Document of The World Bank

Report No: ICR00002249

IMPLEMENTATION COMPLETION AND RESULTS REPORT (IBRD-48660)

ON A

LOAN

IN THE AMOUNT OF US$ 322.15 MILLION

TO THE

ISTANBUL METROPOLITAN MUNICIPALITY

FOR AN

ISTANBUL MUNICIPAL INFRASTRUCTURE PROJECT

November 28, 2013

Sustainable Development Department Turkey Country Unit Europe and Central Asia Region

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CURRENCY EQUIVALENTS

(Exchange Rate Effective November 28, 2013)

Currency Unit = Turkish Lira 1.00 = US$ 0.50 US$ 1.00 = 2.02

FISCAL YEAR

ABBREVIATIONS AND ACRONYMS

CAS Country Assistance Strategy DMs District Municipalities EA Environmental Assessment EMF Environmental Framework FI Financial Intermediary FM Financial Management GDP Gross Domestic Product ICR Implementation Completion Report IMM Istanbul Metropolitan Municipality ISDS Integrated Safeguards Datasheet ISMEP Istanbul Seismic Risk Mitigation and Emergency Preparedness Project LARP Land Acquisition and Resettlement Policy Framework MSP Municipal Services Project M&E Monitoring and Evaluation OP Operational Policy PAD Project Appraisal Document PAPs Project-affected Persons PCU Project Coordination Unit PDO Program Development Objectives PP Project Paper RAP Resettlement Action Plan SPO State Planning Organization WB World Bank

Vice President: Laura Tuck Country Director: Martin Raiser

Sector Manager: Sumila Gulyani Project Team Leader: Mara Warwick

ICR Team Leader: Stephen Karam

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TURKEY Istanbul Municipal Infrastructure Project

CONTENTS

Data Sheet A. Basic Information iv B. Key Dates iv C. Ratings Summary iv D. Sector and Theme Codes v E. Bank Staff v F. Results Framework Analysis v G. Ratings of Project Performance in ISRs vii H. Restructuring vii I. Disbursement Graph viii

1. Project Context, Development Objectives and Design ............................................... 1 2. Key Factors Affecting Implementation and Outcomes .............................................. 6 3. Assessment of Outcomes .......................................................................................... 18 4. Assessment of Risk to Development Outcome ......................................................... 19 5. Assessment of Bank and Borrower Performance ..................................................... 19 6. Lessons Learned ....................................................................................................... 22 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners .......... 23 Annex 1. Project Costs and Financing .......................................................................... 25 Annex 2. Outputs by Component ................................................................................. 26 Annex 3. Economic and Financial Analysis ................................................................. 28 Annex 4. Bank Lending and Implementation Support/Supervision Processes ............ 29 Annex 5. Beneficiary Survey Results ........................................................................... 31 Annex 6. Stakeholder Workshop Report and Results ................................................... 31 Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR ..................... 32 Annex 8. Comments of Cofinanciers and Other Partners/Stakeholders ....................... 42 Annex 9. List of Supporting Documents ...................................................................... 42

MAP………………………………………………………………………………………43

iv

A. Basic Information

Country: Turkey Project Name: Istanbul Municipal Infrastructure Project

Project ID: P100383 L/C/TF Number(s): IBRD-48660 ICR Date: 05/08/2012 ICR Type: Core ICR

Lending Instrument: SIL Borrower: Istanbul Metropolitan Municipality

Original Total Commitment:

USD 322.15M Disbursed Amount: USD 22.44M

Revised Amount: USD 22.44M Environmental Category: FI Implementing Agencies: Istanbul Metropolitan Municipality Cofinanciers and Other External Partners: None B. Key Dates

Process Date Process Original Date Revised / Actual Date(s)

Concept Review: 04/03/2006 Effectiveness: 09/14/2007 02/23/2009 Appraisal: 04/04/2007 Restructuring(s): 09/09/2009 Approval: 06/28/2007 Mid-term Review: 4/23/2011 Closing: 12/31/2011 06/30/2013 C. Ratings Summary C.1 Performance Rating by ICR Outcomes: Highly Unsatisfactory Risk to Development Outcome: High Bank Performance: Unsatisfactory Borrower Performance: Unsatisfactory

C.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings

Quality at Entry: Highly Unsatisfactory Government: Moderately Unsatisfactory

Quality of Supervision: Unsatisfactory Implementing Agency/Agencies: Unsatisfactory

Overall Bank Performance: Unsatisfactory Overall Borrower

Performance: Unsatisfactory

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C.3 Quality at Entry and Implementation Performance Indicators Implementation

Performance Indicators QAG Assessments (if any) Rating

Potential Problem Project at any time (Yes/No):

No Quality at Entry (QEA):

None

Problem Project at any time (Yes/No):

Yes Quality of Supervision (QSA):

None

DO rating before Closing/Inactive status:

Unsatisfactory

D. Sector and Theme Codes

Original Actual Sector Code (as % of total Bank financing) General transportation sector 23 General water, sanitation and flood protection sector 13 100 Housing construction 11 Solid waste management 30 Sub-national government administration 23

Theme Code (as % of total Bank financing) Natural disaster management 40 50 Other urban development 40 50 Pollution management and environmental health 20 E. Bank Staff

Positions At ICR At Approval Vice President: Laura Tuck Shigeo Katsu Country Director: Martin Raiser Ulrich Zachau Sector Manager: Sumila Gulyani Sumter Lee Travers Project Team Leader: Mara K. Warwick Seema Manghee ICR Team Leader: Stephen Karam

ICR Primary Author: Sonia Hammam F. Results Framework Analysis Project Development Objectives (from Project Appraisal Document) The objectives of the project are to assist the Istanbul Metropolitan Municipality in: (a) improving its solid waste management; and (b) improving its capacity to mitigate

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earthquakes by retrofitting key facilities and infrastructure and upgrading the institutions and their procedures to help them respond to emergencies. Revised Project Development Objectives (as approved by original approving authority) The objectives of the project are to contribute to: (i) the rehabilitation and cleanup of unauthorized waste disposal sites and creeks; and, (ii) the strengthening of the capacity of the Istanbul Metropolitan Municipality (IMM) to mitigate the impact of earthquakes by retrofitting infrastructure and providing training to respond to emergencies more effectively. (a) PDO Indicator(s)

Indicator Baseline Value

Original Target Values (from

approval documents)

Formally Revised Target Values

Actual Value Achieved at

Completion or Target Years

Indicator 1 : Percentage decrease in water pollution in the nearest body of water to the dumps and creeks rehabilitated.

Value quantitative or Qualitative)

No baseline specified in September 2009 restructuring.

No target specified in September 2009 restructuring.

Not reported by Borrower.

Date achieved 09/09/2009 09/09/2009 07/15/2011 Comments (incl. % achievement)

No achievement on PDO indicators.

Indicator 2 : The Istanbul Municipality is able to ensure safe and accessible infrastructure during and in the aftermath of an earthquake.

Value quantitative or Qualitative)

No baseline specified in September 2009 restructuring.

No target specified in September 2009 restructuring.

Not reported by Borrower.

Date achieved 09/09/2009 09/09/2009 07/15/2011 Comments (incl. % achievement)

PDO indicators not achieved.

(b) Intermediate Outcome Indicator(s)

Indicator Baseline Value

Original Target Values (from

approval documents)

Formally Revised

Target Values

Actual Value Achieved at

Completion or Target Years

Indicator 1 : Rehabilitation and stabilization of creeks: Number and percent of creeks rehabilitated.

Value (quantitative or Qualitative)

No baseline specified No target specified.

Creek rehabilitation started on nine of the 14 sections, and partially completed on six of the

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sections for which contracts had been awarded by project closing.

Date achieved 09/09/2009 09/09/2009 07/15/2011 Comments (incl. % achievement)

Creek rehabilitation contracts were awarded for 14 creek sections. Rehabilitation works commenced on 9 sections and were partially completed on 6 creek sections.

