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1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Document of The World Bank FOR OFFICIAL USE ONLY RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF GUATEMALA LAND ADMINISTRATION II PROJECT LOAN 7417-GT DECEMBER 14, 2006 Sustainable Development Central America Country Management Unit Latin America and the Caribbean Region IN THE INITIAL AMOUNT OF US$ 62.3 MILLION TO THE REPUBLIC OF GUATEMALA JUNE 29, 2010 Report No: GT This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.
2 ABBREVIATIONS AND ACRONYMS CONAP DICABI ESCAT FORTIERRAS IDAEH IDE IFR IGN IPP IRR IUSI M&E NPV PCU RGP RIC SAA SAT SNIC UTJ National Council for Protected Areas Directorate of State Property and Valuation RIC s School for Development and Training for Territorial Planning and Cadastre Land Fund Agency Institute of Anthropology and History Spatial Data Infrastructure Interim Unaudited Financial Reports National Geographic Institute Indigenous Peoples Plan Internal Rate of Return Real State Tax Monitoring and Evaluation Net Present Value Project Coordinating Unit General Public Registry Registry of Cadastral Information Secretariat of Agrarian Affairs Safeguard Advisory Team National System for Cadastral Information RIC s Legal Technical Unit Regional Vice President: Country Director: Sector Manager: Task Team Leader: Pamela Cox Laura Frigenti Ethel Sennhauser Enrique Pantoja
3 GUATEMALA LAND ADMINISTRATION II PROJECT CONTENTS Page A. SUMMARY... 1 B. PROJECT STATUS... 1 C. PROPOSED CHANGES... 2 D. APPRAISAL SUMMARY... 4 ANNEX 1: RESULTS FRAMEWORK AND MONITORING... 5 ANNEX 2: REALLOCATION OF PROCEEDS... 13
4 Datasheet Section - The Datasheet is generated through the portal and will be available to approvers/managers as part of the clearance process s workflow (see workflow tab in the portal) it is therefore not required to insert it here for the clearance process. - Once the package is cleared by RVP (last step of the clearance process), Team needs to insert the datasheet here before sending the package to SECPO and the PrintShop. Go to SECPO site for details on submitting Lending Documents to the Board.
5 GUATEMALA LAND ADMINISTRATION II PROJECT SUMMARY 1. The main changes proposed under this Project restructuring are: (a) adjustment in project scope regarding cadastral surveying (from 55 to 41 municipalities) due to increased costs since the project was prepared in 2006, and unforeseen costs emerging from the regulations of the cadastral law (targets of several indicators would consequently need to be adjusted); (b) establishment of an interinstitutional committee facilitated by RIC and a technical committee within RIC to strengthen project implementation and coordination; (c) change to project description : (i) to add in component 2, under activity 3, the support to municipalities to improve their capacity to collect property taxes, and (ii) to eliminate, under component 3, activity 1 (b) related to support for the preparation of a draft of the regularization law; (d) reallocation of Loan proceeds to reflect adjustments in project scope and costs; and (e) change to the requirement of submission period of IFRs and progress reports from quarterly to semi-annual. PROJECT STATUS 2. Project implementation has improved recently, although ratings remain Moderately Unsatisfactory (MU) for both Implementation Progress (IP) and PDO achievement. As agreed with the Registry of Cadastral Information (RIC) the implementing agency the Project Coordination Unit (PCU) has been reorganized and strengthened with new personnel while given operational and administrative independence. Good progress has been made in the Action Plan to improve procurement and financial management. Several key activities have been started, including preparatory activities for cadastral surveying in six municipalities, modernization of the Property Registry, and for the development of the technological platform integrating cadastral and registry information. 3. The main initial challenges faced by the Project include a one-year delay in project approval by the Guatemalan Congress, and more critically, RIC s weak capacity to implement a project of this magnitude. RIC is a relatively new agency still in a consolidation process. Contrary to what had been assumed at appraisal, the experience and capacity of the Technical and Legal Unit (UTJ) that implemented the previous project was not completely transferred to RIC. Given this, the PCU, which by design had been fully integrated into RIC s organizational structure, had weak initial support from RIC s technical and administrative units and was constrained operationally and administratively. Moreover, the Project lacked effective inter- and intra-institutional coordination mechanisms to help the PCU ensure the collaboration of participating agencies and RIC s own units. Moreover, there were also preparatory activities, some of 1
