Belize Municipal Development Project (P111928)

Mid-term Review Mission – June 10 – 14, 2013

Aide Memoire

  1. Introduction
  1. A World Bank team led by Yoonhee Kim (Team Leader and Sr. Urban Economist) and comprised of Maritza Rodriguez (Sr. Financial Management Specialist), Noreen Beg (Sr. Environmental Safeguards Specialist), Yingwei Wu (Sr. Procurement Specialist), Kimberly Vilar (Social Development Specialist), Anna Okola (Transport Specialist) and Keren Charles (Operations Analyst Consultant) undertook the Mid-term Review (MTR) Mission of the Project from June 10 – 14, 2013.
  1. The mission team held discussions with Ms. Yvonne Hyde (CEO, Ministry of Finance and Economic Development), Ms. CandelariaMorter (CEO, Local Government), Mr. Eugene Palacio (Director, Local Government), Mr. Errol Gentle (CEO, Ministry of Works and Transport), Mr. Lawrence Sylvester (CEO,Ministry of Housing and Urban Development) Ms. Beverly Castillo (CEO, Ministry of Natural Resources and Agriculture, MNRA) and Ms. Gina Young (MNRA), the Mayors and Town Council representatives of Belmopan, Benque Viejo del Carmen, Corozal, Dangriga, Orange Walk, Punta Gorda, and Santa Elena/San Ignacio, as well as Daniel Cano (Executive Director, Belize Social Investment Fund, SIF) and the Project Implementation Unit (PIU).
  1. The mission carried out site visits for Phase 1 and Phase 2 works in all seven Town Councils as part of the Mid-term Review Mission. The mission expresses appreciation for the kind support extended to the Bank team during the mission (a detailed list of people met is provided in Annex 2). A wrap-up meeting was held with the Project Steering Committee (PSC) to discuss the key findings of the mission. In particular, the mission focused on reflecting lessons learnt and experiences from the Project’s implementation up to date and the completion of the Phase 1 program.
  1. This aide-memoire summarizes the findings, recommendations and agreements reached during the mission and it is subject to confirmation by World Bank management. The aide-memoire will be publicly disclosed once finalized.
  1. Key Project Data and Performance Rating

