designated for social - cultural activities. Number of apartment units to derive from each building are given in the above table: 60

71 Cost estimation for the development of Plot 2: Option 1 Cost estimate for the development of Plot No. 2 according to Option 1 is based on the unit cost of ALL / m 2 according to Instruction no. 3, dated , "On the approval of the average cost of housing construction by National Housing Agency for 2016", in addition to other criteria on urban development, detailed plan and the ration amongst construction, recreation, squares, roads and public parking surfaces etc. Construction surfaces in accordance with the construction intervention, Plot 2, Option 1 Construction areas in structures that are adopted for housing 11,099 m² Construction areas in structures that are adapted for social facilities 2,420 m² Construction areas for housing in new structures 4,496 m² Construction areas for demolition 5,449 m² One-storey 4,400 m² Three-storey 345 m² Four-storey 704 m² Table 17. Construction surfaces in accordance with the construction intervention, Plot 2, Option 1 The cost assessment will be based on the list of the construction work as proposed in the above table, whereas in the following table are presented in a detailed way the construction unit costs, including the cost of housing construction, auxiliary facilities and infrastructure. Estimated unit construction / demolition costs of Plot 2, Option 1 Construction cost / m² for new construction (Publication of NEH) 38,881 ALL/m² Construction cost / m² for reconstruction and adaptation of these constructions into houses and social facilities 29,000 ALL/m² Construction cost / m² for the demolition of buildings of this typology 2,800 ALL/m² Construction costs for roads, squares and parking lots 4,500 ALL/m² Greenery cost 1,000 ALL/m² Water supply and sewerage network 2,000 ALL/m² Electric network 300 ALL/m² Telephone 100 ALL/m² Table 18. Estimation of unit construction / demolition costs, Plot 2, Option 1 On the basis of unit prices and volumes of works in accordance with the intervention way, construction cost of the housing complex, including the related infrastructure, are presented in the following table. The investment necessary to make functional the social housing project does not include the roads affording access to the area; based on this, their surface is considered outside the investment area. Consequently, the cost of road, water supply and sewerage, electric network 61

72 and telephony infrastructure is calculated referring to the surface of roads, squares and parking lots of 5,771 m 2, which represents the surface within the investment area. Estimation of costs for the development of Plot 2, Option 1 A. Land value 0 ALL B. Construction cost of buildings 582,117,176 ALL Cost for new building 174,808,976 ALL Cost for the demolition of existing buildings 15,257,200 ALL Cost for reconstruction and adaptation for social housing 321,871,000 ALL Cost for reconstruction and adaptation for social facilities 70,180,000 ALL C. Total infrastructure cost 52,859,900 ALL Roads 25,969, ALL Water supply and sewerage 11,542, ALL Electric network 2,231, ALL Telephone 577, ALL Greenery 12,540, ALL D. Total Construction Cost 634,977,076 ALL E. Cost study and design 31,778,900 ALL Urban study 1,300,000 ALL Design 20,116,074 ALL Supervision, takeover 10,362,826 ALL Total (A+D+E) 666,755,976 ALL Total (A+D+E) 4,866,832 EUR The average cost residential unit 2,517,198 ALL/unit Total EUR 18,374 EUR/unit The average cost in m 2 residential area 37,710 ALL/m 2 The average cost in m 2 residential area 275 EUR/m 2 Table 19. Estimation of costs for the development of Plot 2, Option 1 20 Cost is calculated by multiplying the surface of roads, squares and parking lots (5,771 m 2 ) within the investment area with the cost per m 2 of road, squares and parking lots. 21 Cost is calculated by multiplying the roads, squares and parking lots (5,771 m 2 ) within the investment area with the cost per m 2 of water and sewerage network. 22 Cost is calculated by multiplying the roads, squares and parking lots (5,771 m 2 ) within investment area with the cost per m 2 of electric installations, adding the total cost of the electric cabin of 500,000 ALL. 23 Cost is calculated by multiplying the roads, squares and parking lots (5,771 m 2 ) within the investment area with the cost per m 2 of telephony. 24 Cost is calculated by multiplying the green surface (12,540 m 2 ) with the unit cost per m 2 of greenery. 62