G. Ratings of Project Performance in ISRs

No. Date ISR Archived DO IP

Actual Disbursements (USD millions)

1 02/07/2008 Satisfactory Satisfactory 0.00

2 02/01/2009 Satisfactory Moderately Unsatisfactory 0.00

3 11/21/2009 Satisfactory Moderately Unsatisfactory 0.00

4 06/11/2010 Unsatisfactory Moderately Unsatisfactory 0.00

5 12/27/2010 Unsatisfactory Moderately Unsatisfactory 13.50

6 06/29/2011 Unsatisfactory Unsatisfactory 21.70 H. Restructuring (if any)

Restructuring Date(s)

Board Approved

PDO Change

ISR Ratings at Restructuring

Amount Disbursed at

Restructuring in USD millions

Reason for Restructuring & Key Changes Made DO IP

09/09/2009 Y S MU 0.00

Restructuring approved to: a) revise the PDO and project components; b) extend the closing date until June 30, 2013; and, c) revise the project results framework.

If PDO and/or Key Outcome Targets were formally revised (approved by the original approving body) enter ratings below: Outcome Ratings Against Original PDO/Targets Highly Unsatisfactory Against Formally Revised PDO/Targets Highly Unsatisfactory Overall (weighted) rating Highly Unsatisfactory

viii

I. Disbursement Profile

- Original ---- Formally Revised -- Actual 400

300

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N ~ N ~ N & N ~ N ~ <1 <1 <1 <1 <1 .... • • "' "' .. .. .. .. .. 0 0 - - N N "' "' '<t '<t - - - - - " - - - -.. .. .. .. .. .. .. .. .. .. 0 .. .. .. .. N N N N N N N N N N N N N N N

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1. Project Context, Development Objectives and Design

1.1 Context at Appraisal 1. Background. In 2007 when the project was approved, Istanbul’s population was estimated at 12.5 million. Istanbul is the largest city in Turkey and the country’s main center of industrial, financial, service and other economic activities. Administratively, Istanbul is both a metropolitan municipality and a province, contributing 23% of Turkey’s Gross Domestic Product (GDP) in 2007.

2. An extremely rapid six-fold population increase over the past three decades -largely a result of the attraction that Istanbul’s expanding labor market exerted on Turkey’s internal migration - has taxed the capacity of the Istanbul Metropolitan Municipality (IMM) to provide services to its population. New and often illegal settlements and industrial plants expanded into environmentally fragile areas such as creek watercourses that should have been protected as natural resources. Inefficiencies in collection and safe disposal of solid waste, including industrial waste, have created potential public health hazards. Istanbul’s problems are exacerbated by its location in one of the world's most active earthquake zones adjacent to the North Anatolian fault line. Strong earthquakes are a periodic occurrence and throughout recorded history have struck the city repeatedly, causing severe damage and loss of life.

3. Istanbul’s future challenges are even more daunting with the city expected to double in size over the next 25 years and reach a population of 20-25 million by the year 2030. Accommodating such growth, while maintaining and/or improving the living conditions of the city’s inhabitants, requires strong coordination and control of urban development and public service delivery.

4. The governance structure in Istanbul is complex: as a province, Istanbul is administered by a Governor who is appointed as the representative of the national government. Responsibilities of the Governor include provision of nationally administered services such as education, health, and disaster management. As a municipality, governed by the Metropolitan Municipality Law of 2004, Istanbul is administered through a two-tier local government system that consists of IMM at the top level and 32 District Municipalities (DMs) at the lower level. The head of IMM is an elected mayor. IMM is responsible for management of all citywide municipal services and infrastructure.

5. The Metropolitan Municipality Law expanded the geographical area of IMM from 1,830 km2 to 5,349 km2, dramatically increasing the investment needs and service delivery challenges for IMM. The Law also required IMM to prepare both a Metropolitan Strategic Development Plan and an Environmental Plan to reflect the demands of the expanded area, identify the corresponding investment needs, and explore possible sources of financing. The Strategic and Environmental Plans were completed and approved by the Municipal Council of IMM in 2006. To address its multiple needs and prepare for future challenges, in 2006 IMM requested the World Bank to assist in

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financing a first investment program under its strategic plans, focusing on environmental management and disaster risk reduction.

6. Rationale for Bank involvement. The project was included in the 2003 Country Assistance Strategy (CAS) for Turkey (Report No. 26756 TU) which pursued four major objectives: (i) supporting sound macroeconomic management and governance; (ii) promoting equitable human and social development; (iii) creating a more attractive business climate; and (iv) strengthening environmental management, and disaster preparedness and mitigation capacity.

7. The project aimed to support these CAS objectives by focusing on: (i) critical environmental problems by upgrading solid waste disposal facilities and safe disposal of waste; and (ii) strengthening disaster mitigation by improving key infrastructure and infrastructure services whose continuing operation would be critical in the event of an earthquake. The project was intended to complement the Istanbul Seismic Risk Mitigation and Emergency Preparedness Project (ISMEP) approved in 2005, implemented by the Istanbul Special Provincial Directorate, which focused on strengthening Istanbul’s disaster response capabilities, and reducing risk through seismic mitigation of public facilities. The project was also intended to work in parallel with the Municipal Services Project (MSP), approved in 2005 and implemented by Iller Bank, which supports the provision of infrastructure to medium and small municipalities in Turkey. It is worth noting that both of the other related municipal projects are progressing satisfactorily and have been extended with Additional Financing, and, in the case of ISMEP, with considerable co-financing from other IFIs.

1.2 Original Project Development Objectives (PDO) and Key Indicators 8. The objectives of the project at Board approval were to assist the Istanbul Metropolitan Municipality in: (a) improving its solid waste management; and (b) improving its capacity to mitigate earthquakes by retrofitting key facilities and infrastructure and upgrading the institutions and their procedures to help them respond to emergencies.

9. Project Outcome Indicators were: (a) reduced negative impact of solid waste collection and disposal operations on environment and population; and (b) reduced risk of breakdown of key municipal services during earthquakes. There were no baseline values or targets developed for these indicators at Board approval.

1.3 Revised PDO (as approved by original approving authority) and Key Indicators, and reasons/justification

10. For reasons explained in detail below, the project content presented to and approved by the Bank’s Board of Directors in June 2007 had not been included in the

3

approved investment program for 2007 by the State Planning Organization (SPO)1, the national authority responsible for domestic approval of internationally financed projects in Turkey. Given the mandatory requirement that SPO confirm externally-financed investments, the project could not proceed with implementation as appraised. After SPO provided its confirmation of components to be included in the project, a Level I restructuring was necessary to align the project components with SPO’s approved allocations and components before implementation could begin. This Level I restructuring, approved by the Board on September 9, 2009, was used to: (a) revise the PDO and project components; (b) extend the closing date until June 30, 2013; and, (c) revise the project results framework.

11. The revised objectives of the project were to contribute to: (a) the rehabilitation and cleanup of unauthorized waste disposal sites and creeks; and (b) the strengthening of the capacity of the Istanbul Metropolitan Municipality (IMM) to mitigate the impact of earthquakes by retrofitting infrastructure and providing training to respond to emergencies more effectively.

12. The PDO indicators after restructuring were: (a) percentage decrease in water pollution in the nearest body of water to the dumps and creeks rehabilitated; and, (b) the ability of the Istanbul Municipality to ensure safe and accessible infrastructure during and in the aftermath of an earthquake measured by the number of road viaducts retrofitted according to Turkish seismic standards. However, no baseline values or targets were developed for these indicators.

1.4 Main Beneficiaries 13. The main beneficiaries of the project were intended to be the population of Istanbul Metropolitan Municipality, which was expected to benefit directly from improved environmental quality of creeks and watercourses, and from increased resilience of key municipal infrastructure to earthquake risks. Although unstated in the original project design or project restructuring of September 2009, the final project design, whose creek rehabilitation component included civil works for flood mitigation purposes, would have provided additional flood risk mitigation benefits to populations living along Istanbul’s many creeks and watercourses.

1.5 Original Components 14. At Board approval, the project consisted of the following four components:

• Component A: Improvements in environmental management: closure of existing illegal landfills and rehabilitation of creeks; preparation of annual business plans that include operating performance, investment program and financial targets and results; and, financing waste collection equipment.

1 Under a Government-wide restructuring of ministries and public agencies in 2011, the State Planning Organization was renamed the Ministry of Development.

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• Component B: strengthening of municipal services and infrastructure: preparing a detailed risk assessment for all major municipal systems; preparing a Municipal Infrastructure Risk Mitigation Plan; retrofitting of municipal infrastructure (under-passes, pipelines, viaducts, etc.); and, providing emergency fire department equipment. • Component C: Pilot urban transformation program: pilot urban transformation feasibility studies; and, retrofitting and construction of buildings, fire stations and emergency housing associated with urban transformation in the most seismically vulnerable areas.

