Belize Municipal Development Project (P111928)

First Implementation Support Mission - March 28-April 1, 2011

Aide-memoire

I. Introduction

1. A World Bank team comprising Yoonhee Kim, Team Leader, Pete Kolsky, Sr. Water andSanitation Specialist, Ellen Hamilton, Sr. Urban Planner, Yingwei Wu, Sr. ProcurementSpecialist undertook an implementation support mission of the Project from March 28 toApril 2, 2011 and held discussions with Yvonne Hyde, CEO, MED, Marian McNab, CEO,Labor, Local Government and Rural Development, Lawrence Sylvester, CEO, Housing andUrban Development, Eugene Palacio, Director of Local Government, Ministry of Labor,Local Government and Rural Development, Aaron Gongora, Mayor, Dangriga, SimeonLopez, Mayor, Belmopan, Ernest Raymond, Project Coordinator, and Daniel Cano,Executive Director, BSIF. This was the first implementation support mission. The missionexpresses appreciation for the kind support extended to the Bank team. A wrap-up meetingwas held with the Project Steering Committee on April 1, 2011 to discuss the key missionfindings. The next full mission is planned for fall 2011 with a technical mission focused onsafeguards supervision to be carried out before the end of June 2011.

2. This aide-memoire summarizes the findings, recommendations and agreements reachedduring the mission and is subject to confirmation by World Bank management. The aide-memoire will be publically disclosed once finalized.

3. Key Project Data and Performance Rating

Key Project Data Key Performance Ratings

Previous CurrentRating Rating

Board Approval September 16, Progress towards achievement Satisfactory SatisfactoryDate 2010 of Project Development

ObjectivesEffectiveness January 25, 201 1 Overall Implementation Satisfactory SatisfactoryDate ProgressClosing Date November 30, Disbursed US$0.5

2015 millionLoan amount US$15 % Disbursed 3%

million

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II. Implementation Status Overview

4. The Project became effective at the end of January. Since the Project was approved inSeptember 16, 2010, key staff has been recruited and successfully assumed theresponsibilities of project management. All municipalities have complied with the firstround of selection criteria. To date, the technical studies on traffic management andparticipatory planning have been finalized. In addition, the municipal finance managementand drainage assessment studies are close to completion. Two pilot projects in Belmopanand San Ignacio/Santa Elena are expected to start their bidding processes this month and tobegin implementation in May, 2011. The consulting services for design works for streets forthe remaining TCCs will begin the bidding process in April. It is estimated that these worksfor street improvement can commence during the 4 th quarter of this year.

III. Implementation Status by Project Component

Component 1. Municipal Infrastructure Investments

5. Compliance with eligibility criteria. The mission was pleased to note that all the TCCshave complied with the phase 1 eligibility criteria. The mission stressed the importance ofbeginning to prepare to meet the eligibility criteria for the phase 2 investments. The missionalso advised BSIF not to proceed with any phase 2 subproject agreement and bidding processuntil the TCCs fully meet the criteria.

6. Progress in the first round of investment. Two pilot projects in Belmopan and SanIgnacio/Santa Elena are expected to start their bidding processes this month and to beginimplementation in May, 2011. The consulting services for design works for streets for theremaining TCCs is expected to begin the bidding process in April. It is estimated that theseworks for street improvement can commence during the 4 th quarter of this year. The missionand the PSC agreed that BSIF should make every possible effort to advance theimplementation of these investments.

7. Project Cycle. The mission reviewed feasibility studies for phase 1 investments in PuntaGorda, Corozal and Dangriga. The mission emphasized the importance of including analysisof alternatives and strengthening the economic and financial feasibility of these investmentsas markets are potentially important revenue sources for the municipalities and as theyshould be managed in a way that allows them to be viable and at a minimum does not requirecommitting public funds for their management and maintenance. It was agreed that theBSIF will revise the completed appraisals for Punta Gorda and Dangriga investmentsand submit them to the Bank for review by the end of April, 2011. Feasibility work forthe roads and traffic management in all the TCCs has been included in the BECAconsultancy.

