Housing Policy in Armenia Condominium Activity by zgo16115

VIEWS: 29 PAGES: 20

									                                                                                       Working Paper No. 04/10


                 Housing Policy in Armenia: Condominium Activity

                                             Mais Vanoyan∗
                                        Senior Resident Advisor
                                       Local Government Program
                                         USAID/Urban Institute
                                  Mais.Vanoyan@armpolicyresearch.org

                                                    January 2004

                                                      Abstract

Urban housing maintenance presents a major challenge for Armenia today. While most residents of
multi-family apartment buildings have privatized their apartments, they have yet to take responsibility
for the dilapidated common property and infrastructure in their apartment buildings. Most buildings
require major repair and investment, but the organizational structure and financial means currently are
unavailable to fulfill this need. As a result, the property of the apartment building structure owners,
which includes the whole common area of the buildings are remaining out of routine maintenance. The
central government has made several attempts to encourage residents to form associations to manage
the common property and infrastructure of urban housing, most recently with new legislation in May
2002. Local governments also have attempted to devolve responsibility for housing services to
residents, but they face a conflict of interest in that they often own commercialized zheks, or housing
maintenance companies.

            The views expressed in this Working Paper are those of the author(s) and do not necessarily
            represent those of the Armenian International Policy Research Group. Working Papers describe
            research in progress by the author(s) and are published to elicit comments and to further debate.


Keywords: Housing policy, condominiums, Armenia

∗
  The Urban Institute (UI) is grateful to USAID, and especially Bella Markarian, CTO, for enabling author a
chance to present Armenian experience on condominium activity in the Second Annual Conference organized
by Armenian International Policy Research Group in Washington D.C. The author enjoyed working with Brien
Desilets, Urban Institute Independent C onsultant and preparing with him previous two reports on condominium
activity in Armenia. This paper was developed on the basis of these joint reports and affected by his stable
support enclosing his relevant comments and recommendations. The author is very grateful to Carol
Rabenhorst, Urban Institute LGP Principal Investigator, for her prompt and professional contributions and
helpful comments on the draft.
Keywords:
Acknowledgements
               Brief history of reforms and legislative background

The housing sector in Armenia is remaining for the Government as a field of one of the
highest priority. After independence, the reforms were provided in housing very
intensively in addition to reforms started in different fields of national economy. Even
before the independence, in 1989 the state allowed tenants to purchase their apartments
from the state at the officially defined value. By the year 1993 8% of housing were
privatized in Armenia (1). New privatization wave of apartment buildings in Armenia
started in 1993, when the Parliament of Armenia adopted the Law of RoA about
Privatization of State and Public Housing. According to this law to privatize the
apartments the tenants were required to pay fee equal to two months of the minimum
salary. This was a very small amount, and enabled the residents to become owners of
their apartments. Due to, actually, free privatization, 96% of housing sector is privatized
now in Armenia.

On 30 May 1995 the Government introduced the Decision No. 295 that directed
condominium formation. The government directed its local authorities – executive
committees to perform the appropriate organizational activities aimed at mostly finishing
the formation of condominiums in those apartment buildings where at least 50% of
apartments are privatized to support the formation of condominiums as a means of
providing for the management of common property in apartment buildings. Some local
authorities received this Decision as an order to complete condominium formation in all
multi-unit buildings and the creation of condominium associations were started all over
the country. This was, actually, the first legal act of Republic of Armenia on
condominiums.

Later, on 1 May 1996 the National Assembly adopted The Law on Condominiums - the
first law on condominiums of Republic of Armenia. It provided for voluntary registration
of condominiums and identified condominium organization as voluntary option of
housing management. The National Assembly amended it in 1998, exempting the idea of
limiting condominium associations to single buildings. The adopted law and amendments
provided for the identification, certification and registration of condominium associations
and provided the method of forming the associations, electing a governing body as well
as fiscal management requirements.

Thus in early stage of reforms after independence, the housing sector was decentralized
in terms of ownership and management by several regulatory acts. The same is
concerning the housing maintenance. The state housing stock was being traditionally
managed, maintained and repaired by the official state housing maintenance
organizations known by name “ZHEK”. Responsibility for maintenance of the housing
stock was transferred to local governments in Government Decrees 42, 51 and 116 of
1997 and “ZHEK”s were converted into joint stock enterprises and enclosed in the local
government structure. However, even after the passage of the Law on Condominiums, the
Law was slow and ineffective in implementation. The apartment buildings were
remaining still in the poor condition, mainly due to the lack of appropriate management
and maintenance. The former “ZHEK”s were not able to provide proper maintenance, on
the reason of lack of sufficient subsidizing and inefficient operations inherited from the
former state-ownership structure. As for new organizational structures – condominiums
are unable to provide maintenance of houses on the reason of the “circle of non-payment”
(residents do not pay because they do not trust in manager and do not see any
maintenance activity and a maintenance activity is not provided because of lack of
payment for service fees).