• Component D: Project Management and audits: design studies, surveys and technical training for project implementation; and, external audits of project accounts.

1.6 Revised Components 15. At restructuring, revisions were made to the project components to align them with SPO’s approved investment allocations. The components of the restructured project were as follows:

• Component A: Improvements in solid waste management and rehabilitation and cleanup of creeks: (a) closure and rehabilitation of existing unauthorized disposal sites for municipal solid waste (landfills) and rehabilitation of creeks through creek bed and canal cleaning, protection of stream banks to control erosion and loss of bank materials, and rehabilitation and replacement of existing rainwater and wastewater pipelines; (b) preparation of annual Business Plans for IMM that include operating performance, investment program and financial targets and results; and (c) financing waste collection equipment. • Component B: Strengthening of municipal services and infrastructure: (a) preparing a detailed risk assessment for all major municipal systems; (b) preparing a Municipal Infrastructure Risk Mitigation Plan; (c) retrofitting of municipal infrastructure; and, (d) providing emergency fire department equipment. • Component C: Pilot urban transformation program: (a) pilot urban transformation feasibility studies and preparation of microzonation studies.

• Component D: Project Management and audits: (a) design studies, surveys and technical training for project implementation; and, (b) external audits of project accounts.

16. The most significant changes were made in Component A, where funding for the creek rehabilitation subcomponent was expanded substantially to $161.4 million to give

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more importance to the mitigation of flood-related hazard risks in Istanbul, while funding for activities related to the solid waste subcomponent was considerably reduced to only $4.1 million. The other major change was the elimination of the investment activities for retrofitting and construction of buildings and housing under Component C, which SPO determined should be funded separately by IMM and not included in the externally financed project. Most of the increased funding for the creek rehabilitation subcomponent came through the savings that resulted from the exclusion of these activities. The other two components were unchanged although funding for Component B was reduced in line with the SPO allocations.

1.7 Other significant changes 17. There was insufficient agreement with the Government’s domestic approval authorities on the content of the project prior to Board approval. In contrast to the expected practice for investment lending in Turkey, the project content as described in the Board package had not been confirmed in SPO’s approved Annual Investment Plan prior to Board presentation. However, the Bank still sought clearance of the negotiated documents in order to proceed with Board presentation, even though it was aware that SPO’s confirmation of project components would not occur before January 2008 when its Annual Investment Plans are published. The Guarantor’s clearance was conditional with a caveat that the signing of both the Loan and Guarantee agreements could not proceed without SPO’s confirmation of the project components.

18. SPO’s eventual confirmation of project investments in February 2008, introduced important modifications to the content and allocations of various project components, which had to be reflected in a subsequent project restructuring before implementation could begin. As previously indicated, there was a significant increase in allocations for the creek rehabilitation subcomponent of Component A. While this subcomponent for creek rehabilitation was included in the approved 2007 Board package, it had been added during in the context of negotiations, and its preparation and appraisal took place as part of the preparation of the restructured project.

19. After the SPO confirmation was in place, and internal procedures for clearance completed, the Loan Agreement was signed with IMM on July 25, 2008. However, the signing of the Guarantee Agreement was made a condition of loan effectiveness because the project could not be accommodated in the Government’s sovereign guarantee envelope for 2008. Once the 2009 guaranty authority was available, the Guaranty Agreement was signed on January 13, 2009 and effectiveness was finally declared in February 2009. The project then had to undergo a Level 1 Restructuring in September 2009 to align it with the SPO-approved components and allocations, before implementation could begin.

20. Prior to the restructuring of September 2009, a subcomponent intended to purchase solid waste cleanup vessels and vessels for firefighting was dropped. While this component had the support of SPO, the Guarantor and IMM, the Bank deemed that it could not be included in the restructured project without triggering the International Waterways Policy (OP/BP 7.50). The Bank and the Government discussed this issue at

6

some length, and Bank management and regional safeguards staff sought options to resolve the issue both internally and with the Government. However, the Government objected to the Bank’s interpretation that this policy should be triggered and riparians notified for a component that covered the purchase of sea vessels that would be used by IMM to clean up oil spills on the Bosphorus.

2. Key Factors Affecting Implementation and Outcomes

2.1 Project Preparation, Design and Quality at Entry 21. The project, as prepared, was intended to support investments based on Istanbul’s strategic plan related to environmental management and disaster risk mitigation. Some flexibility was built in by design for selected physical subprojects, many of which were to be identified during implementation. This programmatic approach to design encompassing a broad range of municipal investments was appropriate for a large municipality with Istanbul’s capacity and large investment program, and has been successfully applied in other contexts. It, however, proved ambitious for a first engagement in the absence of carefully defined implementation arrangements and procedures and clearly established criteria for prioritization of strategic investments,2 including selection and preparation of a first year set of investments. Moreover, the flexibility afforded by a programmatic approach was limited in a context which entailed lengthy procedures to obtain prior confirmation of externally-financed activities.

22. The choice of a multi-sector approach was justified on the grounds that it would provide IMM with a broader capability to address environmental and disaster mitigation issues. However, given that this was IMM’s first Bank project, and the Bank’s first municipal project in Turkey, there was a learning curve for both IMM and the Bank. In the end, much of the implementation focused on ensuring procedural compliance with Bank rules and procedures rather than institutional strengthening in the management of IMM’s strategic investment projects.

23. In analyzing project preparation, design and quality at entry, three features stand out which reflect the Bank’s shortcomings in its assessment of risks, the adequacy of mitigation measures, and of project readiness: (a) consensus on project components appears to have been in flux for a considerable amount of time before and after Board approval; (b) the absence of a realistic appraisal by the Bank of IMM’s capacity to manage implementation in compliance with Bank processes, including coordination of a diverse group of municipal departments, and (c) Safeguards instruments developed for management of land acquisition and resettlement were not sufficiently robust to guide implementation, nor were they adapted to actual project components.

2 A sector note was undertaken concurrently with project preparation that, according to the concept note, was intended to analyze the strategic plan investments, and establish priorities. However, much of the analysis in the note which was completed in June 2008, focused on the finances of the municipality and its associated enterprises, and did not address the original objective.

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24. Lack of agreement on project components. The absence of SPO approval of project components prior to presentation of the Board package represented a substantial risk to both project design and implementation, which was not adequately recognized and addressed. In addition, project preparation and readiness for implementation were compromised by the lack of internal agreement on project components, which were still in a state of flux at the time of Board presentation, as evidenced by the late addition of the creek rehabilitation component during negotiations. The lack of agreement on project components ultimately led to design changes, which had to be subsequently reflected through a restructuring, further delaying the start of implementation.

25. The Bank was aware that SPO’s confirmation of project components was a domestic mandatory requirement for all externally financed investments, and that project effectiveness and implementation would be delayed until the confirmation was in place. It was also aware of the complex relationships between central and municipal government, and that their lack of agreement still needed to be resolved. Under these circumstances, the more prudent course would have been to work out these outstanding issues as part of project design and preparation, in advance of Board presentation. In fact, the PAD flagged the absence of SPO confirmation of the project investments as a high risk for FM, and proposed that SPO confirmation be sought by Board date. This was not done due to lending pressures, despite the substantial FM risk rating even after mitigation.

26. Incomplete assessment of IMM’s implementation capacity. The Bank and the Borrower agreed to embed the project within IMM with a light coordination function established within the office of the Deputy General Secretary responsible for Finance. The strategic choice of embedding project management within IMM was considered “good practice,” in contrast to establishing a project-specific implementation unit. Nonetheless, the project decision meeting acknowledged the inherent risk of this management model for project disbursement and procurement, given that this was IMM’s first project with the Bank. To mitigate this risk, completion of an Operations Manual, acceptable to the Bank, was made a condition of Board presentation at the decision meeting. Additional mitigation measures identified in the PAD were: training of IMM staff in Bank procedures, field presence of the supervision team, and assistance from the ISMEP team, which had a well-established IPCU.

27. The mitigating measures proved insufficient in a number of respects. Most notably, the Operations Manual, provided a very summary description of the project responsibilities of IMM’s departments, their staff and the project coordinator, contrary to what had been anticipated at the project decision meeting. While it covered procurement and financial management processes adequately, it did not identify specific areas requiring support and strengthening, leaving such issues to be identified at a later date. Nor did it describe implementation and coordination procedures, reporting requirements and implementation responsibilities for various components. In hindsight, many of the subsequent implementation problems resulted from this lack of clarity and specificity about roles and responsibilities, and the inadequate assessment by the Bank of IMM’s capacity to incorporate Bank requirements in its internal processes.