6 which were only clarified or identified in the regulations to the Cadastral Information Registry Law (the RIC Law), that needed to be completed or revised after project approval. PROPOSED CHANGES Outputs /results or indicators The original number of municipalities would be reduced from 55 to 41, and as a result, it would be necessary to adjust the targets of several indicators (see Annex 1). Moreover, to strengthen the Project results matrix, additional indicators have been added to measure (i) important intermediate results of the cadastral and regularization process not originally identified, and (ii) gender equity results. Components Under Component 2 (Maintenance of Cadastral Information and Municipal Services), the stated target for Activity 1 would be deleted and stated in a general way as establishment of Municipal Cluster Offices in the Cadastral Zones Moreover, under Activity 3, support to municipalities, it would be noted that such support includes technical assistance and training, provided with participation of the Directorate of State Property and Valuation (DICABI) and the Directorate of State Property, both agencies within the Ministry of Public Finance, to strengthen local capacity to administer and collect property taxes known in Guatemala as IUSI (Impuesto Unico sobre Inmuebles). Under Component 3 (Legal Reforms and Institutional Strengthening for Land Administration), Activity 1 (b) related to support for the preparation of a draft Regularization Law, would be eliminated. Upon closer analysis carried out since project approval, it has been concluded that this activity is not directly relevant to the Project Development Objective (PDO) and the Government has decided to carry it out on its own. Consequently, the related legal covenant under Schedule 2, Section I, Part B, 3(a) of the Loan Agreement would be eliminated. The current legal framework allows implementing the project and achieving its PDO and related outcomes. Moreover, reaching consensus on a draft law, which includes issues that have been under debate in the country for many years, is beyond the control of the Government, and particularly of RIC, as implementing agency, and of participating agencies such as Registry of Cadastral Information (RGP), the Secretariat of Agrarian Affairs (SAA) and the Land Fund (FONTIERRAS). There are currently several drafts of a regularization law being discussed in the country and the Government will continue its own efforts to promote consensus. Finally, the name of Component 3 would be modified to read Institutional Strengthening for Land Administration and the activity 1(a) is clarified as 2
7 Provision of technical assistance and training to the RIC for the preparation of the Specific Regulation on Communal Lands. Institutional arrangements In addition to the reorganization and re-staffing of the PCU, two committees (described below) would be established to strengthen project implementation and coordination. The committees are: (a) Project Coordination Committee, to be facilitated by RIC, will provide overall guidance and follow up on project implementation and promote inter-institutional collaboration. The Committee will be comprised of the heads (or their delegates) of RIC, as implementing agency, and all the participating agencies. These currently include in addition to SAA, RGP, FONTIERRAS, the National Council for Protected Areas (CONAP), the Guatemalan Institute of Anthropology and History (IDAEH), and the National Geographic Institute (IGN). In addition, other agencies, including DICABI and the Directorate of State Property, would be invited as needed. No official decree is required to establish the committee, but it should have a document stating its mission and operating principles. (b) Project Technical Committee, to be organized by the Project Coordinator, and including the relevant departments (gerencias) within RIC, including, inter alia, technical, operations and legal departments. The committee will meet at least once every quarter and when an urgent matter arises. Financing o Project Costs and financing plan. There is no change to the financing plan but some adjustments were made to the project costs to reflect the proposed changes in project scope, targets and outputs. Project Costs (US$m.) Components/Activities Current Proposed 1) Cadastral and land regularization (2) Maintenance of cadastral information and municipal services (3) Legal reforms and institutional strengthening 4) Project management and monitoring and evaluation Total Baseline Costs Contingencies
