Report: Rebuilding Khachik Village Project

THE URBAN FOUNDATION

For Sustainable Development

REPORT 2009 February, March, April On Rebuilding Khachik Village Project PHASE 2

Prepared: By: Hayastan Stepanyan-Project Director, Urban Foundation for Sustainable Development For: Habitat for Humanity Armenia Warning: Report contents confidential information on Khachik village families’ income and expenses and it is intended just for administrative use.

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Background Khachik village, which is one of the strategically most important communities in Armenia because of its location close to the border, is facing an enormous housing need. Up to 87% of houses in the community have been classified as insecure, substandard, unhealthy houses. Solving the housing problem is vital for the livelihood of the community, as homelessness will force the remaining 1100 population, especially the youth contingent, to migrate from the village.

The Urban Foundation for Sustainable Development (hereinafter UFSD) started Project in Khachik in August 2008 and served 47 Families of which 12 families have been granted by loans up to 3.000.000 AMD and 35 Families -880000 AMD for each.

Second stage of the Project started on 1st of February and will last 5 months.

Project Objectives for the second stage are: 1. To continue develop established working relationships with local authorities and future beneficiaries.

2. To continue control under construction have been started in 2008 and continued this year 3. To serve at least 35 new families in the period February 1, 2009 –June 30, 2009, signing with them pre-selection agreements.

4. Document the process, lessons for the future community implementation projects.

5. Present to the HFHA the final list of housing needs in Khachik signed by Mayor.

UFSD is obligated to implement the objectives below: a) To control construction works with 47 families who had started construction works late in 2008 and are continuing works since this spring. b) To map the additional housing need and create a prioritized housing list by need / intervention type / affordability (according to SDA standards), c) To serve at least 35 new families, whose houses have been selected during the assessment, d) To provide new Final List of Housing needs in Khachik Community.

The UFSD has to develop a standard process / tools/manual for implementing community construction projects in an efficient, effective and participatory manner.

Progress of the UFSD Activity in February 2009 1. Preparation and Implementation an professional Affordability Assessment in the village.

During the reporting period, a professional affordability assessment has been conducted by the sociologists group in Khachik community to determine a level of income, poor, earning size, etc. This activity provided the information for further selection of beneficiaries (to determine further loan holders).

The list submitted by the City Hall Head Vachagan Poghosyan has been used for the assessment. It included 36 families. Assessment was conducted through the questionnaire developed for the first stage of the project. Sample questionnaire is available in the UFSD office. The results of conducted assessment have been analyzed and reported to the HfHA office in early March. Detailed information on families income is a confidential therefore it is available just for administrative use.

2.

Work with top-priority 12 houses in Khachik.

During the reporting period, Ashot Hovhannisyan, Khachik project construction manager continued to make cost estimation of the houses with renovation needs on the List provided by Mayor. During oneweek visit to Khachik, he estimated 3 incomplete houses based on the design project and personal observation and approximately 45 houses with renovation needs. Results of this estimation are demonstrated in Table 1 below: As a next step, UFSD Team members had visited all houses on the List, took photos of all of the houses, conducted individual interviews with each family. During these interviews the appropriate required documents have been observed (in particular ownership on land and house, passports, registered family members, etc.), as well as estimated cost taking into account the cheapest elements and other price reducing factors has been offered and negotiated to each family. The corrected completion construction costs are provided in Table 1, Last column.

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Table 1. Results of construction cost estimation of 36 houses based on the project and after individual interviews with families.

LIST Of partner families included in 2009 housing repairing and reconstruction project of Khachik village community of Vayots Dzor region Ă?Ă?#

Surname

Number of Family members

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32

Aghanyan Alvard Hovhannisyan Roza Abrahamyan Misak Miqayelyan Garnik Khachatryan Qajik Gevorgyan Vazgen Harutyunyan Norik Abrahamyan Melsik Navasardyan Ofelya Badalyan Samvel Miqayelyan Aram Gevorgyan Kamo Sargsyan Luseres Ohanyan Aram Asatryan Anastas Sargsyan Hrachik Suqiasyan Mihran Miqayelyan Asatur Abrahamyan Razmik Khachatryan Sirekan Sargsyan Babken Grigoryan Nelli Stepanyan David Zaqaryan Karen Aghababyan Manvel Harutyunyan Nahapet Miqayelyan Vahik Sargsyan Vahan Nersisyan Smbat Manukyan Artavazd Abrahamyan Ishkhan Miqayelyan Harutyun