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28. While the original appraisal had focused on the solid waste component, the responsibilities, procedures and reporting requirements of different departments for its implementation are not described in the 2007 Operations Manual. Reportedly IMM updated the Operations Manual to reflect subsequent project changes. However, it is not clear from available project documentation that it was provided with adequate guidance to ensure that the institutional responsibilities and implementation procedures for the creek rehabilitation component were covered in sufficient detail, and roles and procedures clarified for the different implementing departments.

29. After Board approval, the Bank strengthened its field presence with the posting of the task manager in the field and some training sessions on project-related issues, such as safeguards, procurement and financial management to IMM.3 However, the frequent changes in staff within IMM implementing departments meant that continuity and institutional knowledge was difficult to maintain. There was further loss of continuity with the changes in key Bank staff who had been engaged in project preparation but who did not remain during the implementation phase, including some who were never replaced.

30. Inadequacy of supporting social safeguards instruments. The project was classified as FI in November 2006 at the project concept stage, based on the understanding that the specific subprojects, which could cover the range of environmental classifications, would only be identified during implementation. In keeping with the FI classification, an Environmental Management Framework (EMF) and Land Acquisition and Resettlement Policy Framework (LARP) were prepared. At the time of restructuring, the appropriateness of the FI classification for a non-financial intermediary project was raised. However, the PP notes that the classification was retained for the sake of continuity as the EMF was already in place and IMM staff had been trained accordingly.

31. The problems that arose during implementation were not caused by the classification. Both the EMF and environmental safeguards were adequately treated in project preparation and restructuring. Instead, the problems centered on land acquisition and resettlement (OP4.12). In part, they reflected weaknesses in the original preparation of the LARP, which had been approved by the Bank in 2007, as it did not provide sufficient guidance for planning and preparing resettlement action plans (RAPs). More importantly, it was not strengthened or adapted to reflect the challenges of creek rehabilitation at restructuring, which was a critical oversight.

32. Implementation could have proceeded more smoothly, if, during project preparation and restructuring, social safeguards had received the same level of attention and guidance given to developing and testing instruments for environmental safeguards. This would have required greater emphasis on developing a LARP that covered potential situations, set out clear principles, criteria and procedural steps, and reached a consensus

3 Training in social safeguards was provided in November 2008, as part of an overall training session on safeguards, with the regional social safeguards coordinator making the presentation. Several training sessions on procurement and financial management are reported to have taken place.

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on measures to bridge the gaps between Turkish law and Bank policy requirements. Instead, these instruments had to be developed during the course of implementation, or applied retroactively as described in more detail in Section 2.4.

33. The project documentation for both the original and restructured project indicated that the LARP had been prepared as “a precautionary measure” intended to provide flexibility in the event that subprojects were presented that might require public land to be cleared or private land to be acquired. Yet, despite having allowed for this flexibility, there was little effort to ensure that the instruments were robust enough to treat potential cases of resettlement should they arise. The general expectation was that resettlement would not be required, as activities would be undertaken on public land and within existing rights of way. This proved to be a serious oversight in the absence of specific criteria for the selection of creeks to be rehabilitated under the project. Moreover, given that flooding is a significant disaster risk in Istanbul, limiting creek rehabilitation activities to cleaning up existing systems for environmental purposes did not reflect IMM’s interest in mitigating the risk of devastating floods and associated loss of life.

34. A further complicating factor was the extension of a clause in the 2007 Board approved Loan Agreement that had precluded resettlement under Component C– pilot urban transformation –to cover all components in the restructured project. This overall ban was inconsistent with the claim in both the original and restructured project that the LARP was intended to allow flexibility. Moreover, the notion that urban transformation could take place without resettlement was naïve at best. For this provision to be applied, it would unnecessarily restrict dealing with a large creek rehabilitation program where resettlement is, at times, unavoidable to ensure the safety of residents, and mitigate the severity of the flooding problems caused by encroachment. This was underscored in the 2008 feasibility study for the creek rehabilitation component, which identified encroachment on Istanbul’s creeks as one of the major causes of flooding, and suggested that the design of an effective creek rehabilitation program might entail land acquisition and resettlement.

2.2 Implementation

35. The project was in unsatisfactory implementation status from January 2009 until its closure in July 2011. At that time, fourteen contracts had been signed under the creek rehabilitation component, with disbursements of US$ 22 million (7% of total project financing). The considerable procedural delays in the start of implementation, the changes in priorities and the lack of attention by the Bank and the Borrower in ensuring the adequacy of the project’s systems and procedures and their consistency with evolving priorities and activities significantly affected project implementation and outcomes.

36. Implementation was essentially put on hold from Board approval in 2007 until the project was restructured in late 2009. During that period, project activities were effectively an extension of the preparation and design phase and its restructuring, including: resolving procedural issues, confirmation of project components, design and preparation of the creek rehabilitation component, including an EMF and EMPs, and

10

preparation of an initial set of procurement packages for the microzonation, fire-fighting equipment and creek components.

37. After the restructuring, the Bank engaged IMM on ways and means to move implementation forward. Progress was made on initiating works on the creek rehabilitation component, but was very slow on other components. It was intended that a second Level I restructuring would take place by the end of 2010 to address the implementation deficiencies, cancel activities that had been included in the September 2009 restructuring that IMM no longer intended to undertake, and to scale back the project to a more manageable size through partial cancellation of the IBRD loan.

38. A restructuring proposal was submitted by IMM in April 2011. However, the restructuring and mid-term review mission later that month revealed serious shortcomings in project implementation, particularly with respect to IMM’s handling of land acquisition and resettlement under the creek rehabilitation component, which made it difficult to proceed with restructuring, and ultimately led to the decision to cancel the project.

39. The senior management of IMM played a very active role in communicating with the Bank and assessing project implementation during the period from March to June 2011. IMM management spent considerable time and effort in evaluating alternative implementation arrangements for the project. Finally, they concluded that due to internal limitations and the differences between local regulations and World Bank policies, the implementation problems could not be easily overcome, nor could implementation arrangements be quickly revised. Therefore, in close consultation with the Bank and the Guarantor, and in recognition of the risks faced by all three parties of continuing with a non-performing project, IMM requested cancellation of the remaining loan funds and closure of the project.

40. As a result of IMM’s request, which was supported by the Bank and the Guarantor, implementation was stopped on July 13, 2011 and all remaining loan funds were cancelled, resulting in a total disbursement of US$ 22.44 million of the original US$ 322.15 million over the life of the project. Aside from the creek rehabilitation component, the two other activities (microzonation and fire safety) under implementation at the time of cancellation, were not subject to the same implementation issues and had been expected to be completed. However, upon cancellation of the entire project, these activities were also stopped.

41. Factors affecting Implementation

42. Shortly after the 2009 restructuring, the Bank’s Quality Assurance Group (QAG) undertook a disbursement learning review of the project, which identified major issues affecting project implementation. It took note of the lack of project readiness at the time of approval, the effectiveness delay caused by the delay in providing guarantee authority, and the lengthy process for achieving internal consensus on project design changes, which were ultimately reflected in restructuring.

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43. The review identified the following factors on the part of the government: (i) the difficulties in obtaining timely clearances and approvals for both the loan guarantee and components to be included in the project; and (ii) Istanbul’s relatively strong financial position which allowed it to finance activities with its own funds when it deemed Bank policies/requirements to be either too burdensome or too slow. The issues identified on the part of the Bank were: (i) the decision to opt for a first order restructuring, (ii) stringent interpretation of the application of OP7.50 requirements for notifying riparians before Istanbul could purchase sea vessels to clean up the Bosphorous; and (iii) inadequate procurement planning, which led to delays in reviews and approvals. The review’s conclusion that the changes in design appeared to require a simple reallocation among components overlooks the fact that the creek rehabilitation component had not been defined and appraised at the time of Board approval.

44. The key issues that are indicative of, and contributed to implementation difficulties reflect many of the weaknesses in project preparation that were identified earlier. They include: (a) the long lag time between Board approval and effectiveness, (which has been discussed previously); (b) the incomplete restructuring and revision of instruments; (c) changing priorities during implementation; (d) IMM’s inability to incorporate necessary systems for successful implementation; and (e) inadequacies in project management and coordination.

