RP680

Croatia Coastal Cities Pollution Control Project 2

Policy Framework for Land Acquisition and Resettlement[1]

Eleven municipalities participated in the first phase of the Coastal Cities Pollution Control Project, including the largest ones. Phase 2 of the Project is expected to include over 30 municipalities up and down the coast. Many have expressed an interest in participating, and some have almost completed their documentation and designs. Dutch Trust Funds funded 29 social assessments and many environmental assessments in candidate municipalities. Additional municipalities are expected to come forward during implementation. As in Phase 1, the amount of land acquisition that may be required is not clear at the time of appraisal, but it is expected to be minimal. The purpose of this Policy Framework is to articulate how land acquisition will be dealt with under Phase 2 the project. Specifically, the objective is to assure that all private land transactions comply with the Obligations Act, the Expropriation Act (published in the Croatian Official Gazette, Narodne Novine, 9/94, 35/94, 112/00, 114/01), General Administrative Procedure Act and the World Bank Operational Policy 4.12, Involuntary Resettlement.

Background

During the preparation of Phase 1, it was expected that most municipalities would need to acquire some private land for the installation of wastewater and sewage conveyance and treatment facilities and rights of way for collector networks, including sewer lines, connecting points, manholes and tunnels and, in some cases, larger tracts for pumping stations, treatment facilities and conveyance and outfall points. The Policy Framework for Phase 1 covered land acquisition (“CompleteExpropriation”) and servitude agreements for rights of way (“IncompleteExpropriation”), as well as the unlikely situation in which households would be relocated or resettled due to the investments.

The Policy Framework constituted an agreement that any land acquisition and resettlement caused by the project would be carried out following well-established procedures specified in Croatian laws and Statutes relating to land purchase and expropriation, which comply with World Bank Operational Policy (OP) 4.12, Involuntary Resettlement. These procedures werealso specified in the project Operations Manual that provides detailed instructions regarding documentation and impact assessment.

In practice, there were very few instances of private land acquisition in Phase 1, and only one instance of expropriation through court proceedings. With that one exception, all privately-owned plots wereacquired for the project through negotiation between the Municipalities or Municipal Water and Sewerage Companies (MWSC, the sub-borrowers) and owners. Similarly, although servitude agreements were more common, few private owners requested payment to granta right of way. In many cases, the sub-borrowers provided domestic connections to the system in lieu of payment.

The precedent established in Phase 1 is expected to be repeated in Phase 2, specifically: no resettlement; little expropriation of private property; successfullynegotiated agreements for land acquisition; and servitude agreements that are mutually satisfactory, with or without compensation.

Expropriation Procedures

In the Republic of Croatia expropriation is the only exception to the principle of inviolability and confinement of private property that is determined in the Constitution of the Republic of Croatia (Article 48). The process of expropriation is specified in detail in the Expropriation Act that enables government institutions to acquire private property for projects that are deemed to be of state interest, while protecting the interests of those whose assets are expropriated. (See Annex A). Three principal provisions guide the process, which must be completed before civil works can be carried out on a site:

  • Minimize expropriation
  • Substitute land and residences, if feasible and mutually acceptable
  • Provide cash compensation according to market prices.

If not regulated by a separate law, real property may be expropriated when necessary for construction of facilities or carrying out works “in the interest of the Republic of Croatia” and when it is deemed that the real property to be proposed for expropriation will provide higher benefit when used for other purposes than the benefits resulting from the prevailing use of the real property. Real property may be expropriated because of construction works or building of economic infrastructure facilities (traffic, telecommunication, water management, energy), health, educational or cultural facilities, industrial, energy, traffic and telecommunications facilities, facilities to be used by Croatian judiciary system, the military and the police, as well as for exploration and exploitation of minerals and other natural resources.

The expropriation procedure may only be initiated within the period of two years from the date the interest of the Republic of Croatia has been established.

It is carried out only after settlement negotiations have proved unsuccessful.

There are two types of expropriation: “Complete Expropriation” gives a beneficiary (the sub-borrower) the right of ownership on expropriated land; “Incomplete Expropriation” gives a beneficiary the right of servitude (right of way and similar rights).

The entire process is public and transparent.

