Urban upgrading

PES covers the period 6/81-11/82 and is based on document review, site visits, and interviews with A.I.D. personnel. An attached 1/84 memorandum updates progress. Despite implementation delays, the project has achieved some success. Some 3,700 families have benefited from water/sewer subprojects initiated in six communities. About 20-40% of these newly served families have begun home improvements without institutional support, a good indicator of the likely success of the home improvement loan component which is set to begin in 1/83. In both municipalities, project Executing Units have hired community development specialists who, working through patronatos (local leaders), have targeted benefits and beneficiaries, explained cost recovery mechanisms, and achieved strong community support. Tegucigalpa"s municipal government (CMDC) has arranged for the National Water and Sewer Authority (SANAA) to own and operate its new systems and recover their costs; San Pedro Sula has its own water/sewer authority, although it has yet to implement a betterment levy process. TA activities have included: annual impact surveys, assessments of municipal needs and accounting practices, and a soap factory feasibility study; a training program and a cost accounting manual for municipal/Ministry of Finance staff; and courses for social workers/patronatos. Two critical issues need to be resolved. In Tegucigalpa, 17 of 24 projects involve CMDC"s "recuperation" of improperly registered land into the public domain and the issuance of new legal titles, or "intervention" actions to force owners of private subdivisions to pay for the installation of basic services. A.I.D."s concern is that CMDC"s procedure adequately protect private property rights and the legitimacy of new titles. An A.I.D. land tenure legal advisor is studying this issue. A second problem has resulted from SANAA"s refusal, in a dispute over project control, to proceed with badly needed repairs to Tegucigalpa"s primary water system. Recommendations address these and other issues.