Recognizing that it is necessary to protect the housing stock from further deteriorating
and aiming to offer residents other forms of ownership management, the Ministry of
Urban Development in conjunction with USAID funded Local Government
Program/Urban Institute1 developed the Apartment Building Management Law and
elaborated amended Law on Condominiums. These laws were passed in June 2002 in
National Assembly.

The new adopted legislation permits two forms of management in addition to
condominium associations: authorized managers and trustees. Under both options,
residents sign a contract with the appointed representative to ensure maintenance of
common areas and infrastructure. A related Decree, No. 1625 of 10 October 2002, spells
out mandatory norms that must be maintained in apartment buildings, whichever form of
management residents choose.        According to the Law on Apartment Building
Management, mayors are charged with supervising compliance with mandatory norms
and, also, where residents fail to form or select a management body, or the selected
management body fails to bring the building into compliance with the mandatory norms,
local governments are required to take on many of the duties assigned to management
bodies, including ensuring compliance with mandatory norms.
Context



1
  This program is one of the few programs attempting to establish new attitude towards the housing
management and maintenance. Beginning in 2001, LGP developed training materials and conducted
training seminars for condominium associations and local government officials in Yerevan and LGP’s pilot
cities. Condominiums training were being provided for the initiative groups on establishment of housing
associations – condominiums. Local Government Program subcontractors have developed a condominiums
training manual. The topics in that manual included condominium association condominiums management,
citizen participation in condominium associations, budget and financial management, the Law on
Condominiums and relationships between local governments and condominium associations. Most of these
activities were implemented through the sub-contractors.

Urban Institute Local Government Program has contributed to the development of the legal
framework for condominium associations and apartment building management. In 2000-2001,
LGP, in cooperation with the Ministry of Urban Development (MUD) and a group of consultants that
formed a Condominium Working Group, analyzed the Law on Condominiums and drafted amendments to
harmonize the Law with the Civil Code, Law on Local Self-government and Land Code. In 2002, LGP
again collaborated with MUD and the Working Group to provide technical support to the National
Assembly, prepare mandatory norms and develop public outreach materials related to the ABM Law.
The situation related to condominium development in Armenia cannot be out of general
picture of creation and development of Civil Society in the country. The Armenian
legislation defines the condominium as “ non-profit and non-commercial cooperative
entity based on membership of citizens and legal persons and founded through merging
of interests of it’s members and for the purpose of management of the property
considered the shared ownership of the apartment building(s)”. Consequently,
condominium associations in Armenia can be related to a type of Civil Society
organizations in addition to Non Governmental Organizations and other Community
Based Organizations and etc.

As of June 1, 2001 there are 2,579 registered NGOs in the Republic of Armenia. (Human
Development Report, Armenia 2001. 10 Years of Independence and Transition in
Armenia, UNDP, Armenia, 2001) Despite the mushrooming of NGOs fewer than 10%
are actually in operation and/or can be considered as self-sustainable. (Human
Development Report, Armenia 2000. Human Rights and Action for Progress.
UNDP, Armenia, 2000). According to the survey conducted by UNDP the numbers of
those who think that the formation of civil society in Armenia has yet to begin and those
who think that it is only in an embryonic stage are nearly the same - 25-30% of all who
were surveyed.. (Human Development Report, Armenia 2001. 10 Years of
Independence and Transition in Armenia, UNDP, Armenia, 2001).

The creation of the great deal of NGOs in Armenia are conditioned mainly by the discrete
funds of international donors’ organizations, therefore the advocacy of interests of a
certain groups of society is remaining unclaimed. There are, also, NGOs created by the
“top”, to express interests of different level of government strata. Thus the overall
picture of development of civil society in Armenia is still remaining weak and the
comparison NGO development with the development of condominiums in Armenia
points out similar scene.

Like this, since the first legal act on condominiums over 700 condominiums associations
have been established in Armenia during the passed 8 years. This amount is covering
about 55% of housing stock. Due to unequal distribution of establishment in some cities
there were no established condominiums at all and in Kapan city for example the whole
housing stock is converted into condominiums. About 80 % of established condominium
associations are in Yerevan (2). In the table bellow it is represented the trend of
establishment condominium associations by the years.

