URBAN UPGRADING

investors against default on housing loans made to the Government of Honduras (GOH). Funds will be used to upgrade marginal, urban communities in Tegucigalpa and San Pedro Sula through cost recoverable investments, especially in water supply and sewer systems. Municipal governments (MG"s) will resolve land tenure problems (illegal settlements) in 80 communities according to Decree 833, although San Pedro Sula will adapt the Decree to its own condition. Project financing will be available for use under the following tenure situations: (1) those who have title or are renting properly titled lots and homes; (2) those occupying municipal land which does not meet municipal standards; and (3) buyers making time payments on lease/purchase contracts in privately sponsored subdivisions not meeting municipal standards. Land purchase costs will be absorbed by the MG"s. Infrastructure services will be provided to 31,000 households. The National Water and Sewer Authority will install water and sewerage systems where affordable. If unaffordable, project funds will finance the installation of either a water or a sewerage system. Secondary water distribution systems will be partially financed. Drainage facilities will be installed where needed. The National Electric Energy Company will set up street lighting with private hookups. Also, community streets and access roads will be paved. The National Housing Agency and the Honduran Credit Union Federation will provide home improvement activities for up to 2,500 units. Improvements will include sewerage, water, and electrical connections, and rebuilding walls, rooms, etc. Technical assistance, including community legal assistance to resolve land tenure problems, as well as pilot projects geared to social improvements will be funded under complementary project 5220155.