45. Incomplete Restructuring and Revision of Instruments. The restructuring was justified in the Project Paper (PP as being necessary “to align the project components with the evolving priorities of the IMM within the framework of the national investment budget approved by the Turkish State Planning Organization.” The creek rehabilitation sub-component, took on greater significance in its own right, as an important measure to mitigate the risks of flooding, and accounted for half of total project financing. The PP indicated that the main rationale for the increased importance of activities under this component was IMM’s request to expand funding for creek rehabilitation due to “the urgent need to mitigate risks against flooding.” Yet, the revised objectives and indicators did not reflect this rationale. Instead, the objectives focused on the environmental aspects of cleaning up creeks. Similarly, the indicators made no reference to mitigation of flood risks, but were measured by the decline in pollutants.

46. The restructuring PP defined the activities to be financed under the creek rehabilitation subcomponent as “cleaning creek bed and canals, protection of stream banks and rehabilitation and replacement of existing rainwater and wastewater pipelines.” The very large addition of resources for these activities warranted review and modification of the appraisal analysis, and a separate analysis of its benefits and risks, since it had not been an integral part of the original appraisal. However, the PPP effectively treated the restructuring as though it was a matter of reallocation of resources from one component (pilot urban transformation) to another (creek rehabilitation).

47. Implementation was adversely affected by the failure to fully analyze the additional risks and benefits that this subcomponent might entail, or to establish criteria for the selection of creeks to be rehabilitated. The general assumption appears to have been that the significant expansion of the creek rehabilitation activities would not affect

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the institutional arrangements and associated implementation processes, or the identified risks and benefits of the project as appraised. As a result project implementation processes and tools, such as the Operations Manual and LARP, were not adapted to reflect the requirements of the largest component of the restructured project.

48. Changing Priorities During Implementation. While the restructuring allowed the creek rehabilitation component to move forward, progress on implementation of other components was quite slow as a result of lengthy procurement processes, and was affected by changes in IMM priorities. The degree to which these changes were influenced by the significant lag in the start of implementation, and the heavy emphasis on procedural compliance, is difficult to ascertain based on existing documentation. However, at least in the case of the solid waste component, for which preparation of consultant procurement packages was started in late 2009, IMM later made it clear that it had found other means of dealing with the issue of unauthorized dumps, and would not need to use Bank financing for this component.

49. In October 2010, IMM reported in a letter to the Bank that it no longer intended to carry out many of the activities listed in the September 2009 Project Paper, including the rehabilitation of illegal waste dumps and most of the technical assistance. Its stated priorities were: (i) the rehabilitation of creeks for flood control purposes, under Component A, (ii) providing emergency vehicles to the fire department, and limiting seismic strengthening of city bridges and viaducts, under component B and (iii) microzonation studies under Component C. In short, within a year from the start of implementation, IMM decided to largely limit project components to the activities that were already underway. The changes in priorities implied that a second first order restructuring would be necessary to align objectives and components with the actual project activities and priorities of IMM, and reduce the size of the loan.

50. Inability to Develop Necessary Systems for Successful Implementation. A critical deficiency was related to IMM’s implementation of safeguards policies, in particular OP4.12. No system was developed for IMM to plan, prepare, implement and report on land acquisition and resettlement under the project. As Section 2.4.1 below describes in detail, it was not possible to remedy this deficiency before project closure. Similarly, project monitoring and reporting systems were not sufficiently developed prior to the start of implementation, and remained inadequate throughout the implementation period, with only one progress report produced by IMM.

51. Weaknesses in Project Management and coordination capacity. Implementation was adversely affected by weaknesses in the project management structure, which was characterized by:

• Insufficient authority of the project coordinator to coordinate the actions of diverse implementing departments and ensure compliance with project requirements;

• Insufficient capacity to carry out the project functions in line with Bank implementation requirements; and

• Inadequacy of overall project monitoring and reporting.

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52. Despite IMM’s appointment of a full time coordinator in July 2010, coordination authority to ensure compliance by the staff in implementing departments remained weak. Staffing of key implementation functions was subject to frequent changes in some instances, or was insufficient in others. At the same time, the inadequacy of the reporting and monitoring systems and ambiguity regarding associated roles and responsibilities made the task of coordination and ensuring compliance even more difficult. The project implementation management issues finally came to a head at the time of the mid-term/restructuring mission in late April 2011. At that point, the continued lack of progress in resolving safeguards compliance and other implementation issues led the Bank to conclude that the decentralized implementation arrangements were unworkable and needed to be replaced with a designated unit with qualified staff.

2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization

53. The design of project monitoring during project preparation was inadequate as the results framework in the PAD provided few baselines and targets and the indicators were not measurable. During the September 2009 restructuring, the indicators were improved significantly, although the two PDO indicators were still vague and the indicators for the first objective did not reflect the importance of creek rehabilitation as a flood control measure. In the absence of significant data collection, indicators could not be measured, and no baselines and targets were developed for the restructured project.

2.4 Safeguard and Fiduciary Compliance

2.4.1 Safeguards Compliance / Social:

54. A central issue that led to IMM’s decision to cancel the project in July 2011 was non-compliance with the World Bank social safeguard policy on Involuntary Resettlement (OP4.12) as it related to land acquisition and resettlement under the creek rehabilitation component. Due diligence on land acquisition and resettlement aspects was recorded in the initial 2007 (Board approval version) ISDS and elsewhere in the project files: “The project is expected to take place on public land or within existing rights of way and it is not expected that any project activities will entail any land acquisition, relocation of population, or result in restricting the access of individuals or communities to economic resources. However, as a precautionary measure to enable a quick response in case the final design of any activities should unexpectedly call for the expropriation of private land or relocation of people or businesses, the IMM has prepared a Resettlement Policy Framework satisfactory to the Bank that will ensure compliance with OP 4.12, and hence the safeguard is triggered as a precautionary measure.”

55. During the 2009 restructuring process, the ISDS was revised and re-dated. The same policies were triggered: OP 4.01, Environmental Assessment; OP4.11, Cultural Property, and OP 4.12, Involuntary Resettlement. The section on OP 4.12 was unchanged from the above-cited text, indicating that land acquisition and resettlement impacts were still seen as likely to be quite minor. Accordingly, the LARP accepted Turkish

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legislation on expropriation and treatment of informal settlers, while also requiring that IMM prepare and submit land acquisition plans for Bank approval, and ensure public consultation.

56. While the supervision missions in late 2009 until March 2010 also did not foresee major resettlement requirements, the team was conscious from the start of the potential risks and provided guidance to help IMM establish adequate planning, monitoring and reporting on resettlement and land acquisition. Initially, the primary concern of supervision missions, starting in late 2009, was to ensure adequate documentation and reporting by IMM on land acquisition as required by the LARP. The reporting problems were attributed to: a) the lack of adequate guidance in the LARP as to IMM’s planning, monitoring and reporting obligations, and b) the weak inter-departmental collaboration and communications on expropriation matters.

57. Over the course of implementation, it became clear that the effective rehabilitation of creeks for the purposes of flood control was likely to entail more significant requirements for land acquisition and resettlement than had originally been anticipated in the social safeguards due diligence documentation. In addition to their vulnerability to being used as wild dumpsites, Istanbul’s creeks are crucial for protecting the city from flooding by providing storm water drainage along their natural contours. In light of the frequency of severe flood events, it is understandable and even desirable that IMM sought to augment the capacity of the creeks. In fact, the reports on creek rehabilitation, submitted by IMM to the Bank, as part of the preparation of the restructured project, specifically stated that due to the damage and associated loss of life caused by frequent flooding, IMM intended to expand the capacity of those creeks that it deemed risky. This should have alerted the project restructuring team of the need to review the consequences of such works for land acquisition and potentially resettlement, and the adequacy of the existing LARP in addressing these requirements.

58. In view of the emerging significance of land acquisition and resettlement during implementation, it became clear to the supervision team that the LARP that had been established would need to be revised and considerably strengthened to provide policy-compliant resettlement plans and actions. The Bank worked intensively with IMM to develop adequate systems for managing resettlement and land acquisition issues. The intention was to establish acceptable policy- compliant procedures, (including a complete revision and strengthening of the LARP, and RAPs), and have the system in place prior to the proposed second restructuring, at which time the clause banning resettlement could be lifted. However, the difficulties of correcting existing deficiencies in social safeguards systems, and applying ex post remedial actions soon became evident, as the cases of Beykoz and Kurbagalidere creeks, described below, illustrate.