Table 1 Housing Associations (HOA) - Condominiums in Armenia

                                   1996         1998          2001            2003*
    Number of registered           60           354           602             708
    HOAs
    Number of buildings in         300          650           4035            5494
    HOAs
    Number of apartments in        1600         42.583        170.969         226.986
          HOAs
          Number of units in                  N/A            10 %             41 %                54.8 %
          HOAs as percent of all
          apartments
    Source: 1996 and 1998 data are from the Doane, Simpson and Rabenhorst, (2000); 2001 data are from
    Desilets and Vanoyan (2001); 2003* data is ongoing and is provided by Ministry of Urban Development of
    RoA.

    In spite of the process of establishment of condominiums is ongoing and we have in
    Armenia impressive amount of housing associations, however, many condominiums are
    inactive because of a lack of individual action, interest and understanding among their
    members. Approximately 15 percent of condominiums report that they are totally
    inactive and collect no fees. Approximately 20 percent actively collect dues, hold
    meetings and provide a range of services to their members.               The remaining
    condominiums provide varying levels of services (5).

    The principle indicator for the activity of condominium associations is collection of fees
    for services. There are about 60 condominium associations, collection rate is over 60%
    and mainly, these condominiums are acting in Yerevan (3). The ordinary collection rate
    does not exceed 30%. As a result of the low collection rate condominium association
    cannot sustain as organization and nor organize services for residents and to prevent
    apartment buildings from the further deterioration.

    Residents are not willing to pay for the current services of the buildings. This is not only
    result of that the services are expensive (still they are remaining far below the costs of
    maintenance (10))2 and some families are not afford to pay for the routine maintenance.
    Residents are willing to pay and see the result of their payment. But the capital
    investments are rare in the buildings, in spite of that there is high necessity to address
    these needs (as it will be discussed bellow) and the routine maintenance is less priority
    for the residents. Consequently, it is hard to collect fees for the routine maintenance for a
    building requiring capital repairs.

    As it was analyzed in the report (5,6), key reason of poor collection rate of
    condominiums is not an ability of residents to pay, but willingness to pay. Some
    condominium chairpersons are certain that collection rates would increase if they were
    able to provide more services.

    Results of Household Survey implemented by Center for Policy Analysis, AUA provided
    in 9 pilot cities for LGP/UI show (7), that the residents are willing to pay more for the
    type of “visible” services (such as Garbage collection) taking into account, that this type
    of services are provided by condominiums more properly- more often and regularly
    (Table 2). The garbage collection and the cleaning of common areas are the services,


2
 In case if the management is provided by former ZHEKS the fact that fees does not cover the cost of
maintenance is partly because these enterprises are inefficient and sometimes corrupt
which are provided by the most of housing associations (up to 70%), if compare with the
services of common areas repair and maintenance (25%).


              Services       Provided        by      Active     Condominiums
              Table 2

                                                                Percentage of
                                                                   Active
              Service                                          Condominiums
                                                              Providing Service
              Garbage Management or Payments                         70
              Cleaning of Common Areas                               62
              Water     Supply      Maintenance       or             41
              Payments
              Common Areas Repair or Maintenance                     25
              Heating     System       Payments       or             24
              Maintenance
              Elevator Maintenance or Payments                       20
              Self-policing of Illegal Electricity Use               11

              Source: Environmental Resource Management; 2001; Urban Heating
              Strategy for Armenia; Demand Analysis, Tacis/World Bank


Respectively, willingness to pay for the garbage collection is closer to 80% of
respondents in the survey provided by CPA (see the Chart bellow). At the same time
willingness to pay for the maintenance of apartment building maintenance is almost twice
less. Moreover, the willingness to pay decreased at the recent survey vs. the survey
provided in 2001 for the services of maintenance of apartment buildings (being as the
only negative trend amongst 14 type of services) while the increase of willingness to pay
for the garbage collection is more significant (about 10%).
     Willingness to pay for services                                                               2001                                 2002                              Difference


   90
   80
   70
   60
   50
   40
   30
   20
   10
    0




                                                                                                 Maintenance




                                                                                                                                                                          Maintenance
                                                                                                               Nursery
                                                                  Centralized
                                      Landscaping




                                                    street dogs




                                                                                                                                                  Libraries




                                                                                                                                                                                         of cemeteries
                                                                                                                         arts schools
                      Street lights
         collection