8. The mission also reviewed the project cycle steps, which are clearly outlined in the OM. Insome instances the mission noted that there was room to include more detail in order to fullyfollow the steps in the OM. In some cases, steps were followed but not fully documented(i.e., date-stamped). It is also important to strengthen the filing system. As the PIU is newand as the project is at an early stage, this speaks to the need for the newly recruited staff to

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become fully conversant with the project design as described in detail in the OM. It wasagreed that the PIU will review the status of all subprojects under preparation and ensure thatthe documentation for each subproject is fully compliant with the procedures anddocumentation outlined in the OM. This review and updating will be completed by theend of April 2011.

9. Technical Review of Drainage Assessment. The existing drainage assessment provides auseful starting point for planning of the future investments in drainage. It also provides avaluable background document for feasibility planning in each of the affected communities.The assessment was not proposed as, and does not constitute, a pre-design feasibility study,or a comprehensive drainage plan for each of the affected communities. The study bothidentified drainage problems, and proposed conceptual solutions to them in the projectmunicipalities of Belmopan, Benque Viejo, St Ignacio/Santa Elena, Orange Walk, Corazol,Punta Gorda and Dangriga. The conceptual solutions are costed, with the exception of thosefor Dangriga (see below), and the sum of such costs is approximately 3.9 million BZ dollars,or approximately US 2 million dollars.

10. Field visits (see below for more details) confirmed that the problems identified by theconsultant were recognized by town councils, and that conceptual solutions proposedappeared plausible and reasonable, although their physical viability in several cases dependsupon topographic data that were not available to the consultant. The consultant proposes aseries of LIDAR surveys to acquire the additional necessary data, but the mission concludedthat local ground surveying will in practice be simpler and quicker to arrange, cost less, andbe better targeted to resolve the specific questions.

1. The mission noted that the absence of land use planning is creating substantial unforeseenfuture costs for the TCCs, which are expected to develop drainage solutions for land that isunsuitable for building to begin with.

12. In most cases, the problems identified and solutions proposed are generally local elements ofthe respective drainage system that can be dealt with in isolation. This is fortunate, as thetime, cost and effort required to provide comprehensive drainage planning for allcommunities would be prohibitive within the scale of this project. Further feasibilityplanning to establish capacity requirements, levels, downstream effects in some cases,easement issues etc is still required in all cases, but the proposed solutions can be consideredin relative isolation from the complete system. Dangriga is the exception, where the complexexisting drainage system, and the very low level of land in affected areas relative to thedrainage network did not permit the consultant to prepare straightforward conceptualsolutions that could be costed.

13. The next steps for this work are to send the draft drainage report to the municipalitiesso that they can better understand the cost of the proposed drainage solutions vs. theirother investment needs. This would be followed by the preparation of Terms of Referencefor consultants to prepare feasibility studies for the high priority drainage works in each ofthe communities, on which municipalities may make final informed decisions about theextent and nature of investment they wish to make in drainage. The feasibility study shouldstress options to address the identified problems, and their consequences, including both

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capital and maintenance costs, land acquisition issues, downstream effects etc. Topographicground surveys of critical parts of the existing and proposed drainage systems will be anessential element of the feasibility study.

Component 2: Technical Assistance and Capacity Building for TCCs, MLLGRD andMNRE

14. The mission emphasized the importance of mobilizing technical assistance in a timelyfashion, as the technical assistance is essentially designed to support the TCCs to meet thephase 2 eligibility criteria.

15. Municipal financial management. It was agreed that BSIF, together with the LocalGovernment Officer, will prepare a work plan drawing from the municipal finance reportconclusions in order to develop a program of technical assistance to support themunicipalities in complying with phase 2 eligibility criteria. It was also agreed that BSIF andthe Local Government Office will circulate the draft final report of the municipal finance andhold a dissemination seminar to get feedbacks from the TCCs and relevant ministries. Themission and BSIF discussed the possible need to bring in international expertise on this areaand also stressed that the Local Government Officer should provide close assistance to TCCsin meeting the phase 2 eligibility criteria on municipal finance, including revenueenhancement. It was agreed that financial management equipment/customization andtraining of Quickbook will be implemented in all TCCs under one contract. Thecustomization and training will be first carried out in Orange Walk and subsequently roll outto the rest of TCCs.