73 Including investments in infrastructure, as well as costs for the reconstruction and adaptation of the existing buildings, the total cost of all project implementation is estimated at 666,7 million ALL or the equivalent value of 4,86 million EUR. For a number of about 237 apartments, the average value of a residential unit is estimated at 4,87 million ALL / unit or the equivalent value of 18,374 thousand EUR, while the average cost per m 2 construction residential area, including the costs of infrastructure and recreational and green land surfaces, is estimated at 37,710 ALL / m 2 or the equivalent value of 275 EUR / m Feasibility of the development of Plot 2: Option 2 Urban criteria for the development of Plot 2: Option 2 Through the Option 2 for the development of Plot No. 2, the Consultant proposes the demolition of all existing buildings (except the facility no. 5) and the exploitation of all the territory to build new housing that will be used by the municipality for various programs of social housing. Figure 19. Site layout of Plot 2 in the current situation Under this Option, in this plot is proposed to demolish all existing buildings (except no. 5), while there will be construction of condominium apartment buildings with up to 4 storeys as shown in the following layout and urban development criteria. Urban criteria for the 63

74 development of the plot are based considering or referring to the criteria for development of the existing social housing complex. Urban criteria for the development of Plot 2, Option 2 Surface of the land plot 27,105 m² Surface of land occupied with structures 5,144 m² Land use coefficient 19% Total construction surface over land 18,156 m² Construction intensity 0.67% Maximal height of construction structures 14.5 m² Recreation and green land surface 12,400 m² Greening coefficient 46% Surface of roads, squares and parking lots 9,561 m² (roads within the study area) Surface of roads that afford access to the area 2,344 m² (outside Surface of the roads, investment squares area) and parking lots 7,217 m² Road and square coefficient 35% Table 20. Urban criteria for the development of Plot 2, Option 2 The entire territory of plot is about 27.1 ha, from where, according to Option 2, the land use coefficient for the plot is estimated at 19 %, greening coefficient 46 %, road and squares coefficient, sidewalks and public parking surface at 35 %, while the construction intensity at This option generates a total construction surface over the land of about m 2 in a construction area occupied by structures of m 2. According to Option 2, from all existing facilities will remain only Object 5, which is proposed to be transformed into a facility for social and cultural services for the residents of the Shkozë Administrative Unit. 64

75 Figure 20. Site plan of construction on Plot 2, Option 2 On the basis of these criteria for development, the typology of the function of the surface that is offered in this plot, is presented in the following table. Functional typology of the construction area, Plot 2, Option 2 Service facilities 2,420 m² Residential surface 15,736 m² Total construction area 18,156 m² Table 21. Functional typology of the construction surface in Plot 2, Option 2 On the basis of the functional typology, the suggesting organizational scheme of the constructions in this land plot, is presented in the following layout. 65

76 Figure 21. Master plan of the development of Plot 2, Option 2 As it is shown in the layout in Figure 16, in the construction site of the plot No. 2 is proposed the construction of 7 residential buildings of 4 storey, while existing facility no. 5 will be preserved and transformed into a social - cultural centre. The developed plot surface will be complemented with other recreational facilities such as playground and sports fields. From this organization will be obtained 252 residential units allocated as in the following table. Typology of the apartment units 4-storey building 6-storey building Number % Number % Studio Apartments 28 3% 42 12% Apartments % % Apartments % % Total number of residential apartments % % Table 22. Typology of residential apartments, Plot 2, Option 2 Construction intensity, land coefficient of the surface of construction site and other facilities that will be in the function of this complex, suggests for a high quality residential units that can be developed in the context of a public-private partnerships, based on an exchange contract between the municipality the private investor that would provide for the highest % of the exchange against the surface of the land and infrastructure investments provided by the municipality. 66