                                                                                                                                        schools




                                                                                                                                                              monuments


                                                                                                                                                                          of apartment


                                                                                                                                                                                         Maintenance
                                                                                transportation




                                                                                                                                         Sports
                                                     Control of




                                                                                                               school


                                                                                                                          Music and
   -10
                                                     and cats
          Waste




                                                                                                                                                                            buildings
                                                                   heating




                                                                                                  of roads
                                        streets




                                                                                                                                                                 City
                                                                                    Public

Source: USAID/Urban Institute, Citizen Participation Program In Nine Pilot Cities: Report On 2001
Follow-Up Household Survey Findings, February, 2002

Thus in spite of Armenia succeeded in legal framework upgrading legislation in the field
of housing policy along the post soviet period, however little has changed on the ground.
Moreover recently Yerevan government (the city has marz status) established a
coordinating committee to provide assistance to residents establishing condominium
associations or other type of housing management, various decrees have been issued with
the aim of supporting condominium development, although condominium development
in Armenia is encountered with obstacles some of the reasons of which is discussed
bellow.

                                         Mentality or lack of action from the “bottom”

Traditionally in Armenia, the residents were not responsible even for the maintenance of
their own apartments. Officially even minor repair in the apartments had to be provided
by the ZHEKs. The reason for that is the apartments were state owned and the state
should take care for the apartments. As for buildings maintenance, also, any repair of
entrances, yards, utilities or any other common properties, was being organized by
ZHEKs. The concept of condominium therefore represents a crucially new approach to
maintain common shared property and supposes new challenge for the mentality of
owners.

The passed process of condominium development, in addition to the Soviet tradition of
individual inertia, has created an environment in which many citizens are unaware of the
responsibilities and opportunities offered by their status as homeowners and
condominium members. They do not act as homeowners in market economies with long
traditions of private property; for example, many homeowners still expect their
government to repair their roofs should they require repair.
Homeowners do not maximize their rights and opportunities within condominium
structure because they are unaware of those rights and opportunities, and because they
witnessed condominium formation as another wave of centrally directed government
programming. Condominiums are in the making in Armenia but the process is going on
for 8 years and many residents are informed of their condominium membership only after
their condominiums had been registered. (5)

As a result the great deal of condominium associations are not collecting monthly service
fees necessary for sustain activity of condominiums. Only about 10% of condominiums
in Armenia have maximum collection rate 60% and more.

                                 “Top-Down” approach

Local authorities in Armenia, on certain reasons are usually reluctant to the idea of
condominiums. Partly, it can be connected with the loss of power upon a significant
number of population. That can cause the loss of influence on the electorate. The other
part don’t trust on the idea of condominiums and consider that the concept of
condominiums is too early for Armenian mentality and environment as the sense of
community is not strong enough and the Housing associations in Armenia can not
survive.

 Recently, after adoption of the new legislation in the field of Apartment Building
Management, there appeared a tendency to form condominiums, that include numerous
buildings. (Ijevan, Hrazdan, Vanadzor, Kentron District of Yerevan and etc.). For
example in Kentron District a condominium, which is founded recently, is covering 650
apartment buildings. The same situation is in Arabkir district in Yerean where 311
buildings were formed into one condominium association. Generally it is being initiated
by the local government bodies i.e. by the “top”, which does not fit with the idea of
condominiums, as the legislation clearly defined condominium formation as voluntary
act.
In this way local governments bodies tend to solve two of their own problems or
obligations

1. Fulfill the requirement of the law, by that they show their commitment to the
   government. which is foundation of any type of management body for apartment
   buildings.

2. Deal with few people while managing and to establish “easy management” i.e. to
   keep the housing activity under the control

Recent survey of condominiums in Vanadzor (3) has shown, that condominiums in that
city have very high collection rate, sometimes it reaches up to over 90%. The
extraordinary peak of rate in this city can be explained by the fact, that City Hall has too
much involvement in activity of condominiums. In spite there is close collaboration with
condominiums, sometimes they exceed their power in condominiums daily activity. The
following summarizes the results of audit provided by the Housing Department (Senior
Specialist Nerses Shahverdian) of Lori Marzpetaran (3,5), which is becoming typical for
other local governments.