4 5 5 5 6 3 5 2 2 3 3 4 4 4 5 5 5 5 5 5 5 5 6 6 7 7 8 8

33 34 35 36

Sargsyan Sargis Hayrapetyan Vagharshak Mnatsakanyan Varditer Voskanyan Valerik TOTAL

5 5 7 5

5 5

Loan amount

Loan Agreement Type

600000 850000 1000000 1000000 1000000 1000000 1000000 1000000 1000000 1000000 1000000 1000000 1000000 1000000 1000000 1000000 1000000 1000000 1000000 1000000 1000000 1000000 1000000 1000000 1000000 1000000 1000000 1000000 1000000 1000000 1000000

non-collateral non-collateral non-collateral non-collateral non-collateral non-collateral non-collateral non-collateral non-collateral non-collateral non-collateral non-collateral non-collateral non-collateral non-collateral non-collateral non-collateral non-collateral non-collateral non-collateral non-collateral non-collateral non-collateral non-collateral non-collateral non-collateral non-collateral non-collateral non-collateral non-collateral non-collateral collateral

1500000 2000000 2000000 2000000 3000000 40.950.000

collateral collateral collateral collateral

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3. Signing of the Pre-Selection Agreements with 36 Families in the village Khachik.

During the reporting period, the UFSD project Staff collected all Applications from Partner Families about their willingness to participate in the Project. In addition, UFSD took refusal letters from those Families, who refused to participate in the Project for different reasons (Attachment 1).

Many houses have been disqualified for participation in the project, because this houses were damaged totally (4th degree damaged category) and should be destroyed in accordance with Armenian Legislation.

Some of this households want to start new construction and build new house on the same land plot or on the other one, which they have in possession/ownership or want to buy, if they will be allowed to participate in the “Khachik Rebuilding Project-Phase 3” .

UFSD Team also collected all documents necessary for signing and notarizing of contracts, prepared copies for UFSD Filing and also for FMC to make the process easier for FMC. FMC was selected as a Partner of the Habitat for Humanity International (Armenia) for signing Loan and Pledge Agreements and issue the Loans. As we were acknowledged, the Main Loan Agreement between HFHA and FMC has been signed only on the end of April and the Loan Agreements and Collateral have been signed on the end of May. Delay of signing of this Agreements cause many difficulties for UFSD and the Project as a whole. UFSD and FMC Staff worked very closely and arranged several meetings together to finalize loan issuance procedures, to revise documentation package, sign and register according with RA legislation.

UFSD Team members during this period, 20 times visited Khachik community and met with Municipality Staff and Partner Families. All meetings with the Head of Khachik Community and other officials were very successful. They were explained why the project was delayed and discussed the way to continue the Project in a very quick way to achieve tangible results as soon as possible.

UFSD visited all 12 semi-complete houses (the first stage houses), discussed high importance of the Project continuation, explained to the Partner Families Project details, asked them to continue the construction works and finish until June 30, 2009. They are doing everything to find also other sources of funding to complete all construction works.

Mayor of Khachik is very interested in the Project. He met with the Head of Notary Office and State Cadastre Department of Yeghegnadzor several times, explained them the high importance of the Project and has recommended them to do everything in order to facilitate the signing process of the Pledge Agreements and other documents.

At this moment construction works progress for the houses had been selected for “Khachik Rebuilding Project-Phase 1” is shown in the Table 3 and Attachment 1.

1.

Total number of households received Loans

47

2.

Number of houses, who used whole amount of loan and based on construction schedule completed all construction works as much as the loan amount allowed.

Number of households, who bought construction materials and is in the process of construction works.

Number of households, who bought construction materials, but didn’t start construction works yet (Manukyan Yervand1 of 12 Priority Families and Karapetyan Ruben-renovation loan).

Number of households who consider that they need additional money to build/reconstruct/renovate house completely.

Number of households not satisfied with this Project

35

3.

4.

5.

6.

10 2

40

0 4

4.Work with families applied for house renovation loan Mayor of Khachik submitted 3 List for Housing needs: 1.The first list for those households, who have land plots and want to build new individual house. We checked this list and recommended the Mayor to check all documents one more time and send to us the final list signed and sealed.