8 Front-end fee (IBRD Total Financing Required o o Disbursement arrangements. There is no change to the original disbursement arrangements. However, Operating Costs will be added to Category 1 in the table of eligible expenditures that may be financed out of Loan proceeds (Section IV, A.2 of Loan Agreement). Reallocations. A reallocation of proceeds is proposed as a consequence of the revisions to the project cots. See table in Annex 2. Others Requirements for Interim Unaudited Financial Reports (IFRs) and Project Progress Reports. Following current practice, the requirement of IFRs and progress reports would be changed from quarterly to semi-annual. Updating of the Operational Manual. The Operational Manual has been updated to reflect changes proposed in institutional arrangements and other issues. APPRAISAL SUMMARY Economic and financial analysis. Considering the adjustment in Project scope, a new economic analysis was carried out by an independent consultant (document in Project files). This analysis confirmed the viability of project investments as expected benefits continue to outweigh the costs. Specifically, the Internal Rate of Return (IRR) of the restructured project has been estimated at 14%. Technical. A new cadastral surveying strategy has been prepared to reflect the adjustments in Project scope and options to accelerate implementation. Specific criteria was agreed to select the 41 municipalities which would be included under the restructured project. These criteria and list of municipalities have been included in the Operations Manual. Such list may be modified upon agreement between the Borrower and the Bank. Exceptions to Bank Policy. There are no exceptions to Bank Policy Risk. No new or increased risks would result from the Project restructuring. 4
9 ANNEX 1: Results Framework and Monitoring GUATEMALA LAND ADMINISTRATION II PROJECT Project Development Objective (PDO): to foster the process of achieving land tenure security in the Project Area through the provision of efficient and accessible cadastral and land administration services Revised Project Development Objective: PDO Level Results Indicators* Core D=Dropped C=Continue N= New R=Revised Unit of Measure Baseline Cumulative Target Values** YR + 1 YR +3 YR +6 YR Frequency Data Source/ Methodology Responsibility for Data Collection (1) 80% of new transactions in the project area conducted with validated and integrated cadastral and registry information (2) 50% of parcels (declared regular or irregular) in the Project area are integrated into RIC s Public Registry (3) The technological platform that D % 0 0% 10% 80% N % 0 0% 0% 50% Biannual Reports Reports N % 0 0% 10% 70% Biannual Reports Independent assessment 5
10 includes RIC s public registry is assessed satisfactorily regarding its logistical, physical and data security (4) 80% of land conflicts identified during the cadastral survey are in a resolution process and out of which 50% are solved (5) Satisfactory rating (third level on a four-scale basis) by at least 50% of users of the public registry of RIC (and by at least 50% of female users) (6) At least 70% of the targeted population in the project area participates in the cadastral survey (at least 40% participating population is of indigenous descent) and (percentage of participants who are women) C % 0 0% 15%/7% 80%/50% Biannual Reports Reports in coordination with SAA R % 0 0%/0% 30%/30% 50%/50% Survey taken YR4 and YR6 R % 0 0% 20%/10%/c % 70%/40%/ x% Biannual reports Stratified, representative sample survey Reports and SAA 6
11 INTERMEDIATE RESULTS Intermediate Result (Component One): Revised Intermediate Result (Component One): (1.1) 90% of surveyed parcels in the project area (including national, private, and communal lands) incorporated into RIC s database. (1.2) 80% of communal lands in the project identified and certified according to the process established in the Regulations for Communal Lands and Indigenous Peoples Plan (IPP), of which at least 50% are indigenous peoples communal lands (1.3) 430 kilometers of protected areas boundaries and 100 kilometers of national reserve areas boundaries demarcated in the R % 0 0% 0% 20% 80% Biannual Reports Reports M&E System / RIC s database R % 0 0% 10% 30% 80% Biannual reports Reports M&E System / RIC s database R Km km 100km/0 km / 1 PAs 430km/100 km / 4 PAs Biannual reports Reports M&E System, CONAP and OCRET 7
12 project area, and at least 4 protected areas boundaries fully demarcated (1.4) 195 archeological sites and 25 ceremonial sites in the project area identified, georeferenced and incorporated in to the database of the Department of Cultural Resources Registry (1.5) 2,000 kilometers of municipal boundaries identified and agreed among the relevant parties (1.6) 60 % of parcels in national lands identified as eligible for new title by FONTIERRAS are titled and registered in the General Public Registry (RGP), of which at least 50% benefit women through joint or individual title and x % benefits individuals of indigenous descend R Number 0 0 0/0 70/10 195/25 Biannual Reports Reports M&E System R Km Biannual Reports Reports M&E System R % %/10%/ x% 60%/50%/ x% Biannual Reports Reports M&E System and IDAEH and IGN, FONTIERRAS and RGP 8