77 However, as part of this Option, could be considered the opportunity for a higher construction intensity by increasing the number of storeys from 4 up to 6. This will lead to an increased number of housing units from 252 to 378 apartments. This number of residential units would make the project more attractive to private investors and at the same time more beneficial for the municipality. Nevertheless, the decision-making to accept one or the other solution for this option will remain in the hands of municipal authorities. Cost estimation for the development of Plot 2: Option 2 The assessment of the construction cost for the development of Plot No. 2, is based on the unit cost of ALL / m 2 as of the Instruction no. 3, dated , "On the approval of the average cost of housing construction by National Housing Agency for 2016", in addition of the urban criteria, the detailed plan and the ration amongst construction, recreation, squares, roads and public parking surfaces etc. Construction surfaces in accordance with the construction intervention, Plot 2, Option 2 Option 2 4 storeys Option 2 6 storeys Construction surface in structures adapted for social facilities 2,420 2,420 m 2 Construction surface for buildings in new structures 15,736 23,604 m 2 Construction surface for demolition 9,449 9,449 m 2 One-storey 8,400 8,400 m 2 Three-storey m 2 Four-storey m 2 Table 23. Construction surfaces in accordance with the construction intervention, Plot 2, Option 2 The assessment cost will be based on the list of the construction works as proposed in the above table, whereas in the following table are presented in detail the construction unit costs, including the cost of housing construction, auxiliary facilities and infrastructure. Estimated unit construction /demolition costs, Plot 2, Option 2 Option 2 4 storeys Option 2 6 storeys Construction cost / m² (publication of NHA 2015), for new construction 38,881 38,881 ALL/m 2 Construction cost / m² for reconstruction and adaption of existing building into social facilities 29,000 29,000 ALL/m 2 Construction cost/m² for the demolition of buildings of this typology 2,800 2,800 ALL/m 2 Construction cost for roads, squares and parking lots 4,500 4,500 ALL/m 2 Greening cost 1,000 1,000 ALL/m 2 Sewerage network and Water supply 2,000 2,000 ALL/m 2 Electric network ALL/m 2 Telephone ALL/m 2 Table 24. Estimation of unit construction / demolition costs, Plot 2, Option 2 67

78 Based on above unit prices and volumes of works according by the intervention way, total development cost for the complex, including the related infrastructure, is calculated as presented in the following table. The investment necessary to make functional the social housing project does not include the roads affording access to the area; based on this, their surface is considered outside the investment area. Consequently, the cost of road, water supply and sewerage, electric network and telephony infrastructure is calculated referring to the surface of roads, squares and parking lots of 7,217 m 2, which represents the surface within the investment area. Estimation of costs for the development of Plot 2, Option 2 4-storey building 6-storey building A. Land value 0 ALL B. Construction cost of buildings (ALL) 708,468,616 1,014,384,324 Cost for a new construction (ALL) 611,831, ,747,124 Cost for the demolition of the existing buildings (ALL) 26,457,200 26,457,200 Cost for reconstruction and adaptation for social facilities (ALL) 70,180,000 70,180,000 C. Total infrastructure cost 62,697,300 62,697,300 Roads (ALL) 32,476,500 32,476,500 Water Supply and Sewage (ALL) 14,434,000 14,434,000 Electric network (ALL) 2,665,100 2,665,100 Telephone (ALL) 721, ,700 Greenery (ALL) 12,400,000 12,400,000 D. Total cost of construction 771,165,916 1,077,081,624 E. Study cost and design 38,315,964 52,999,918 Urban study (ALL) 1,300,000 1,300,000 Design (ALL) 24,430,536 34,121,946 Supervision, takeover 12,585,428 17,577,972 Total (A+D+E) (ALL) 809,481,880 1,130,081,542 Total (A+D+E) (EUR) 5,908,627 8,248,770 The average cost housing unit (ALL/ m 2 ) 2,933,738 2,803,972 The average cost housing unit EUR/ m 2 ) 21,414 20,467 The average cost m 2 residential area (ALL/m 2 ) 46,982 44,903 The average cost m 2 residential area (EUR/m 2 ) Table 25. Estimation of costs for the development of Plot 2, Option 2 For an average number of 4 storeys, including investments in infrastructure, greenery and recreation, study - design and supervision - takeover, as well as costs for the reconstruction and 68