At the end of May Mayor Vachagan Poghosyan submitted 2 separate Lists (signed and sealed) related to: 1. Khachik families for core house (identified as priority need- 38 families and as not priority need- 10 families).

2.The list of households, who applied for repairing/renovation works-31 families.

The Mayor has submitted another list, which contains households, who declined to participate in the Project, because: a) they are very old and do not want to take a loan; b) their houses were damaged and it is not reasonable to renovate this houses (some of those households want to build a new house); c) some households do not live in the village and during our visit all houses were locked.

The number of families applied for renovation loans as of March 1, was 43. The construction manager had surveyed those 43 houses in order to estimate the renovation cost and to identify the possibility to provide some renovation loans. From these 43 Families were chosen 36 Families who permanently live in Khachik, have eligible houses, have enough monthly savings to repay loans (i.s. Families are affordable) and submitted complete documentation package for signing Loan Agreements. All these Families have signed Loan Agreements. The total amount of the loan package is 40.950.000 AMD. UFSD construction manager prepared time schedules of construction/renovation works for each household and started to supervise the process of purchasing construction materials, transportation to the village and construction/renovation works all of these partner families on day to day basis and recorded the Progress of Construction/Renovation works started in 2008.

UFSD Team will continue to supervise all construction works not only until June 30, but also during first 2 weeks of July, take pictures of each step of construction/renovation works make professional advisory job and report about progress to the HFHA..

Status of 36 households as of 30.04.2009 whose houses are included in the Project-Phase 2 1.

2.

3.

4.

5.

6.

7.

8.

Total number of households interviewed by UFSD 85 Number of houses for which cost estimations are made 43 Number of households signed pre-selection agreements 36 Number of households with notarized loan agreements 5 Number of households with signed loan agreements for the 31 houses with renovation needs Number of households with incomplete documents 0 Number of households in construction process 31 Number of households completed construction in 5 accordance with construction works schedule

It was important to organize general and orientation meetings with the partner families, properly explain them all conditions of the Project, conduct interviews before selection of Families, check all necessary documents and collect copies of documents, to do initial cost estimation, then sign Pre-selection Agreements and send complete information to the HFH Armenia Office for information (and submission an official Letter to the FMC) and FMC for the Final Decision and issuance of Loans.

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UFSD Staff organized Last General Meeting in Khachik on 10.04.2009 and explained all conditions of the second phase of the Project. All Partner Families, who applied for participation in the Project have been gathered in the City Hall and were explained that renovation loans for Khachik in 2009 will be given for 20 year with 4.5 % interest rate, up to 1.000.000 AMD without collateral, above 1.000.000 AMD with collateral.

At this moment, everybody in the village (including Mayor) wants to get information on continuation of the Project in the village, as well as to have signed agreement with Habitat International or HFH Armenia about Project prospective to apply for the other sources of funding for the new houses. The process of preparation of the design-drawing works and completion of documentation package for the houses to be included in the list of new houses for 2009 is also very important.

5. Problems identified during the implementation of the 2nd stage and lessons learned.

Having implemented the “Redeveloping Khachik village� project for 1 year, the Urban Foundation for Sustainable Development closely get aware of the problems of the community, psychology of residents, the culture of their interaction, extreme commitment to help each other and some other nuances of the community life.

To understand the importance of the below mentioned problems, we present one more time the general description of the community.

The village of Khachik is located in Vayots Dzor Marz (Region) of the Republic of Armenia at a distance of 130 km from the Capital Yerevan and 40 km from the Regional center Yeghegnadzor. The total area of the village is 7303 hectares, village’s altitude from the sea the level is 1850 m, it has 27 km state boarder with the Republic of Azerbaijan (Nakhijevan). This fact gives a community a strategic importance. Thus, in the course of Karabakh conflict being a bordering community, the village was bombarded for several times from Azerbaijani territory causing 5 casualties and 14 injured . 38 houses and the school of the village were damaged, and the residents started to desert the village.

Currently, despite lasting ceasefire , emigration remains a key issue for the village and the scale continues to increase threatening with complete abandonment of the village by its inhabitants. One of the reasons is poor economic situation of the community and problems in the fields of infrastructure, housing, agriculture, animal husbandry, healthcare and culture. Students from Khachik studying in Universities outside the village, often do not return to the native village because they would not find an employment in the village.