59. To develop more robust systems for handling and reporting on resettlement and land acquisition issues, a consultant was hired by IMM in October 2010 to undertake a social assessment of Beykoz Creek, where rehabilitation of the lower creek sections had already been completed by IMM, and World Bank funding was sought to complete the upper section. It was known that resettlement had already taken place at the site, and that more resettlement would be needed in the future. It was expected that the social

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assessment would lead to a final, Bank-compliant report that would facilitate immediate progress on Beykoz Creek and serve as a prototype report for future creek rehabilitation.

60. The report produced in November 2010 revealed that, on the positive side, IMM had taken solid steps to minimize land-related and resettlement impacts, and that land acquisition processes were generally applied in a fair manner and consistent with domestic policy requirements. However, it also indicated that the actions taken in Beykoz with respect to some of the 12 households that had been relocated some time before the signing of the contracts, did not comply with OP4.12 due to gaps between domestic and Bank requirements, or special circumstances surrounding individual cases. 4 While the report could not be considered a full RAP and did not provide specific recommendations on remedial actions, the Bank requested that IMM indicate whether it would, in principle, be willing and able to provide remedial assistance to affected households.

61. In late March 2011, IMM responded in writing, indicating that the actions it had already taken at Beykoz were in line with Turkish laws and regulations and that such legislation did not allow retroactive remedial actions once legal processes were completed. It, however, indicated that it would take on board the issues raised by the report in future rehabilitation activities to ensure compliance with OP4.12. The non-compliance with the World Bank resettlement policy and the legal agreement made it impossible for the Bank to provide a no-objection to the bid evaluation report for civil works at Beykoz Creek.

62. During the mid-term-restructuring mission in late April 2011, visits were made to all creeks that had either been proposed by IMM or were already under implementation. Key features of each creek, including land acquisition and access aspects, were assessed by order of difficulty with respect to resettlement impacts. At that time, the mission observed that IMM had made significant design changes at Kadikoy Kurbagalidere Creek E-5 section after the signing of the creek rehabilitation contract, without obtaining a no-objection from the Bank. These changes had resulted in cases of physical resettlement, without aid of a RAP, and in spite of the Loan Agreement’s preclusion of such resettlement.

63. Beyond, the issues at this site, the mission also found additional problems related to implementation of resettlement, which rendered restructuring very difficult: (1) Bidding on two creek rehabilitation contracts had started without site-specific drawings and without the World Bank’s review and clearances for EMPs and RAPs; and (2) Reports provided to the Bank on resettlement and expropriation were often inconsistent,

4 The Beykoz contract was signed in 2010 and the inclusion of this creek in the project was finalized at the time of restructuring in 2009. While the 2010 consultant report does not indicate the actual date that houses were demolished, and households relocated, it makes reference to the 2006 floods as the main cause of the expropriation under emergency measures, and resettlement of the 12 households who had already had their houses demolished. It also indicates that these households had spent about two years as tenants until they could rebuild or relocate to more permanent housing in the same area.

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and did not accurately reflect reality on the ground, particularly with regard to the presence of informal structures which were not taken into account. The overall deficiencies in reporting resettlement and the weaknesses in the procurement practices and implementation arrangements led the Bank to request that IMM take actions beyond remedying the specific violations that had been observed at Kurbagalidere Creek.

64. In a letter to IMM, Bank Management on April 27, 2011, requested that IMM : a) confer the creek rehabilitation component to experienced personnel or entities; b) suspend civil works on all contracts where resettlement had occurred, or was expected to occur, until a full review had been completed; c) suspend bidding and contract signing on creek rehabilitation until completion of remedial actions on all creeks; and d) ensure that no further land acquisition and resettlement take place until the project is restructured and the Loan Agreement amended to allow for resettlement.

65. In addition, to remedy the deficiencies in the instruments and institutional arrangements for social safeguards, IMM was asked to:

• Establish a project coordination unit through assignment of full time qualified personnel for key project management functions, such as procurement and safeguards;

• Revise the LARP to produce a resettlement policy-compliant framework that includes provisions related to all project-affected persons, (PAPs), social surveys of and consultation with PAPs, and for the preparation of RAPs where surveys indicate that resettlement may be required;

• Carry out RAPs as a routine part of subproject planning, and prior to the bidding of contracts; and

• Hire a social expert to carry out a full social survey of all creek sections to provide a full and complete assessment of current status.

66. Discussions continued between IMM and Bank management throughout May and June 2011, with IMM responding positively indicating its willingness to address most of these issues. It did, in fact, report that it had suspended construction on the Kurbagalidere contract. It also suspended bidding and contract signing, and confirmed that no future resettlement would take place. However, as the pending issues with respect to revisions in implementation arrangements and instruments could not be satisfactorily resolved in a reasonably short time frame, and in light of the residual risks to the Borrower, Guarantor and the Bank, the project, as previously noted, was cancelled in July 2011, at IMM’s request.

2.4.2 Safeguard Compliance / Environmental:

67. Compliance with environmental safeguards was generally satisfactory. Safeguards issues were adequately addressed during the original project preparation in 2007. An environmental assessment framework was prepared in January 2007 by IMM. In addition, a general environmental assessment report and Environmental Management

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Plan (EMP) was prepared and disclosed in February 2007, reflecting the solid waste subcomponent that was originally the principal activity under Component A.

68. During the restructuring in September 2009, the ISDS was revised to include provisions for the creek rehabilitation. The safeguard policies triggered remained the same, and again a general EMP was prepared for the creek rehabilitation component. Sub-project specific EMPs were prepared, and were included in the bidding documents and shared with the contractors. While there was general compliance with the site specific EMPs, the mid-term review mission found that there were problems with the mitigation measures and Bank reporting requirements related to physical and cultural property on three sites. These issues were brought to the attention of IMM, in the April 27, 2011 management letter, and IMM was asked to update the EMPs of the three affected creek contracts to reflect the authorizations received and actions needed in and around the cultural property. Authorization was obtained or sought on two of the sites, but the EMPs were not updated at the time of project closure. However, there was no adverse impact since construction did not start at any of the sites by project closure.

2.4.3 Fiduciary Compliance:

69. IMM’s procurement performance remained weak until the cancellation of the project. Accordingly, the procurement risk rating prior to project cancellation was substantial.

70. The management and implementation of procurement, was hampered by the fragmented implementation arrangements, the lack of central coordinating and control mechanisms, understaffing of the procurement function and frequent changes in personnel. As a result, procurement planning and contract management were weak on the creek rehabilitation component, with delays in contract execution, and significant design changes, which were not reported to the Bank for a no-objection.

71. In general, procurement under the microzonation and fire safety components was less problematic in terms of the process, but proceeded quite slowly without reaching the contract award stage before closure. The preparation of both packages was quite lengthy, having started even before the restructuring, with significant back and forth between the Bank and the IMM. While the procurement of the microzonation package was finally bid in 2011, contract award was cancelled due to project closure. Preparation of the fire equipment package was ultimately completed, but the procurement process was not started due to the project closure.

72. In contrast, IMM took steps to enhance the financial management procedures relating to the project once the project was declared effective. It integrated the project accounting into its main financial management system and generated the Interim Unaudited Financial Reports automatically from the system.

73. The marginally unsatisfactory rating for financial management at the time the project was cancelled was due to weaknesses that had been identified in the last FM supervision, for which actions were pending, and had not been reviewed by the Bank prior to closing.

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2.5 Post Completion Operation/Next Phase

74. Not applicable as the assets intended to be financed under the project have not been completed.

3. Assessment of Outcomes

3.1 Relevance of Objectives, Design and Implementation 75. The relevance of the PDO as defined in the PAD remains high. Improving environmental management and reducing vulnerability to disasters was and still is a high priority for Istanbul Metropolitan Municipality. The PDO fit well with the Bank’s strategy in Turkey at the time, and complemented other ongoing Bank-financed projects in Istanbul and other municipalities in Turkey.

76. The relevance of the project design was weak insofar as the relative priority of various components and their alignment with stated objectives changed over the course of project preparation, restructuring and implementation. Moreover, implementation arrangements and procedures proved to be inadequate to the task of ensuring effective implementation in line with Bank procedural requirements and achievement of PDOs.

3.2 Achievement of Project Development Objectives 77. The project did not make any progress towards achieving its development objectives, given the limited implementation of planned activities.