• These condominiums are founded on the base of former zheks. The staff of zheks are
simply converted into condominiums. The creation of the condominiums occurred not in
classic way of “bottom-up”.
• Some condominium chairpersons are still working in the city hall and they are
considered to be double subordinated receiving salary from the municipality.
• In spite of City Hall Department of Housing and Condominiums is coordinating
activity of condominiums having regular meetings with them once in every week, this
department are making condominiums be accountable and is pressing on Condominium
chairpersons to exhibit “good figures”.
• Correspondingly, condominium chairpersons are transferring the pressure towards the
tenants using illegal methods of collection fees for services, refusing non payers to
provide different certificates and documentation (certificate of identity and etc.).

The case of “too much involvement” of Local Government in Vanadzor shows, that in
spite of condominiums in this city have high rate of service fees collection they are very
much economically dependant on the local government. The latter can “punish” a
condominium, which is not collecting enough sum and refuse to allocate subsidy. Local
government can also “award” subsidy to start some repair in the houses.

The economic dependence of condominiums were being used by local authorities as a
leverage during presidential elections and elections in different levels all over Armenia.
Most of condominium chairpersons during elections are involved to fulfill the political
order.

The obstacles regarding to the hardened attitude towards the ownership and maintenance
of building structure owners and local government officials listed above tightly are
connected with a broader field of difficulties – establishment of Civil Society in
Armenia. The citizens should have know their rights and responsibilities. The
management of condominium should be transparent, involving citizens in decision
making, as well local government officials should be receptive towards the idea of
delegation of responsibilities to the community-based organizations and etc.

                               Lack of capital investments

Residents were allowed to privatize their apartments since 1993 and the process was
completed in 1999. Although apartments were being privatized actually without charge
but the residents got their apartments in the buildings, which haven’t been repaired
decades and no capital investments were undertaken. Meantime the amount required to
repair only the roofs and common hallways in apartment buildings would be more than $
160 million (10 % of GDP) (4). The deterioration of construction of houses is going on,
but no capital investment is provided.

Condominiums could play a major role in sustainable economic development in Armenia
if owners’ resources could be channeled into investing in their property through capital
repairs. Housing improvements can play a major role in the overall economy even if
individual investments are relatively small because of the large number of persons who
would be participating. This will create jobs in construction, and increase the
manufacturing and sale of materials. This has proven to be true in other transition
countries. When owners are mobilized to repair their buildings, jobs are created in private
sector management as well as construction, all of which adds to the GDP.

Approximately one –quarter of the multi –family stock was built in Armenia before 1960
and about 53% were built from 1960-1980, which means three quarter of units are 30-50
years old. At the same time, capital repairs of houses have dropped by a factor from 1.3
percent of the housing stock in 1994 to 0.1 percent in 2000. (4)

There are in Armenia 1425 apartment buildings being in the condition of different type of
emergency, which is around 11% of total amount of apartment buildings. (8). The
government is faced with the challenge to organize reconstruction of these buildings,
which needs huge investments. The great deal of the remaining amount of buildings need
general capital repair (roof and entrances repair, internal potable water supply and
sewage system renovation, yard improvement, etc.).

The practice has shown that organizational effort of the government including creation of
legislative background on housing to ease the burden of reconstruction and to redirect it
towards the homeowners is not enough to solve the problem. The privatization and the
creation of the favor basement for activity of condominiums need to be accompanied
with substantial investments.

USAID funded Local Government Program (Urban Institute) organized Participatory
Urban Assessment (PUA) within its Citizen Participation and Apartment Building
Management program components. PUA was provided in the cities Kapan, Sisian,
Jermuk, Sevan, Ijevan, Vanadzor, Alaverdi in 2001 and updated in 2003. Each city was
divided into neighborhoods and the problems are prioritized through the each district-
neighborhood. Citizens vote for each problem and are prioritizing all problems they
consider to exist in their district. Comparison of the results of two surveys indicates, that
there is significant increase of frequency of problem priorities in the districts. Table 3
shows the trend of dynamics of prioritized problems in the pilot cities identified by
Participatory Urban Assessment. In 2003 frequencies

As an apartment buildings related problem it is taken three groups of problems: a)
Apartment building capital repair, which includes roof repair, repair of entrances and
other common areas b) Drinking water pipeline and internal sewage system repair c)
Improvement around buildings, construction of playgrounds
Table 3. Priority of apartment buildings related problems in LGP pilot cities

      Description        Priority Survey Kapan    Sisian Jermuk Sevan   Ijevan Vanadzor Alaverdi
                            N             (20*)     (8)    (3)   (9)      (9)    (15)   (9)