Key Project Data / Key Performance Rating
Previous / Current
Board Approval Date / September 16, 2010 / Progress towards achievement of Project Development Objectives / Satisfactory / Satisfactory
Effectiveness Date / January 25, 2011 / Overall Implementation Progress / Moderately Satisfactory / Satisfactory
Closing Date / November 30, 2015 / Disbursed / US$2.6 million / US$ 4.7 million
Loan Amount / US$ 15 million / % Disbursed / 17% / 31%
  1. Implementation Status Overview
  1. As of May 31, 2013, the Project has disbursed about US$ 4.7 million, equivalent to approximately 31% of the loan amount. Since the last supervision mission in December 2013, the PIU has disbursed US$ 2.1 million. Another US$ 2.2 million (including US$ 0.46 million operating cost) has been committed for the implementation of Phase 1 sub-Projects, consisting of 50% of the total loan.
  1. Key Findings from Mid-Term Review Mission
  1. Main Achievement of the Project up to date: The mission was pleased to note the following achievement up to date.
  1. The project is well underway to achieve its development objective (to improve access to basic municipal infrastructure and to enhance municipal management in selected town and city councils of Belize).
  1. The project has completed all Phase 1 investment (except Dangriga market sub-component), resulting in the rehabilitation of 19 streets(some 7.3 km)and refurbishment of the Punta Gorda Town Hall
  1. Mobilization and implementation of five TA components: Revenue Enhancement, Financial Management, Asset Management and Maintenance Plan, Urban Development Plan, Communication Strategy, and Road Safety and Public Awareness. The TA programs have begun to demonstrate tangible results and benefits to enhance TCC’s capacity for municipal management. Some examples include: a) color coded land use maps was developed for the seven (7) municipalities under the BMDP to assist with the consultancy to prepare the municipal development plans; b) diagnostic report on the performance of their revenue sources including a comparative analysis of the performance and administration of revenue sources including property tax and trade license fees; and c) the participation of Mayors, Deputy Mayors and Administrators of all TCCs in a two-day peer sharing workshop on Best Practices for revenue collection and management, among others.
  1. Phase 2 preparation is well underway according to the implementation plan including meeting the requirements of the second phase eligibility criteria and counterpart contribution
  1. Enhanced project implementation capacity of the PIU in all aspects (technical, financial, procurement, project management, safeguards policies) and continued institutional efforts to maintain high level of transparency (e.g. FM disclosure, website, etc). The Bank also acknowledges guidance and oversight provided by the Project Steering Committee
  1. Overall project’s ratings for Progress towards Project Development Objective and Implementation Progress are satisfactory.
  1. Key Recommendations and Lessons Learnt for the Remaining Project Implementation:
  1. Phase 2 Project Appraisal and Investment Prioritization: the mission noted that while investment prioritization was adequately carried out following a consultative and participatory process, some of the proposed investments appear to lack technical, economic, and financial assessment. In particular, the proposed project appraisal documents should strengthen alternative investments that were considered and document better social, economic, technical, and environmental justification for the proposed investment for TCCs.
  1. Design Review: the mission recommends carrying outa thorough design reviewincluding: a) site visitsto validate the adequacy of design; b) sharing site designs with the TCs for review; c) utilizing external peer review is encouraged to ensure the best quality of designs.
  1. Contract/construction Management: the mission stressed the importance of enhancing contract and construction management by the PIU. Based on the review of Dangriga market sub-component, the mission recommends adequate documentation of any issues raised during the site visits by the PIU technical staff; proactive communication and clarification of any contractual issues by the PIU; and maintaining signed minutes of the discussion between the PIU, contractors and TCs. In particular, while SIF retains supervision and project management roles (Dangriga, small works), it is important to maintain logs of instructions to contractors. Such records are critical not only for the determination of delays in future, if relevant, but also importantly to ensure compliance and implementation by contractor, and aid in subsequent follow up visits.
  1. Capacity building and technical assistance components for TCCs: there is a need to build a closer dialogue and policy linkage with the Ministry of Local Government and the Ministry of Natural Resources and Agriculture. In particular, important progress has been made for revenue enhancement TA (with the support from international and local consultants) and MLG can play a significant leadership towards accomplishing the objective of the TA and ensuring that the project’s support for revenue enhancement can be sustained and continued. In addition, an interim protocol for information sharing relating to land ownership between TCCs and the MNRA was agreed and the mission recommends following upon and monitoring this during the project implementation.
  1. Ensuring participatory project implementationthroughout the entire project cycle: the mission stressed that the key development impact that the Project aims to achieve is enhancedtransparency and accountability for TCCs. The Project has built several mechanisms to allow this (e.g. investment prioritization through participatoryprocess, establishing project monitoring committee and grievance mechanisms, and making financial statement public). The remaining project implementation should continue to support participatory process and transparency and the Bank team will provide adequate support as needed.
  1. Implementation Status by Project Component