3.3 Efficiency Not Applicable.

3.4 Justification of Overall Outcome Rating Rating: Highly Unsatisfactory 78. Although the project was relevant at appraisal and remains relevant in terms of Istanbul’s priorities for infrastructure development and disaster risk reduction, its outcome is rated as highly unsatisfactory given its failure to achieve all of its intended PDOs.

3.5 Overarching Themes, Other Outcomes and Impacts (a) Poverty Impacts, Gender Aspects, and Social Development 79. Not Applicable.

(b) Institutional Change/Strengthening

80. Not applicable, since none of the institutional strengthening activities and studies, which were intended to improve IMM’s capacity to plan for urban environmental management and disaster risk reduction were carried out.

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(c) Other Unintended Outcomes and Impacts (positive or negative)

81. Not applicable.

3.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops 82. Not applicable

4. Assessment of Risk to Development Outcome Rating: High 83. The risk to development outcome is rated High, as most key activities under the project were not implemented.

5. Assessment of Bank and Borrower Performance

5.1 Bank Performance

a. Bank Performance in Ensuring Quality at Entry Rating: Highly Unsatisfactory 84. Bank inputs and processes during project preparation were inadequate. Adjustments to the project appraisal were not made as project components changed to ensure readiness of the project, prior to Board submission. Project preparation did not consider major details for effective implementation by ensuring that there was a well-structured Operations Manual that created a framework for successful implementation of the Project with clearly spelled out coordination, reporting and monitoring responsibilities and functions. The Bank also did not adequately assess the Borrower’s capacity to comply with the Bank’s safeguards and fiduciary procedures and identify relevant technical assistance to strengthen these functions, beyond training sessions.

85. During project preparation the issue of land acquisition and resettlement was not addressed satisfactorily, nor was this deficiency addressed at the time of restructuring when the creek rehabilitation component was better defined. While the project documentation allowed some flexibility to respond to situations where resettlement might be necessary, the legal agreement on the restructured project banned resettlement. Instead of addressing the land acquisition and resettlement requirements of the creek rehabilitation program, the assumption seems to have been that the project would not require resettlement, or could exclude works on creeks where resettlement might be necessary. These deficiencies should have been better addressed by the project team, but were also overlooked by the sector and country management units that could have proposed corrective actions and other means of addressing these important gaps.

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(b) Quality of Supervision

Rating: Unsatisfactory

86. During the period between Board approval and restructuring, the supervision activities were essentially a continuation of the preparation phase. The field-based team worked to resolve procedural issues of clearances, as well as reach agreement on project components, the restructuring of the project, and preparation of the creek component, including an initial procurement package, so it could be initiated shortly after restructuring. The Bank also provided guidance on IMM’s preparation of procurement packages for both the microzonation and fire-fighting equipment during this period.

87. Many of the weaknesses that affected the original preparation were carried through the restructuring. Specifically, these included a weak focus on implementation processes, reporting requirements, roles and responsibilities for different components, and the inadequacy and ambiguity with respect to social safeguards instruments. While there was continuity in the staffing of the environmental function throughout the period, social safeguards did not receive adequate attention beyond a training session in November 2008. Nor was there adequate staffing of the social safeguards function to review the implications of the creek rehabilitation component at the time of restructuring, despite requests for assignment of staff.

88. The Bank’s supervision activity during this period was not recorded in formal detailed reporting by the field-based team in the form of aide memoires or management letters. Moreover, only a limited number of Back to Office reports were issued during this period to record findings of missions. The lack of a formal written record of communications on critical issues and understandings, as emphasized by IMM management, affected the level of attention given to project implementation issues and required actions. It also impacted the transition to a new team that took on supervision when project implementation started shortly after the restructuring in late 2009. Surprisingly, there was no supervision handover mission on what was a complex project that had already experienced significant procedural delays, and a restructuring.

89. After the restructuring, (i.e., when actual implementation started), supervision reporting was significantly intensified in late 2009 by the Bank’s new team. More formal and frequent short missions were undertaken, with five aide memoires and management letters issued, and timely responses from IMM. Notably, safeguards supervision was strengthened and included three social safeguard specialists (including the Lead Social Specialist in the ECA Regional Safeguards compliance unit who participated in 3 missions in 2010). An intensive mid-term/project restructuring mission was undertaken that made significant recommendations for remedying project deficiencies. However, as evidenced by the final outcome, even such intensified supervision, could not ensure successful implementation.

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(c) Justification of Rating for Overall Bank Performance Rating: Unsatisfactory. The overall unsatisfactory rating is based on the highly unsatisfactory performance at entry, unsatisfactory performance during supervision, and the final project outcome. 5.2 Borrower Performance (a) Government Performance Rating: Moderately Unsatisfactory

90. The Government’s performance under the project is rated as moderately unsatisfactory. During preparation, the domestic project preparation and approval process was not handled efficiently, particularly the delay in issuing the sovereign guarantee 19 months after Board approval, which substantially delayed project effectiveness. The rating of moderately unsatisfactory, however, reflects the Government’s positive contribution at the final stages of the project to facilitate project closure.

(b) Implementing Agency or Agencies Performance

Rating: Unsatisfactory 91. IMM’s performance under the Project is rated unsatisfactory. Despite substantial efforts made during the preparation phase and the diligence of IMM staff in trying to address problems that arose on the creek rehabilitation sub-projects, these were not sufficient to overcome earlier weaknesses in project implementation, particularly regarding adherence to some procurement and safeguard procedures. Given IMM’s unfamiliarity with World Bank financing procedures and guidelines, it is understandable that it did not fully appreciate the challenges of managing the project through its internal departments, while incorporating Bank requirements and meeting its obligations under the Project.

92. During the period after Board approval through restructuring, IMM was engaged in preparation of the creek rehabilitation component, maintaining a steady dialogue with the Bank on the restructuring documentation and preparation of the initial procurement documents. However, during implementation, IMM was not able to satisfactorily address deficiencies in project coordination, procurement, safeguards compliance, and progress reporting. To its credit, its management took on a proactive and collaborative approach to resolve the issues raised in the mid-term restructuring mission, and when it became clear that the implementation deficiencies could not be resolved, it sought cancellation of the project.

(c) Justification of Rating for Overall Borrower Performance Rating: Unsatisfactory 93. The overall rating of Borrower performance as Unsatisfactory is based on a combined assessment of the Moderately Unsatisfactory Government performance,

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Unsatisfactory Implementing Agency performance, and the Highly Unsatisfactory project outcome.

6. Lessons Learned 94. Early closure of project. The proactive and consultative approach taken by the Borrower, the Guarantor and the Bank in closing the project when their joint assessment showed that the problems hindering implementation could not be easily resolved is a positive lesson from this project. This proactive approach allowed all parties to manage risk and minimize the cost of an unsuccessful project.

95. Resettlement as part of urban development. The project’s assumption that effective creek rehabilitation and flood control works could be undertaken without the need for land acquisition and/or resettlement was flawed. In projects of this type, the need for land acquisition and resettlement is often necessary to ensure safe development and provide social benefits. Treatment of OP4.12 should be integrated into project design, such that social impact can be proactively understood, minimized, and mitigated ex ante.

96. Moreover in a country, such as Turkey, where there is a highly developed set of rules for social protection, the emphasis should be on consistency of outcomes, and agreement upfront on specific measures to bridge the gap between local requirements and Bank policy and procedures. In this respect, the recent report by the ECA Operational Services and Quality department, which compares Turkey’s policies with those of the World Bank is an important contribution. It provides a good guide for how differences could be addressed in future projects. The report tackles the question of which procedural differences are really significant, making it important to ensure full adherence to WB requirements, and when it is desirable to exercise some flexibility as long as the outcomes are acceptable and consistent with WB policies. This focus on outcomes rather than a rigid imposition of procedures for compliance requires an understanding on the part of Bank teams of local practices and results, and of the legislative constraints facing the client.

97. Ownership for project preparation and implementation. It was clear that the Borrower wanted to engage with the Bank, but together they were not able to find the best way to do so. IMM continued to demonstrate its interest in engaging with the Bank, with its move to sign the Loan Agreement once it had obtained SPO approval. However, given what was known about the level of preparation, and the lack of ownership of the original project components at the central level, it would have been prudent for Bank management to have taken a more conservative approach with respect to the Board approval timeline, and not present the project to the Board until it was fully ready. At restructuring, there was a chance to adjust the project to more fully reflect the priority of the creek rehabilitation program for flood control purposes, which appears to have had full “ownership” by the Borrower.