                                                                                                   Total
                                            Fre     Fre    Fre    Fre      Fre    Frequ     Frequ frequences
                                            que     que    que    que      que    ency      ency for the cities
                                            ncy     ncy    ncy    ncy      ncy
       Apartment                    200
    buildings capital                 1       9              2      2        2         5           1         12
    repair (roof and                200
      enctrances)            1        3      11       2      3      4        4         9           5         29
                                    200
                                      1                             2        2         2                      6
                                    200
                             2        3       2       2             2        2         3                     11
                                    200
                                      1                      1                                     4          5
                                    200
                             >3       3
      Total for the
     survey 2001 for
      all priorities                          9       0      3      4        4         7           5         23
      Total for the
     survey 2003 for
      all priorities                         13       4      3      6        6       12            5         40
        Apartment                   200
    buildings drinking                1       1       1                      4         5           3         14
      water pipeline                200
       and sewage            1        3                             1        1         2           3          7
    repair/constructio              200
             n                        1       7       1      1      1        2         2           5         13
                                    200
                             2        3       8       2             4                  6           5         19
                                    200
                                      1               3             5                                        11
                                    200
                             >3       3       2       2             1        2         3                     10
      Total for the
    survey 2001 for
      all priorities                          8       5      1      6        6         7           8         38
      Total for the
    survey 2003 for
      all priorities                         10       4      0      6        3       11            8         36
      Improvement                   200
    around buildings                  1                                      1         1                      2
    , construction of               200
       playgrounds           1        3                      2               4                                6
                                    200
                                      1                                      3                                3
                                    200
                             2        3               1      1               3                                6
                                    200
                             >3       1       8       2      3                         6                     13
                                   200
                                     3        10       5                          1    7            2    20
       Total for the
     survey 2001 for
       all priorities                          8       2        3        0        4    7            0    18
       Total for the
     survey 2003 for
       all priorities                         10       6        3        0        8    7            2    32
      Grand total for
     frequences in the
      survey of 2001                          25       7        7       10        14   21           13   97
      Grand total for
     frequences in the
      survey of 2002                          33       14       6       12        17   30           15   127
* Numbers in the brackets show the total numbers of neighborhoods in a city

There is no significant change of problem prioritization of drinking water pipeline and
internal sewage system repair from 2001 to 2003.
Total number of first three priorities is increased during the survey of 2003 and the
problem of apartment buildings capital repair is set by residents as highest priority 74%
more than in the survey 2001 (Chart 1).

CHART 1

                              The dynamics of prioritized problems in neighborhoods:
                                       Aparmtment buildings capital repair


   45
   40
   35
                                                            Frequencies in 2001
   30
   25                                                       Frequencies in 2003
   20
   15
   10
    5
    0
                Priority 1                Priority 2                Priority 3              Total




The demand of improvement around buildings and construction of playground is
increased 77% during the survey of 2003 (Chart 2).

CHART 2
                                     The dynamics of prioritized problems in neighborhoods:
                               Improvement around apartment buildings/construction of playgrounds

       35
                                                                   Frequencies in 2001
       30
                                                                   Frequencies in 2003
       25
       20
       15
       10
        5
        0
                  Priority 1                   Priority 2                 Priority 3                Total




   Implementation of donor programs

   Donor organizations, who are providing assistance to housing or housing association
   development have attempted to address some problems discussed above – the current
   prevailing mentality of condominium owners and lack of investments. Consequently,
   donors’ activity include technical assistance to condominiums and provision of housing
   maintenance projects. Each program working on housing improvement in Armenia use
   different techniques to achieve capital repairs.

   Some organizations, who are providing funds for housing maintenance have relied on
   construction companies to renovate or repair buildings. This approach does not take
   advantage of the high unemployment and highly skilled labor within condominiums and
   does not foster community participation and development. It also may carry higher
   financial costs for the donors.

   Other donors have implemented building improvement projects in which condominium
   members have provided some or all of the labor themselves, organized by a coordinator
   and supervised by a construction engineer. This approach takes advantage of the high
   supply of unemployed and skilled labor within condominium associations. It also fosters
   a sense of community within the condominium and a sense of ownership and
   empowerment. Bellow a brief description of some projects is provided.