The establishment “of the Republic of Croatia interest” may take place either for the specific facilities in individual procedures held before the Government of Croatia or sometype of structures may be declared being “of the Republic of Croatia interest” in legislation procedure—under the law. Without the establishment of “interest of the Republic of Croatia,” property cannot be expropriated; it can be acquired only through willing buyer/willing seller arrangements. Once an investment is designated or declared under law as being of “Republic of Croatia interest,” the public or private entity managing the investment is authorized to apply for expropriation according to regulations before the, Government Office for the Rights of Property—local branches (GORPs).. The implementing entity can also commission another entity to manage the process on its behalf. .

With respect to the Project, “the Republic of Croatia interest” is already declared in the statutes for the water structures (including transmission mains, pumping stations, waste water treatment facilities, etc.) under the Water Act, and for other municipal utilities, under the Municipal Utilities Act. Practically, one step is thus in place and need not be repeated for investments under the Project. Therefore procedures before the GORPs may start. In each case, the MWSC, thelocal or municipal water and sewerage utility (the sub-borrower) is the entity responsible for the land acquisition. It can manage the land acquisition itself or contract another agency to act on its behalf

The process includes the following steps, regardless of outcome:

  1. Public announcement and publication of plans
  2. Notification of landowners when the tentative alignment is set
  3. Compilation of maps and precise acquisition needs once the alignment is adopted
  4. Preliminary assessment of the value of the required land and structures (land and structures)
  5. Notification of owners and invitation to negotiate, including providing a statement of owners rights, presentation of alternatives, and estimated valuation of standing crops, trees with economic value, and other structures or assets.

If the negotiations are concluded satisfactorily:

  1. For cash compensation, a contract is drafted and signed, payment is concluded and the land is transferred and registered
  2. For exchange, a swap site is agreed, purchased and transferred to the new owner, who transfers the expropriated site

If the negotiations are not concluded satisfactorily,(and the deal is not made):

the utility submits the proposal for expropriation of the real property to the responsible GORP that enacts the decision on expropriation as requested. If the owner disagrees with the financial offer and the amount of land to be expropriated, he or she can appeal the decision to the Ministry of Justice, Administration and Local Self-Government within 15 days of the submission of the decision on expropriation to the owner. If the owner is dissatisfied with the decision of the ministry, the owner has 30 days to appeal to the County Court, which holds an open hearing before rendering a final Decision.

1.If the first Decision is not challenged, it becomes final and enforceable after 15 days and the property can be entered immediately upon payment.

2.If owners are not located, or if co-owners have not agreed among them how to share the compensation, payment is made to an escrow account and the property can be entered immediately after the enforceability of the Decision.

3.If the owner appeals to the Ministry or the County Court, the utility will make payment to the owner according to the Decision of the Ministry or the Court, respectively, and can enter the property immediately upon the enforceability of the Decision. The Decision becomes enforceable following the issuance of the appellate decision by the Ministry. The utility may seek consent from the Government of the Republic of Croatia to enter the property prior to the enforceability of the Decision. The Government may grant such requests if the utility has paid the adjudicated compensation to the property owner and if there is a case of urgency in the subject matter.

Project Procedures

In addition to following and documenting the expropriation procedures indicated above, each sub-borrower will carry out two additional steps.

  • First, once the tentative alignment is identified, the sub-borrower will hold a public consultation to discuss the alignment and its implications, to which all property owners whose lands will be affected by the alignment will be invited by mail. The content and results of the consultation will be recorded in minutes that are maintained in the sub-project file and made available to the social assessment team and Bank supervision missions.
  • Second, if private land is to be acquired, the sub-borrower will prepare a Land Acquisition Plan and submit it prior to effectiveness of the proceeds under the sub-loan agreement. In most instances, the Plan will consist of land and ownership data contained in the final design, with minor elaboration. The Plan will include details about any steps taken prior to the effectiveness of the proceeds under the sub-loan agreement, such as notification or consultation with owners, and description of the land acquisition process. This should include the following: an estimate of the amount of land that will be acquired; the number of owners; if available, a breakdown of (i) freely acquired lands (ii) lands subject to Complete Expropriation and (iii) lands subject to Incomplete Expropriation, breakdown showing the percentage of each affected parcel that will be subject to Complete Expropriation (to the extent available), and any substantial assets to be affected, such as homes or structures; and designation of people and entities responsible for implementing the land acquisition program and lines of authority. This will be reviewed by the financial institution and submitted to the Bank for review and approval. The sub-borrower’s Plan will be updated as information is available, particularly data regarding specific acquisition details and compensation, and monitored by HVJP (Hrvatske Vode Jadranski Projekt)the Project implementing entity, as well as Bank supervision missions.