16. Municipal growth plans. Similar to municipal finance, BSIF will prepare a work plan andterms of reference for technical assistance to support municipalities in complying with thephase 2 eligibility criteria. The mission noted that the recent Bank-financed report on housingdiagnostic would be useful for BSIF since the methodology used in this report is relevant tothe one for municipal growth plans. The Bank will share the report with BSIF.

17. Maintenance planning / Road Safety. For the two TAs, it was agreed that the Bank willprovide necessary guidance to BSIF on how to design the TA.

18. BSIF website. The mission noted the need to make the BSIF website functional and toregularly update and put up key project documents such as the OM, funded subprojects, aswell as BSIF contact information. The mission noted that upgrading the website could befinanced out of the project's operation cost, if needed.

19. Site Visits.

a. In Belmopan, both pilot program road works and potential Phase 2 needs in drainagewere visited. The visit indicated the tradeoffs between lined and unlined drainagechannels clearly, as the substantial maintenance requirements of unlined drains (e.g.clearance of vegetation) can have a profound effect on drainage performance.Drainage Problems in both the Water Supply Area and Las Flores were confirmed,

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and will require significant further study before clear options can be presented toBelmopan to consider.

b. In Santa Elena/San Ignacio, the traffic management recommendations of the trafficconsultant for Santo Ignacio were considered, and the practical limitations of creatinga one-way system discussed. A number of drainage problem areas were visited, andproposed solutions from the drainage assessment were confirmed as plausible, butstill require local topographic confirmation to determine viability, suitability and cost.

c. In Benque Viejo, the mission visited a number of significant drainage problem areas.One of the most pressing is the collapse of the drain passing through Mount CarmelPrimary School, which constitutes a danger to children at the school, and should be ahigh priority for repair. (The drain construction was financed over ten years ago aspart of the Bank-financed work in the previous project.)

d. In Orange Walk. The mission reviewed a number of proposed road improvements,and drainage problems, including the pollution created by a distillery.

e. In Corozal, the mission discussed the proposed road and drainage improvements.The road adjoins the market and would include provision of a sidewalk. CorozalTCC would finance repaving of the parking lot. The mission noted that it would beimportant to evaluate whether either the road or parking would potentially impactvendor livelihoods during construction (i.e., as a result of temporary relocation ofstalls), in which case a resettlement action plan would be needed. This should bedone prior to signature of subproject agreement.

f. In Punta Gorda, the mission discussed with the mayor and Town Council membersthe basic roof repairs, and remodeling required to create office space for the trafficmanagement unit, currently located in distant offices. Low tax collection rates werediscussed in light of the community's poverty. Proposed drainage and road workswere also reviewed.

g. In Dangriga, the mission visited the market, and discussed its proposed expansionwith members of the Town Council. The mission noted that it would be important toevaluate whether temporary stall relocations would have financial consequences forstall owners, in which case a resettlement action plan would be needed. Existingdrainage problems and the Havana bridge were also visited. The flat and low-lyingneighbourhoods of Wagerale and Rivas Estate experience deep and frequent flooding;the uncertainty of its practical solution at reasonable cost highlights the great need forpractical land use planning to avoid housing construction on unsuitable sites.

20. Financial Management. The mission was pleased to find that audit firm is being procured(financial proposal being reviewed) and the evaluation report will be sent to the Bank byApril 8, 2011.

21. Procurement Management. The mission reviewed the capacity for procurementadministration of the BSIF, and found that the Action Plan to strengthen the BSIF'sprocurement capacity and management in implementing the project agreed at the projectappraisal has been implemented. The mission also found that there is sufficient capacity forprocurement administration of the BSIF. The mission and BSIF organized a procurementworkshop during the mission which was well attended by the key stakeholders from TCCsand MED.