                          World Bank Municipal Development Project

Beginning in September 2002, the Municipal Development Project (MDP) administered a pilot
       grant program to condominium associations in Yerevan. Fifty-one associations were
       selected to receive a total of USD400,000 for training, consulting and technical services
       as well as physical improvements to buildings. Building improvements included
       renovation of condominium offices and provision of computers, based on the need for
       contract management facilities. The selected condominiums also benefited from
   rehabilitation of the internal water networks of their apartment building blocks and
   distribution of water meters to measure water usage by individual apartments.
   Condominium associations are expected to repay the cost of the meters within six
   months from receiving them. The criteria for distribution of grants consider social
   conditions of building structure owners and include number of families being in poverty
   assessment system and receiving poverty allowance.

The MDP also included a major public awareness campaign. Television spots on the
establishment of condominium associations, the role of condominium associations in
water conservation. Also as part of the MDP, condominium chairpersons received
training in management theory and psychology, finance and budgeting.

World Bank Japanese Social Development Fund Grant
In May 2003, World Bank began implementation of a grant of USD1.9 million from the
Japanese Social Development Fund (JSDF). Of the total amount, USD150,000 is
envisioned for international and local consultants to provide technical assistance for
condominium association creation, strengthening and training, a public awareness
program. The project is implemented by the Urban Institute. The remainder of the grant is
intended to fund improvements in condominiums, including renovation of internal
building water networks and water meter installation for vulnerable households. The
condominium associations are participating in this project. The selection criteria take into
account the number of poor households living in buildings and include percentage of
families receiving poverty allowance, being in poverty assessment system, having female
over 55 as head of household and etc.

World Bank Urban Heating Project

WB plans an Urban Heating Project of USD10 million. The government has received an
advance of USD1 million on the expected loan in the form of a Project Preparation
Facility (PPF) to implement pilot projects in apartment building heating system
rehabilitation. The Project Implementation Unit (PIU) published a request for interested
management bodies to express their interest in participating in the project. Currently
three housing associations are involved in implementation of pilot projects. The chosen
associations will be eligible for long-term, subsidized loans of up to ten years for heating
system investments, including measuring and control devices.
In both abovementioned project advisory centers are in planning; its purpose and structure are
under discussion.

USAID/The Save the Children Public Works Program.

The Save the Children has implemented Public Works Program in LGP/UI pilot cities.
Citizens are directly involved in this program both from Local Government and Public
Works Programs perspective. LGP enclosed in its Citizen Participation component
Participatory Urban Assessment and citizens direct involvement in Capital Improvement
Planning. The Save the Children requires residents’ participation in all stages of project
design, implementation and evaluation.
Information on two success stories of the USAID/Save the Children Public Works
Program, where a condominium or an initiative group for establishment of a
condominium are implementing partner are presented below. In each case, a Civic Action
Group was elected by community members and as managing body of project
implementation.

JRVEZH 1 CONCOMINIUM (Yerevan)

                           SC contribution       Community            Other contribution
                                                 Contribution
    Grand total            $ 49,996              $ 4,633              $ 150

Outcomes:
• Reconstruction of roofs of 7 public buildings: 3,136 sq.m total space
• Rehabilitation and re-working of doors, windows, and walls of entrances of 8 public
  buildings: 9,200 sq.m total space.
• Landscaping of these 8 public buildings 2 yards and playground.
• Improving the drainage and water passage of all of these 7 buildings roofs.
• Improvement of the overall ambience.
• After implementation the service fee collection rate grew up to 55% comparing to 30-
  35% they had before.

ALAVERDI

                                SC                   Local     Government      Community
                                contribution         contribution              contribution
    Grand total                 $ 64,997             $8,577                    $ 11,645

Outcomes:
• Reconstruction of roofs of 9 public buildings with 5723 sq.m total space
• Rehabilitation and repair of doors, windows, and walls of entrances of public
    buildings with 8182 sq.m of total space.
• Landscaping of these public buildings’ yards and playgrounds.
• Improving the drainage and water passage of all of these buildings’ roofs
Members of CAG are initiating the creation of a condominium on the basis of repaired
buildings

Canadian International Development Agency/Woodgreen Community Center

The Woodgreen Community Center, with funding from the Canadian International
Development Agency (CIDA), implemented a pilot housing association and maintenance
project in Yerevan’s Achapniak district. The project is described in Desilets and
Vanoyan (October 2001). The project has had a lasting effect, as evidenced by the
continued management of approximately two thirds of the district’s housing stock by
condominiums. Relationships between the district government and the condominiums
are described in the section on Relevant Local Government Operations. This is important
as a demonstration that donor projects can make a meaningful difference in apartment
building management.