Annex A

The Expropriation Act

If not regulated by a separate law, real property may be expropriated when necessary for construction of facilities or carrying out the works in the interest of the Republic of Croatia and when it is deemed that real property to be proposed for expropriation will provide higher benefit when used for other purposes than the benefits resulting from the use of the said real property in the present way. Real property may be expropriated because of construction works or building of economic infrastructure facilities (traffic, telecommunication, water management, energy), health, educational or cultural facilities, industrial, energy, traffic and telecommunications facilities, facilities to be used by Croatian judiciary system, the military and the police, as well as for exploration and exploitation of minerals and other natural resources.

The expropriation procedure may only be initiated within the period of two years from the date the interest of the Republic of Croatia has been established.

It shall be carried out after settlement negotiations have proved unsuccessful.

EXPROPRIATION PROCEDURE

The expropriation proposal may be submitted by the expropriation beneficiary (condemner) only after the interest of the Republic of Croatia, as regards the construction of facilities or carrying out the works, has been established by virtue of the provisions of this or another act.

Prior to submitting the expropriation proposal, the expropriation beneficiary shall be obligated to provide, through a competent body, the evidence of the state and the value of the real property for which expropriation is being sought (findings and opinion of experts etc).

The proposal for expropriation of real property must include the designation of: 1. the expropriation beneficiary, 2. the real property proposed for expropriation, 3. the owner and possessor of real property for which expropriation is sought, including his address or seat, 4. the facility or works that are the reason for the expropriation proposal.

The expropriation proposal must be submitted together with:

  1. the proof that the beneficiary of the expropriation has tried to resolve the question of acquiring the ownership rights through a negotiated settlement with the owner of a given real property (written offer, public announcement etc),
  2. an extract from the land-register books or other public registers in which the ownership of real property is entered and which keep the data on the real property for which expropriation is sought, or cadastral and other data if such books do not exist or the situation on the books does not reflect the actual possession,
  3. an extract from the possession document,
  4. the proof of established interest of the Republic in building facilities or carrying out the works on that particular real property,
  5. the evidence of the state and the value of real property for which expropriation is sought (findings and opinion of experts etc).,
  6. the proof that the expropriation beneficiary has secured and deposited in a bank funds approximately necessary for compensation for the expropriated real property and the costs of the procedure, or the proof of having secured another appropriate real property,
  7. the physical planning terms or the expropriation plan for building facilities or for carrying out the works for which expropriation is sought.

Pursuant to the expropriation proposal, an entry shall be made ex officio in land-register or other public register, denoting the expropriation procedure; the competent body shall notify the owner of the real property in writing.

In the first instance, the Government Office responsible for the Rights of Property (GORPs) or the office of the City of Zagreb responsible for Rights of Property (hereinafter: the government office or GORPs) shall have the jurisdiction; in the second instance, the Ministry responsible for Justice, Administration and Local Self-Government shall decide.

The expropriation order shall be issued by the government office within whose territorial jurisdiction real property proposed for expropriation falls. Prior to issuing the expropriation order, the government office must inform the owner of real property about his right to file a request for the expropriation of the remaining portion of real property.

The order which upholds the expropriation proposal shall comprise, inter alia:

  1. the designation of the act by virtue of which the interest of the Republic of Croatia has been established,
  2. the designation of the expropriation beneficiary,
  3. the description of real property to be expropriated, accompanied by land-register data or cadastral data if real property has not been entered into the land-register or other public register or it does not exist,
  4. the designation of the owner and the possessor of the expropriated real property and his address or seat,
  5. the description of facility or works which are the reason for expropriation,
  6. the obligation of the real property owner to transfer it into possession as well as the deadline for transfer into possession,
  7. the obligation of the expropriation beneficiary regarding the compensation for expropriated real property: a detailed description of an appropriate real property or the cash amount that reflects the market value with the deadline for transfer into possession or payment, which may be no more than 15 days after the expropriation order has become final, or announcement of settlement if one has been reached,
  8. the obligation of the expropriation beneficiary to pay legal penalty interest, accrued from the date of the issuance of the expropriation order in the first instance to the date of payment.

An appeal may be filed against the order of the government office within 15 days. The appeal shall be adjudicated by the Ministry of Justice, Administration and Local Self-Government.

An appeal may be filed against the second-instance order with the local County Court (within 30 days from the receipt of the second-instance order). The appeal shall be adjudicated by a Panel of the County Court in open hearings. The decision of the Panel cannot be appealed or revised.