79 adaptation of the object (no. 5) existing as an social - cultural object, the value of the realization of the whole project is estimated to the amount of 809,5 million ALL or equivalent value of 5,9 million EUR. For a number of about 252 apartments, the average value of a residential unit is estimated at about 2,9 million ALL / unit or equivalent value of 21,414 thousand EUR, while the average cost for m 2 /construction is estimated at 46,982 ALL / m 2 or equivalent value of 343 EUR / m 2 Unit costs are calculated by subtracting from the total value of the project, the cost for the construction of social - cultural object. While for an average number of 6 storeys, the value of the whole project implementation is estimated at 1,130 million ALL or the equivalent value of 8,2 million EUR. This project will generate a total of about 378 apartments, with the average value of a residential unit calculated at about 2,8 million ALL / unit or equivalent value of 20,467 thousand EUR, while the average cost per m 2 /construction for residential units is assessed to 44,903 ALL / m 2 or equivalent value of 328 EUR / m Comparative analysis of the options for the development of Plot 2 As discussed earlier in this chapter, the Feasibility Study for the development of Plot No. 2 or otherwise a part of the territory of the former Kombinat Autotraktorëve in Shkozë, Tirana, is designed in 2 options: 1. Option 1: Partial Demolition and the adaptation of the existing buildings of the former Kombinat Autotraktorëve for housing purpose and social facilities. 2. Option 2: The demolition of all the existing buildings of the former Kombinat Autotraktorëve and the construction of new facilities for housing. While Option 1 is based on the reconstruction and adaptation of existing buildings of the former facility, Option 2 is based on the demolition of 6 out 7 existing facilities, the construction of 7 buildings with destination apartment units with up to 4 or up to 6 storeys and converting of the object 5 in a structure designated for social and cultural activities. Adaptation of the object 5 to a structure with destination social and cultural activities is unchanged for both options of this project. The following table provide for the comparison of Options for the development of Plot 2 Comparison of the urban criteria for development Urban criteria for development Option 1 Option 2 Land use coefficient 19% 19% Construction intensity 0.67% 0.96% Greening coefficient 46% 46% Roads and public spaces coefficient 35% 35% Table 26. Comparison of the urban criteria for the development of Plot 2 69

80 Comparison of the functional typology of construction area Functional typology of the construction area Option 1 Option 2 4 storeys Option 2 6 storeys Social service facilities cultural area (m 2 ) 2,420 2,420 2,420 Residential area (m 2 ) 15,595 15,736 23,604 Total construction area (m 2 ) 18,015 18,156 26,024 Table 27. Comparison of the functional typology of the construction surface, Plot 2 Comparison of construction surfaces in accordance with the construction interventions Construction surfaces in accordance with the construction interventions Construction areas for structures that are adapted for housing Construction areas for structures that are adapted for social facilities Option 1 Option 2 4 storeys Option 2 6 storeys 11, ,420 2,420 2,420 Construction areas for new buildings 4,496 15,736 23,604 Construction areas for demolition 5,449 9,449 9,449 Table 28. Comparison of construction surfaces according to construction interventions, Plot 2 Comparison of housing units by typology Typology of residential apartments Option 1 Option 2 4 storeys Option 2 6 storeys Studio Apartment Apartments Apartments Apartments Total number of residential apartments Table 29. Comparison of typology of residential apartments, Plot 2 When comparing data between options and especially the total construction area we find it in similar values over all options, whereas the number of housing units due to the number of storeys is different and varies from 237 residential units in Option 1, to 252 residential units in Option 2 with 4 storeys and 378 residential units in Option 2 with 6 storeys. 70

81 Comparison of construction costs Comparison of construction costs Option 1 Option 2 4 storeys Option 2 6 storeys Land value Construction cost of buildings 582,117, ,468,616 1,014,384,324 Construction cost of infrastructure 52,859,900 62,697,300 62,697,300 Cost for study and design 31,778,900 38,315,964 52,999,918 Total project cost 666,755, ,481,880 1,130,081,542 The average cost residential unit 2,517,198 2,933,738 2,803,972 The average cost in m 2 residential unit 37,710 46,982 44,903 Table 30. Comparison of costs for the development of Plot 2 When comparing project development costs, the total cost of Option 2 with 4 storeys is about 21 % higher than cost for Option 1. This means that the municipality should mobilize more funds to implement the Option 2 (with 4 storeys), which in turn provides construction of 252 housing units versus 237 or 6% more than Option 1. In the case of Option 2 with 6 storeys, due to the greater number of housing units (378), the average cost for a residential unit under this version is about 4% lower than the respective cost of option 2 with 4 storeys, still 12 % higher than Option 1, while the average of construction cost per m 2 in Option 1 is respectively as lower as 20% and 16% compared with the same cost for Option 2 with 4 storeys and to the same Option with 6 storeys. In all cases, the municipality will be interested in the development of the Option 1, which generates a considerable number of housing units for a lower unit cost than the other options. The change of construction intensity in the case of Option 2 from 4 to 6 storeys, may increase the number of housing units available to the municipality for social housing as compared with the other options. The latter option may be especially interesting if the project will be developed in the Public - Private Partnership agreement Comparative analysis for the development of Plot 2 under PPP Relying on the method of calculation of the % of exchange as used for the case of Plot no. 1, in the following table are given the comparison for the calculation of the % of exchange for the development of Plot No. 2. At the core of the development scheme with PPP lies an exchange contract on the basis of which the municipality has decided to develop a land plot of 27,105 m 2. A part of the land plot, with a construction base area of about 12,221 m 2 or 13,664 m 2, respectively for option 1 and option 2, (or about 50% of the land plot given for the development), according to the feasibility study, the municipality will designate (sell) for construction and in return will benefit (purchase) the value of a certain % of a construction area that will be converted into residential apartments. The percentage of exchange is determined in accordance with Instruction no. 6, 71