When designing projects for new rural communities, it is important to take into account some specific factors of the life, culture and economic situation of permanent residents of Community.

During implementation of the Project, UFSD Team identified some issues on which it is important to pay attention and make necessary recommendations.

Issues encountered during the project implementation and recommendations: 1. Winter is lasting in Kachik community and some construction activities are possible only during summer months, particularly activities connected with roofing (covering with tin-sheet, repairs, replacing old one with new in the houses where the people continue to live even during construction/renovation activities During cold whether also concrete and cement activities are not carried out, especially sheltering and plastering activities).

2. Taking into account the circumstance that the community of Khachik is bordering on Azerbaijan and is located in the zone of potential conflict, has strategic significance and is one of the high mountainous villages, which is isolated form the neighboring communities (35-40 km from neighboring Areni community) the RoA Ministry of Defense adopted correct decision and opened about 50 work places for Kachik residents aiming to strengthen the village with the workplaces ensuring sustainable source of income. Starting the February, 2009, 50 more residents entered the contractual work in Khachik regiment 6

and once in 15 days they have to be in positions of military regiment and, don’t come down to the village and can’t be engaged in any construction activities.

3. The construction activities in Khachik region are carried out mainly by their own workforce and under the support of professional co-villagers. Sometimes same professional construction workers/co-villagers (who sometimes are borrowers by themselves) are requested to do same kind of work for the same period for their other co-villagers.

4. The purchase of construction materials is mainly organized in centralized manner, particularly, purchasing of roof material, cement, plaster in order to decrease transportation costs, as well as to make use of possible discounts when purchasing large amount of construction materials. That is why it is necessary to receive agreement of large number of households to organize the centralized purchase.

5. Some of the community residents have documentation problems, particularly, some of them did not formalize their heritage right to the house and did not register ownership rights, which is why it becomes impossible to sign loan agreement and agreement on collateral.

6. Some families apply for the loan amounting AMD 1 million, while according to cost estimation the renovation cost of their housing exceeds 1 million This approach is based in the circumstance that the specified state duties, notary certification and cadastre fees for finalizing the agreement on collateral and registering ownership rights make much money (Note that as of June 01, 2009 amendment was made in cadastral fees and they increased significantly. See Reference book for RoA Intergovernmental Agency documents, # 18, 01. 2009).

Recommendations 1. In order to properly carry out construction activities in high mountainous communities (after provision of loan funds), it is necessary to foresee at least 4-5 months for purchasing construction materials and implementation of construction activities, since the very season for construction activities in Khachik community starts in mid May and lasts up to October (internal finishes activities can be carried out in late autumn or winter, for instance kitchen or bathroom tiling or rooms roll over activities).

2. For construction activities planning purposes it should be taken into consideration that the season of construction activities matches with the high season of agricultural activities. The largest amount of Khachik community residents/partner families income is formed from the production of agricultural goods, therefore when cooperating with partner families, we have to take this circumstance into account and coordinate the schedule for implementation of construction activities with the households.

3.After the selection of partner families, the agreements of collateral and loan agreements should be concluded and funds transferred as soon as possible so that the households be able to plan their activities correctly.

4. While designing and implementing loan projects for construction and renovation of residential houses in rural communities, assessments should be conducted in specific communities on characteristic natural and climate conditions, culture in the community regarding relationships between community residents and mutual support, the distance from the regional center and urban communities, existence of required number of professionals having construction specialties, the level of affordability of community residents, the technical status of personally owned residential houses, average scope of potential construction activities, etc.

5. While selecting communities take into consideration the commitment and consistency of the head of community to cooperate with project implementer, his/her real will to support the project, also correctly include in the project main housing problem of the community (it is desirable that it was supported by main documents). For instance, the issue of roofs is very serious issue in rural communities: replacing asbestos with ecologically clear construction material or installing sanitary facilities in houses, etc.

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6.While implementing construction, renovation activities of residential houses in the communities, cooperate with other donors and in parallel carry out other activities and projects, which will focus on the further economic development of the community, significantly will decrease possible risks connected with proper repayment of loans as well as will create sufficient psychological and moral atmosphere to demonstrate correct behavior in order to mitigate the consequences of the global economic crisis.

Hayastan Stepanyan Project Manager 25.06.2009

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