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22. The mission noted that the Fiduciary Workshop is planned for May 2-6, 2011 in Jamaica andagreed with BSIF that both parties will review the need for the BSIF PIU procurementofficer and other related staff to attend the workshop in the next weeks.

23. Procurement Plan The mission reviewed the updated procurement plan with time schedulesplanned by BSIF. The summary of agreement made for PP is included in Annex 4. Theupdated PP as agreed will be submitted to the Bank for no-objection on April 11, 2011and attach it to the AM.

24. Procurement Supervision. The mission and BSIF reviewed the contract for trafficmanagement (Cl), lease cost selection for financial audit (cl7), OM procurement chapter andprocurement post-review. Detailed summary of discussion is attached in Annex 5.

25. Evaluation Committee. The mission highlighted that the OM provides a detailedcomposition of evaluation committees for both consultancies and works and this should befollowed during the bidding process in order to ensure the adequate representation of relevantministries and TCCs.

26. Advertisement of EOI (Expression of Interest). The mission and BSIF noted that the marketsize for consulting firms and contracts in the country is limited and agreed that it would beimportant to advertise as widely as possible (including both regional and internationalfirms) in order to ensure attracting a sufficient number of qualified firms. The missionsubsequently suggested that BSIF advertise in the embassies, CARICOM, its neighboringcountries, and also in the United Nations Development Business. For the last, the Bank willhelp BSIF to place the ad.

27. Safeguards Compliance. The mission noted that several of the proposed investments underconsideration may involve either land acquisition and/or potential impacts on livelihoods. Ineither of those cases the land acquisition and involuntary resettlement framework would needto be invoked and resettlement action plans would need to be developed and approved by theBank. As these steps require additional time, the mission recommended exploring options tominimize these impacts.

28. In particular, the mission highlighted as is also specified in OM that all the land acquisition /resettlement must be resolved prior to the signing of a Subproject agreement and thatsafeguards compliance is legally the responsibility of the PIU. The Bank's environmentalspecialist plans to visit the project in May and the Bank team will arrange for trainingon the social safeguards, especially land acquisition and involuntary resettlement at theearliest possible opportunity, likely by audio or video.

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Yvonne S. yde Yoonhee KimCEO Ministry of Economic Development Task Team Leader, World Bank

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Annex 1 Action Plan

Issue Recommendation/Action Responsible Agency Due DateI Municipal Finance TA Submit work plan and ToRs for BSIF/LGO April 30

technical assistance for Bank'sreview and NO

2 Hold a dissemination seminar BSIF April 15for the municipal finance report

3 Provide relevant international WB April 15expertise on municipal finance,management planning andmunicipal growthmethodologies.

4 Provide assistance to TCCs to LGO Recurrentmeet 2nd round of eligibilitycriteria related to municipalfinance

5 Revise the appraisal BSIF End of Aprildocuments, includingfeasibility studies, for Dangrigaand Punta Gorda and submitthem to the Bank.

6 Municipal Growth Hire the urban planner BSIF Mid-MayPlans

Submit work plan and ToRs for BSIF Mid-Junetechnical assistance for Bank'sreview and NO

8 Maintenance Submit work plan and ToRs for BSIF End Mayplanning/Road safety technical assistance for Bank's

review and NO10 Drainage Send the draft drainage report BSIF Draft sent:

to the TCCs and discuss the April 8relative priorities of drainage Discussionvs. other investments with over: end Maythem.Prepare the Terms of Reference BSIF June 15, 2011for feasibility studies for thehigh priority drainage works ineach of the communities

I Procurement Decide if BSIF staff will attend WB/BSIF April 15the Jamaica Fiduciary Training

12 Submit the updated PP for NO BSIF April 1113 Advertise tenders as widely as BSIF Recurrent

possible including to bothregional and international firms

14 Facilitate BSIF to advertise in WB April 15the UN Development Businesswebsite

15 Safeguards Training on the social WB At the earliestsafeguards possible

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0pportunit

16 Environmental safeguards WB Maymission

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Annex 2. List of People Met

Belize Social Investment FundDaniel Cano, Executive DirectorErnest N Raymond, Project CoordinatorLemuel Palacio, Procurement SpecialistChristine Lopez-King, Sr. Accounts OfficerEvan Dakers, Social SpecialistNellie Trench, Finance Unit CoordinatorLionel Jimenez, EngineerClifford King, Local Government Officer