13 (1.7) 60% of parcels in lands not registered in RGP identified as eligible for the special titling procedure prescribed in the RIC Law are titled and registered in RGP, of which at least 50% benefit women through joint or individual title and x% benefit individuals of indigenous descent (1.8) 10% of identified communal lands received support to start their regularization process (1.9) At least 14 CORS (active geodesic network) stations are functioning at the national level, and the passive geodesic network established in the project area (1.10) At least 15,000 families in the project area benefited from regularization processes and registry in RGP, of R % %/10% / x% 60%/50%/ x% Biannual Reports Reports M&E System R % %/ 10% Biannual Reports Reports M&E System N number 0 0 0/0 5/0 14/1 Biannual Reports Reports M&E System N number 0 0 3,500 / x% / x% Biannual reports Reports from M&E System / Representative sample survey of beneficiaries before end of project and RGP and RGP and IGN and RGP 9
14 which x% are poor Intermediate Result (Component Two): Revised Intermediate Result (Component Two): (2.1) 6 cluster offices established in the project area during the cadastral surveying process, of which at least 5 offer cadastral services permanently (2.2) 100 professional surveyors and 250 technical surveyors certified and registered in RIC s registry of surveyors (2.3) At least 90% of transactions in Petén related to ownership change of property rights (dominio) in RGP are incorporated in the Public Registry of RIC (2.4) At least 15 municipalities have received technical assistance and training for preparation of territorial development plans R number Biannual Reports Reports M&E System R number 0 0 0/0 30/ /250 Biannual Reports Database of certified surveyors R % Biannual Reports Information from RGP system and RIC system R number Biannual Reports Reports M&E System / Interviews with local authorities and participating municipalities 10
15 (2.5) At least 30 municipalities have received technical assistance and training for administration and collection of property taxes (IUSI) N number Biannual Reports Reports M&E System / Interviews with local authorities, DICABI, and participating municipalities Intermediate Result (Component Three): Revised Intermediate Result (Component Three): (3.1) A draft Land Regularization Law formulated and endorsed by RIC (3.2) Regulations on the RIC Law and regulations for the certification of communal lands approved by RIC (3.3) 500 technicians trained in land administration through RIC s School for Development and Training for Territorial Planning and Cadastre (ESCAT) (3.4) An integrated Registry-Cadastre information platform operates satisfactorily D number C number Biannual Reports Actual Regulations C number Biannual Reports Reports ESCAT R number Biannual Reports Independent Assessment and ESCAT and RGP 11
16 (3.5) 100% of registry books in the Second Property Registry indexed and digitized (3.6) Virtual portal operating for updating and exchange of property registration N % % 100% Biannual Reports Reports from RGP N number Biannual Reports Report prepared by and RGP Intermediate Result (Component Four): Revised Intermediate Result (Component Four): (4.1) Budget, annual operative plans, M&E issued on time as per the Loan Agreement (4.2) Design for the spatial data infrastructure (IDE) completed (4.3) Monitoring and Evaluation and FM systems for the project developed and operating : C % % 100% 100% Biannual Reports Reports prepared by D number N number Actual M&E and FM Systems operating Reports prepared by and participating agencies 12
17 ANNEX 2: Reallocation of Proceeds GUATEMALA LAND ADMINISTRATION II PROJECT Category of Expenditure Allocation % Financing Current Revised Current Revised Current Revised (1) Goods, works, consultants services, Non- Consulting Services, Registration Costs, and Training under Part 1 of the Project (1) Goods, works, consultants services, Non- Consulting Services, Registration Costs, Operating Costs and Training under Part 1 of the Project 14,150,000 16,383, % 100% (2) Technical Services under Parts 1.3 through 1.7 of the Project (3) Goods, works, consultants services, Non- Consulting Services, Operating Costs, and Training under Part 2 of the Project (4) Goods, works, consultants services, Non- Consulting Services, Operating Costs, and Training under Part 3 of the 2) Technical Services under Parts 1.3 through 1.7 of the Project (3) Goods, works, consultants services, Non- Consulting Services, Operating Costs, and Training under Part 2 of the Project (4) Goods, works, consultants services, Non- Consulting Services, Operating Costs, and Training under Part 3 of the Project 17,800,000 22,357, % 100% 13,320,000 12,142, % 100% 7,760,000 5,093, % 100% 13
18 Project (5) Goods, works, consultants services, Non- Consulting Services, Operating Costs, and Training under Part4 of the Project (5) Goods, works, consultants services, Non- Consulting Services, Operating Costs, and Training under Part 4 of the Project 8,620,000 6,167, % 100% (6) Front-end Fee (6) Front-end Fee 155, ,750 Amount payable pursuant to Section 2.03 of this Agreement in accordance with Section 2.07(b) of the General Conditions Amount payable pursuant to Section 2.03 of this Agreement in accordance with Section 2.07(b) of the General Conditions (7) Unallocated (7) Unallocated 494, TOTAL AMOUNT 62,300,000 62,300,000 14
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