82 dated , The oriented methodology for calculating the housing surface for purposes of selling the land plot equipped with infrastructure" pursuant to CMD 35, dated , "On the procedures and forms of the sale of the land equipped with infrastructure for market purposes. " Since the market data regarding prices for the sales of the land plots for development purpose and the price for purchasing of apartments for the area where the project will develop are uncertain and not sufficient, for determining the percentage of exchange is used " The Method of percentage" as it is given in the Regulation No. 6 as above specified. This method is based on the rate percentage of municipal investments (including the value of the land plot) and the private partner investment versus the total joint investment. Data for the calculation of the % exchange for the Municipality Option 1 Option 2 4 storeys Option 2 6 storeys The surface of the studied area 27,105 27,105 27,105 The exchanged land plot surface 12,221 13,644 13,644 Total construction surface 18,015 18,156 26,024 Service facilities Residential area 15,595 15,736 23,604 The total investment construction cost that will be financed by the private investor Study - design cost that will be funded by the private investor Infrastructure cost to be financed by the Municipality Infrastructure cost that will be financed by the private investor Supervision cost that will be funded by the Municipality Price per m 2 of the land plot according to the mapping value in ,937, ,288, ,204,324 21,416,074 25,730,536 35,421,946 37,278,200 39,963,750 39,963,750 15,581,700 22,733,550 22,733,550 10,362,826 12,585,428 17,577,972 32,878 32,878 32,878 Construction price per m 2 37,803 47,309 45,230 The average selling price of apartments in the area (based on the market selling prices) 60,965 60,965 60,965 The average selling price of service facilities 123, , ,300 Table 31. Data for the calculation of the % exchange of the Municipality, Plot 2 In the table above are provided all specific comparative data for all development options of Plot No. 2. The municipality will invest for each option as in the following table, in which values are included the price of the land plot of about ALL / m 2 defined on the basis of land value map according to DCM 89, dated "On approval of the map of the land value in the 72

83 Republic of Albania", as well as investments related to external roads and recreational and green land surfaces. Investment from the Municipality Option 1 Option 2 4 storeys Option 2 6 storeys Municipal investment 434,898, ,954, ,946,680 Land plot value (ALL) 401,802, ,404, ,404,958 Investments in infrastructure (ALL) 25 33,096,376 52,549,178 57,541,722 Table 32. Municipal investment for the realization of the social housing project, Plot 2 In the same way is estimated also the investment of private investor, which includes demolition costs and housing construction and a part of the road infrastructure in the housing function. The following table presents the values of private investment according to options for the development of Plot No. 2. Investment from the private investor Option 1 Option 2 4 storeys Option 2 6 storeys Private investment 548,934, ,752,702 1,002,359,820 Construction costs 511,937, ,288, ,204,324 Infrastructure cost 15,581,700 22,733,550 22,733,550 Design cost 21,416,074 25,730,536 35,421,946 Table 33. Private investment for the realization of the social housing project, Plot 2 Base on the ration of the investment to the total project cost, the municipality will benefit the % of exchange as in the following table. For Option 1 the municipality receives 44% in exchange, for Option 2 (with 4 storeys) municipality will benefit 40% in exchange and Option 2 (6 storeys) the municipality will benefit a percentage exchange by 31%. % exchange of the Municipality Option 1 Option 2 4 storeys Option 2 6 storeys Total investment (private + Municipality) 983,833,364 1,145,706,838 1,466,306,500 Threshold of % of exchange of the municipality 26 m 2 residential area obtained by the % of exchange m 2 service area obtained from the % of exchange Table 34. Minimal % exchange of the Municipality, Plot 2 44% 40% 32% 6,993 6,304 7, Cost of investments in infrastructure includes cost of supervision and inspection, investment costs for 40% of the roads, squares and parking lots and the total cost of water supply and sewerage, electric installations, telephony and greenery. 26 Threshold of % of exchange is the ratio of municipal investments (including the value of the exchanged land) over total investments for project implementation (including the value of the exchanged land). 73