Component 1: Municipal Infrastructure Investments

  1. Completed and ongoing Phase 1 works. The mission visited Phase 1 Project sites under implementation in all seven TCs (Annex 3 includes a detailed list of site visit locations and dates and Annex 4 provides implementation status of Phase 1 works.) During the site visits the mission met with mayors, Town Council representatives, as well as affected stakeholders. The mission found the quality of construction generally satisfactory and suggested a few minor areas of improvement in safety measures (such as pavements) and quality of materials used (such as paint for street markings). Key discussion and issues raised during the site visit are:
  1. Belmopan –The Bank concurs with TC Mayor’s recommendation that the SIF shares the site designs with the Belmopan TCC’s engineer.
  1. Belmopan, Benque Viejo del Carmen– The paint on somestreets started to fade away, which indicate that the PIU should evaluate and determine the best paint options for street rehabilitation works. The Bank recommends following up with contractors and/or putting corrective measures for all streets supported under Phase 1. In addition, maintenance options could be considered to have the roads re-painted regularly.
  1. Punta Gorda – The site visit to the proposed Phase 2 streets revealedroom for improvement in the vetting process for sub-Projects. In particular, the selection and prioritization of Hopeville road, which is expected to benefit directly 86 households, was not clear. Meanwhile, the West St (VOA Sts), which was considered during the public participation process, was not included in the prioritized list. The mission emphasized the importance of carrying out economic, social and technical evaluation, along with community interests and overall public good in the weighting and final prioritization of sub-Projects.
  1. The mission noted some complementary works for Phase 1 street rehabilitation envisaged under Phase 2, such as sidewalk and additional drainage along the street. The mission recommended the PIU proceed with the complementary works under a separate shopping package.
  1. Dangriga Market Sub-Component. The mission discussed with the PIU both supervision and ongoing work contracts in great detail. Site visits to ongoing works for rehabilitation and expansion of existing market highlighted that no engineer is on site to supervise works and there has been considerable delay in project construction (40% completion rate as estimated by SIF). The contractor reports that his team has been working full time with a crew of about 21 men; however, due to ongoing issues related to non-payment, the crew size is variable. The mission discussed options available for SIF to successfully complete works without more delay, including possible contract termination and the status-quo. In order to decide on a way forward, it was agreed that SIF will assess the feasibilityand likelihoodof the existing contractor to complete construction without further delay (e.g. assessing financial condition, credit arrangement, quality of ongoing construction, and revised work plan for completion) by June, 21, 2013, consult with the PSC and the mayor, and inform the Bank of the proposed steps to take and solution by the end of June, 2013. With no supervision firm for last several months and concerns regarding the contractor’s capacity, the mission also noted there is potential that quality of the works may have been compromised. At the present time, with no supervision firm on board, SIF has been performing the supervision functions as well as Project Management, leading to potential contentious scenarios in the attribution of delays between the contractor and SIF.
  1. The mission discussed a long pending issue of supervision contract for Dangriga Market. After the review by the Bank’s team, it was decided that while 100% payments of the contract had been made to ATA by PIU, deliverables had been only partially made under Interim Report #3 for Dangriga. Furthermore, it was decided that the PIU had overpaid the supervision firm at the amount of BZ$21,641 with BZ$11,656 overpaidfor Interim #3 and BZ$9,985 for final payment. It was further agreed that SIF will determine any deduction to be applied to the refund taking into account additional visit by the firm and communicate to the Bank the justification for the final amount for the refund by Friday, June 21, 2013. The case of supervision contact for Dangriga Market highlights the importance of understanding the difference between time-based and lump sum contracts and improving the SIF’s contract management.
  1. Selection of Phase 2 investments: The mission noted that while investment prioritization was adequately carried out following consultative and participatory process, some of the proposed investments appear to lack technical, economic, and financial appraisal. In particular, the proposed project appraisal documents should strengthen alternative investments that were considered and document better technical, economic, and environmental justification for the proposed investment. The mission recommended the PIU review all the selected sub-projects, carry out additional assessment that would justify all the proposed subprojects (e.g. value for money), document social, economic, environmental benefits of the proposed projects, adjust sub-projects prioritization following the analysis, and carry out another public consultation process as needed to close the loop on the final investment programs. It was noted that enhanced project appraisal document and investment prioritization would ensure greater level of legitimacy and transparency for the project. It was agreed that the PIU will provide a revised phase 2 project appraisal documents reflecting earlier comments by the Bank communicated by email and observations made during the mission by July 31, 2013 for the Bank’s no objection.
  1. Eligibility Criteria for 2nd Phase Investment; the mission was informed that all the TCCs have met the required eligibility criteria for the 2nd phase investment. They include:
  1. That the process for the formal adoption of a Municipal Growth Plan by the Town or City Council after a conducting a series of prior public meetings have been initiated. That the process for the preparation of a physical asset maintenance plan and corresponding budget and incorporation of maintenance budget in the Annual Town or City Council budget have been initiated
  2. Conduct monthly Council meetings of which at least one should be open to the general public every two months starting from October 2012
  3. Conduct public Town meetings at least once every six months as required by law starting from October 2012
  4. Submission of monthly financial reports to MLLGRDINEM and the publication of such reports as required by law starting October 2012.Reduction in the overdraft facility maintained by the Town or City Council to within 90% of the overdraft limit as approved by the Ministry of Finance by Q3 2011 and for any investment applied for after July 31, 2012 a further reduction to within 75%; and
  5. Hiring of a qualified accountant using a transparent selection process based on clearly defined qualifications and experience and using Terms of Reference previously agreed with BSIF and the WB.