                                       Conclusion

To overcome obstacles on the way of condominium development in Armenia some steps
have to be carried out, which are necessary but not sufficient
• The donor funds related to condominiums both regarding technical assistance and
housing renovation should not be provided separately, it should be coordinated. An
important role in this direction can play the creation of Condominium Advisory Centers
allotted in the World Bank projects.
• Unified criteria of selection should be elaborated for condominiums, who are
competing to participate in the projects funded both by government and donor
organizations
• The ultimate goal of donor support to condominium associations is condominium self-
sufficiency and sustainability. Donor and government (local or state) support should
require contribution by condominium members including matching funds and repayment,
and in-kind, including labor.
• The provided support should only be available in buildings where an association of
owners has been created and demonstrates that it can function effectively. In addition,
experience in other countries shows that condominiums are more effective when only
smaller number of buildings comprise an association of owners. Local governments
should be discouraged from creating huge condominiums with tens or even hundreds of
buildings because democratic decision-making and owner investment are much less
likely to occur in such huge organizations.

 • Local governments also need clear objectives and goals related to removing the burden
of housing maintenance from their portfolios. They need to understand how their actions
influence the behavior of their residents and how to channel their funds and activities to
encourage homeowners to take responsibility for their properties. Most residents and
local governments agree on the need for subsidies to housing maintenance and
investment. Such subsidies need to be clearly justified for specific purposes. They also
need to be allocated in a transparent and objective manner that encourages, rather than
discourages, citizens from contributing to maintenance and improvement of the housing
stock.
• An assistance that does not require condominium association contributions actually
works against the ultimate goal of condominium association self-sufficiency by sending
the message that condominium associations that do not organize and do not contribute
will benefit from government or donor assistance.
• Donors should expand their efforts to train and inform local and central government
officials, who do not have clear concept on condominium association development.
• Trainings on condominium development and management should be continued,
especially since great deal of citizens are unaware of the potential benefits of
condominium associations, the specific steps in organizing them, rights and
responsibilities of owners. These training courses will be aimed to change the mentality
of residents in the context of self-reliance.
• Technical assistance, trainings and media campaign could be more effective if it is
accompanied with certain implementation programs. But for all that, implementation
techniques should be selected by the donors very carefully. First of all a condominium
should be a direct implementing partner for a donor organization and ensure community
participation providing certain amount contribution of labor, material or cash.


                              Recommendation

To improve activity of condominiums and encourage their foundation, Condominium
Advisory Center (AC) should be established as it is allotted by World Bank projects. The
Advisory Centers are under the discussion. It is recommended that interested donor
organizations have participation in the establishment of fund for AC. The Advisory
Center should include the following main field of activities
       o Popularization of the idea of condominiums through the provision of Public
           Awareness Campaign
       o Acquaintance residents and condominium chairpersons with their rights and
           responsibilities, with formation of condominiums and its management and
           preparation of training materials and provision of trainings for residents,
           chairpersons and local government officials.
       o Creation of Revolving Fund for registration of condominiums as a prototype
           of Housing Loan Fund.




                                    BIBLIOGRAPHY

1. Anlian, Steven and Irina Vanian, “An Overview of Armenia’s Reforms: Housing and
   Urban Development Policy, 1989-1995

2. Doane, John, Malcolm Simpson, and Carol Rabenhorst, Baseline Study for Armenia
   Local Government Program, The Urban Institute, Armenia, 2000 (www.lgp.am)

3. Armenia Local Government Management Handbook: USAID/The Urban Institute,
   Armenia Local Government Program, 2003.

4. Vacvagare, Laura and Ellen Hamilton, “The Problem of Multi-Family Housing in
   Armenia” World Bank, 2003

5. Desilets, Brien and Mais Vanoyan, “Condominium Development in Armenia, An
   Introduction”, Washington D.C., The Urban Intsitute/World Bank, 2001
   (www.lgp.am)
6. Desilets, Brien and Mais Vanoyan, “Condominium Association Development in
   Armenia: Local Government, Central Government and Donors, USAID/Local
   Government Program, The Urban Institute, 2003 (www.lgp.am)

7. Danielian, Lucig et al, “Report on 2001 Follow-Up Household Survey Findings”
   Center for Policy Analysis, American University of Armenia

8. “Damaged Houses” , “Armenian Times”, August 29, Friday, #149.

9. Environmental Resource Management; 2001; Urban Heating Strategy for Armenia;
   Demand Analysis, Tacis/World Bank

10. Tatian, Peter, “Framework for Housing policy in the Armenia, Earthquake Zone”
    USAID/ Armenia EQZ Project, 2002

								
To top