84 Residential areas and the number of housing units (apartments) which will be obtained from the development of the project are calculated based on the % of exchange to be received from municipality. Number of residential apartments benefited from the % exchange of the Municipality Number of residential apartments from the % of exchange Option 1 Option 2 4 storeys Option 2 6 storeys Studio Apartment Apartments Apartments Apartments Table 35. Number of apartment units benefited in % exchange, Plot 2 As it is seen from the table above, the municipality will benefit a larger number of flats from Option 2 with 6 storeys (121) against the other two options. On the basis of the data above, the cost-benefit of the municipality for each option is estimated. This cost- benefit is calculated as the ratio of profit from the sale of apartments at market price over the total initial investment of the municipality. Cost of the financial benefit of the Municipality Option 1 Total revenues from the sale of the construction area with market prices Total revenues from the sale of the residential construction area with market prices Total revenues from the sale of the service construction area with market prices Cost-benefit from the difference between investments and total revenues Option 2 4 storeys Option 2 6 storeys 424,604, ,648, ,030, ,604, ,648, ,030, (8,561,110) (74,653,850) (8,634,262) Rate of the benefit cost -2% -16% -2% Table 36. Cost of the financial benefit of the Municipality from the social housing project on Plot 2 The cost benefit ratio is negative in all options, undependable from the number of apartments obtained applying the PPP. The cost-benefit is lower for the option with 4 storeys due to the lower surface obtained from the Municipality in exchange compared to the other options. It should be noted that the low cost - benefit is the result of a higher price of land plot as defined in the land value map by DCM. 89 dated

85 7. Conclusions From the analysis for Plot No. 2 it is possible to reach to the conclusion that the municipality might look with a particular interest the development of this land plot for the purposes of social housing programs. From the options analysed by the Consultant, it recommends that the municipality might look with interest as a first Alternative, the development of Plot No. 2 according to Option 1, which could be financed from municipal budget or in combination, if possible, with funding from other state sources (state budget or donations). As above is discussed, the development of the project under this option will be based on the conversion of existing buildings of the former Kombinati Autotraktorëve in housing unit and social-cultural services. This option generates a total of 237 apartments, with an average cost for a residential unit of about 2,517,198 ALL and an average construction cost of 37,710 ALL / m 2. Total funding for the development of this option is million ALL or the equivalent amount of 4,87 million EUR. This project can be developed in the context of a medium-term budget framework of 3 years, with an average annual budget worth of 222 million ALL/ year or the equivalent of 1,622 million EUR / year. Alternatively, the municipality can see as a development possibility of this project in a Public Private Partnership scheme as estimated under Option 2 with 6 storeys. This project will be realized through public auction to determine private entity that offers the highest % of the exchange. As the bases for the beginning of the auction would be the calculated percentage of 32%. This percentage is similar to that of the market for the studied area. The demand for higher % of exchange would not make the project attractive to the private sector. According to this Alternative, the municipality will finance a total of 127,721, ALL or 932 thousand EUR (excluding the amount to the effect of the land plot value). This amount will go for partial development of infrastructure and the construction of the social - cultural facility. This project can be developed in the context of a medium-term budget time term of 3 years, with an average annual budget of about 43 million ALL / year or the equivalent of around EUR / year. From the implementation of this Option the municipality would benefit around 121 residential units, in addition to social - cultural facilities and green land surfaces. Despite the selected Option, the relatively high construction cost and the presence of other facilities such as recreational areas, social- cultural and other facilities in the function of residential buildings, will make this housing compound suitable only for " the programme of rental social housing" for those groups in need that able to afford the rent as set from the municipality including other condominium related costs. 27 The amount includes the cost of investments in infrastructure and development of the socio-cultural facility, which together constitute 70,2 million ALL. 75

86 Annex 1: Site plan of proposed plots, subject of the feasibility study 76

87 Annex 2: Site plan of infrastructure in the proposed plots 77

88 Annex 3: General road plan, Municipality of Tirana 78

89 Annex 4: Master plan of Plot 1 - Settlement of Roma community, Shkozë 79

90 80

91 Annex 5: Master plan of Plot 2 - Former Kombinati i Autotraktorëve, Option 1 81

92 82

93 83

94 84

95 Annex 6: Master plan of Plot 2 - Former Kombinati i Autotraktorëve, Option 2 85

96 86

97 87

98 88