Ministry of Economic DevelopmentYvonne Hyde, CEO

Ministry of Labor, Local Government and Rural DevelopmentMarian McNab, CEOEugene Palacio, Director of Local Government

Ministry of Housing and Urban DevelopmentLawrence Sylvester, CEO

Ministry of WorksCadet Henderson, CEO

MayorsAaron Gongora, Mayor, DangrigaSimeon Lopez, Mayor, BelmopanPhillip De La Fuente, Mayor, Orange WalkFloyd Lino, Mayor, Punta GordaHilberto Campos, Mayor, CorozalMaria Castellanos, Councillor, Benque ViejoKaren Fernandez, Town Administrator, San Ignacio/Santa Elena

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Annex 3. List of site visit locations and dates

Belmopan, March 29, 2011Santa Elena / San Ignacio, March 29, 2011Benque Viejo March 29, 2011Corazol, March 30, 2011Orange Walk, March 30, 2011Punta Gorda, March 31, 2011Dangriga, March 31, 2011

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Annex 4: Detailed Agreement made in Procurement Plan:

a. For Component 1, all packages under Phase 1 have been agreed with simplified andconfirmed methods for procurement implementation:

b. Under C l consulting services for design and technical inspection, the civil worksunder two pilot TCCs shall be procured with contracts signed by end of May 2011.

c. The consulting services for design and technical inspection for buildings under C2-3shall receive proposals under LCS procedures on April 22nd and contract to be signedin June 2011.

d. Under C2-3 consulting services for design and technical inspection, civil works forbuildings is planned to be tendered under NCB procedures with two lots and contactssigned in September 2011.

e. The separation of design and supervision for six TCCs' street packages, both underQCBS selection (design at $100,000 and technical inspection $174,000) has beenagreed during the mission, subject to technical advice from the road experts in theBank in connecting these two contracts with those for civil works.

f. Under consulting services for design and technical inspection, civil works under thesix street packages will be tendered under three NCB procedures, each with multilots.

g. Tenders designed with multi lots are recommended by the mission and accepted byBSIF/PIU, given the following consideration: 1) bidders could bid one or severalcombined lots based on their own capacity, therefore attracting both large sizedcontractors and small ones; and 2) reduce number of tenders and overhead by BSIF,thus enabling them to focus on the quality of major tenders. The NCB model biddingdocuments tailored to the project have been gone through with major issues discussedwith PIU for implementation.

h. For Component 2, four selections for individual consultant selection are planned tostart in September 201 1, to provide technical assistance for the preparation of phase2. As required for FM capacity building in TCCs, the procurement of computerequipment under NCB procedures and software under DC is planned forimplementation in May 2011.

i. For Component 3, two vehicles for PIU site work is planned to be tendered underNCB procedures, which shall be completed in May 2011.

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Annex 5: Procurement Review and Clarification

C 1: Contract for traffic manazement. The mission reviewed and clarified the following issues incontract execution:

* Besides other responsibilities as specified in the TOR, the firm shall prepare the technicalsection of the civil woks NCB bidding documents and assist the PIU in technicalevaluation of the bids under such NCB process.

* The PIU should take overall responsibilities of the quality of bidding documents and theprocurement processes and compliance with the procedures agreed with the Bank.The mission reviewed the payment scheme in line with reporting and deliverables and

found it in good order and consistency.

C 17: Least cost selection for Financial Audit The mission discuss with PIU that it should justifythe only financial proposal as received based on the market price benchmark and recommend tothe Bank its decision on next step for contract negotiation.

OM Procurement Chapter

A typo is found with inconsistence of LCS thresholds in OM and PAD. The mission confirmedthat LCS should be applied to consultant contracts in line with WB Consultant Guidelines 3.6.,regardless of cost estimates.

Procurement Post-review

The post-review procedures are explained during this mission. There is no contract subject topost-review.

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