It was agreed that the PIU will provide the Bank team with the evidence of meeting all the 2nd phase investment criteria by June 28, 2013. It was reiterated that no sub-project can proceed without meeting the eligibility criteria.

  1. Lump-sum based supervision –The mission noted the recommended approach for Phase 2 supervision is time based contracting method. SIF noted difficulties, mainly capacity constraints for the oversight of such contracts. SIF confirmed that to date, the majority of contracts are implemented lump sum given the relatively small size of contracts (typically under ½ million). The mission agreed that recognizing the concerns of SIF, and the relatively small contracts envisioned, lump sum may be considered. In this scenario, the mission recommended more detailed estimates on the part of SIF to have better comfort on the expected supervision effort and thus manage better upfront costs estimates, which may also revise upwards to reflect risk transfer to consultant (who assumes full risk for construction delays, which could be caused by any number of factors).

Component 2: Technical Assistance and Capacity Building for TCCs, MLLGRDN and MNRA

  1. Revenue Enhancement (RESP) and Financial Management: The Revenue Enhancement TA has advanced well and has made a satisfactory progress. Some specific achievements up to date are:
  • LGO and UPO are located in the Ministries of Local Government and Natural Resources: Terms of Reference and Memorandum of Understanding between BSIF and the Government Ministries have been agreed to. Agreements include office accommodation and sharing of transportation and accommodation during field work.
  • LGO worked closely with TCCs, MLG, SIF and Consultants to implement the following capacity building initiatives between April 2011 and May 2013: Revenue Enhancement Support Program, Computer and Information Technology Network Upgrade Support, Training in QuickBooks Usage and Municipal Development Plans.
  • LGO Terms of Reference revised at the request of the Ministry of Local Government in March 2013 to reflect greater alignment with specific project related activities.
  • Terms of Reference developed for the procurement of the technical expertise necessary to develop the Municipal Development Plans.
  • Color coded land use maps developed for the seven (7) municipalities under the BMDP to assist with the consultancy to prepare the municipal development plans.
  • Activities coordinated with consultants, government agencies, Non-Governmental Organizational and other relevant stakeholders involved in developing the Municipal Development Plans.
  1. The mission was informed that final reports on the progress and outcome under the TA consultancy is under preparation and the team will support an international expert during the final consultation and dissemination of the final report scheduled end July, 2013. In addition, the team noted that the training for the use of QuickBooks for accounting has improved financial management for the TCs. The Bank noted, however, a need to integrate revenue side management together with expense side and proposed working during the remaining project implementation to ensure the interface and integration of the financial system in TCCs. Furthermore, the mission was informed that the MLG is planning to carry out a strategic review of the Ministry’s roles and work plan to support TCCs in enhancing municipal management capacity. The mission highlighted the importance of institutionalizing revenue enhancement efforts within the Ministry and agreed that the Bank team will have a follow-up discussion with the Ministry end July, 2013. Lastly, the mission was informed of the ongoing efforts by MNRA to update the quality of property registration and cadastral information for town councils. Following the discussion, the mission agreed with the MNRA on the interim protocol to allow sharing relevant information with TCCs for revenue enhancement efforts. It was agreed that Urban Planner under the project will follow up and communicate with the TCCs on the interim protocol.
  1. Municipal Growth Plan, Asset Maintenance Plan and Traffic Management: the consultancies have been just mobilized and the mission highlighted that the PIU send all the main deliverables for the Bank’s technical review and comments. The mission was pleased to note that the TA activity is well under way with formulation of local working group consisting of town councils members, civil society and private sector.

Component 3: Project Management