98. Quality control during restructuring. The outcome of this project indicates that in the case of a major reallocation of resources or significant changes in the priority of

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components through restructuring, a greater use of the Bank’s internal quality control mechanisms, such as a full decision-meeting, and peer reviews would likely improve the outcome of the restructuring.

99. Implementation Capacity Assessment. While the decentralized management of the project proved to be problematic in this instance, it is not evident that a dedicated stand-alone PIU structure would have necessarily produced a more satisfactory outcome. Resolution of many of the issues that arose during implementation required engagement of IMM departmental staff and decisions by the IMM management. While a PIU management structure might have simplified the process of Bank supervision, its effectiveness in achieving PDO’s and ensuring smooth implementation would still have required adequate processes and authority for the PIU to interface and coordinate with various implementing departments and entities.

100. To manage the risks of a decentralized management model, more rigor is needed in the assessment of implementation capacity, even when the implementing agency responsible for a project is generally perceived to be of high capacity. Istanbul’s ability to undertake a large infrastructure program was not at issue. However, its ability to incorporate Bank processes and comply with the project-related requirements was untested. A sound understanding of the implementing agency’s own procedures and practices is required to determine how project-specific requirements will be incorporated into the agency’s regular work flow. Any gaps and/or procedural differences should be carefully analyzed and agreements on how these gaps would be bridged should be put in place at appraisal through the Operations Manual and project documentation. Where such an assessment identifies gaps in capacity to carry out project implementation functions, organizational strengthening should be provided in a timely and targeted manner.

101. Flexible project design. Projects that support a large number of different investments, not all of which may be fully identified before appraisal, require careful project design. Successful projects of this type take significant care before appraisal to clarify the project components, and establish, through the project’s legal agreements, specific and rigorous eligibility criteria for investments under each component. Most importantly, they identify the first year’s investments, which are fully prepared through feasibility study, EA and RAP stage prior to project appraisal. Alternatively, if such projects are intended to provide flexibility in support of a priority investment program, the overall program along with criteria for selection of investments, capacity for implementation and internal implementation procedures are appraised and project-specific adjustments to internal processes are identified, and agreed to. In both instances procedures and requirements for the project are established, appraised and agreed prior to Board approval of the project.

7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners (a) Borrower/implementing agencies Comments of the Guarantor, Borrower and Implementing Agency reflect the findings of the ICR with regard to: (i) the ambitious timetable for project preparation that didn’t

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allow sufficient time for preparing and appraising several elements of the project and ensuring full ownership by project stakeholders; (ii) the inadequacy of the project at design stage in taking full cognizance of the likely need for resettlement and land acquisition and associated safeguard measures; (iii) a breakdown in communications during implementation due to a weak documentary record of understandings reached during missions as typically reflected in mission Aide Memoires; and (iv) a lack of familiarity on the part of the Bank of the Government of Turkey’s procedures for committing external financing. (b) Cofinanciers Not applicable. (c) Other partners and stakeholders

Not applicable.

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Annex 1. Project Costs and Financing

(a) Project Cost by Component (in USD Million equivalent)

Components Appraisal

Estimate (USD millions)

Actual/Latest Estimate (USD

millions)

Percentage of Appraisal

Total Baseline Cost 336.15 22.44 6.7%

Contingencies N/A 0.00

Total Project Costs 336.15 22.44 6.7% Front-end fee IBRD 0.00 0.00

Total Financing Required 336.15 22.44 6.7%

(b) Financing

Source of Funds Type of Cofinancing

Appraisal Estimate

(USD millions)

Actual/Latest Estimate

(USD millions)

Percentage of Appraisal

Borrower 14.00 0.00 0% International Bank for Reconstruction and Development 322.15 22.44 7.0%

26

Annex 2. Outputs by Component

Project component as per September 2009 Restructuring Paper

Implementation status and outputs at time of project closure in July 2011

Component 1. Improvements in Solid Waste Management and Rehabilitation and Cleanup of Creeks (Cost $165.5 million) a. Closure and rehabilitation of existing unauthorized disposal sites for municipal solid waste (landfills) and rehabilitation of creeks as well as replacement existing rainwater and wastewater pipelines;

Closure and rehabilitation of municipal solid waste landfills did not commence. Creek rehabilitation contracts signed on 14 sections; works commenced on 9 creek sections, which were partially financed as per table below. None of the contracts were finalized prior to project closure.

b. Preparation of annual Business Plans for IMM that include operating performance, investment program and financial targets and results;

Did not commence.

c. Financing waste collection equipment. Did not commence. Component 2. Strengthening of Municipal Services and Infrastructure (Cost: $98.5M) a. Preparing a detailed risk assessment for all major municipal systems;

Did not commence.

b. Preparing a Municipal Infrastructure Risk Mitigation Plan;

Did not commence.

c. Retrofitting of municipal infrastructure (under-passes, viaducts, etc.);

Did not commence.

d. Providing emergency fire department equipment.

Procurement preparation completed but procurement process not started.

Component 3. Pilot Urban Transformation Program (Cost $40M; Loan:$40M) Preparation of pilot urban transformation feasibility studies and preparation of microzonation studies. These are necessary in the analysis of seismic risk and the development of land use plans.

Pilot urban transformation feasibility study not commenced. Microzonation study procurement started, but contract award cancelled due to project closure.

Component 4. Project Management and Audit (Cost: $14.15M) a. Design studies, surveys and technical training for project implementation;

Did not commence.

b. External audits of project accounts. Did not commence.

27

Contracts awarded under project prior to cancellation (all within Component A - Creek Rehabilitation) including physical progress achieved on each contract and total disbursements made prior to project cancellation.

Description of Works Date of

Contract Signing

Contract Amount ( VAT included)

(TRY)

Total Payment (TRY)

Progress Total length of the creek to be rehabilitated in

meters (1)

Total length of rehabilitation

works at the last payment

certificate in meters (2)

Physical progress (2)/(1)

(Total Payment / Contract Amount)

1 Çekmeköy Kemerderesi Rehabilitation Project 1st Stage 5/7/2010 7,339,010.06 5,040,784.98 69% 1,480 1,450 98%

2 Küçükçekmece Nakkaşderesi Rehabilitation Project 1st Stage 5/7/2010 9,187,118.68 7,166,209.83 78% 1,250 945 76%

3 Çekmeköy Kemerderesi Rehabilitation Project 2nd Stage 6/14/2010 6,405,632.00 6,951,970.27 109% 900 900 100%

4 Küçükçekmece Nakkaşderesi Rehabilitation Project 2nd Stage 6/15/2010 8,099,146.00 4,817,892.42 59% 910 680 75%

5 Beykoz (Akbaba, Dereseki) Creek Rehabilitation Project 2nd Stage 6/29/2010 9,899,153.32 6,167,338.85 62% 2,545 2,180 86%

6 Kadıköy Kurbağalıdere Rehabilitation Project 8/6/2010 5,107,438.60 1,855,110.07 36% 900 230 26%

7 Üsküdar Bekar Creek Rehabilitation Project 8/9/2010 5,899,544.51 0% 822 0 0%

8 Beylikdüzü, Kavaklıderesi Rehabilitation Project 1st Stage 10/6/2010 6,017,082.20 0% 2,100 0 0%

9

Beylikdüzü, Kavaklıderesi Rehabilitation Project 2nd Stage 10/6/2010 8,258,702.12 0% 3,700 0 0%

10 Haramidere Rehabilitation Project 1st Stage 2/25/2011 11,270,909.24 477,580.92 4% 1,546 0 0%

11 Haramidere Rehabilitation Project 2 nd Stage 2/25/2011 9,690,234.34 410,603.12 4% 1,400 0 0%

12 Haramidere Rehabilitation Prıoject 3rd Stage 2/25/2011 10,731,684.64 454,732.40 4% 1,300 0 0%

13 Esenyurt Haramidere Rehabilitation Project 4/19/2011 11,438,568.24 0% 1,500 0 0%

14 Küçükçekmece Hasanoğlu Creek Rehabilitation Project 4/18/2011 9,752,216.20 0% 1,650 0 0%

Total 119,096,440.14 33,342,222.86 12,231 6,385

28

Annex 3. Economic and Financial Analysis Not Applicable

29

Annex 4. Bank Lending and Implementation Support/Supervision Processes

(a) Task Team members

Names Title Unit Responsibility/ Specialty

Lending Seema Manghee Sr Water & Sanitation Spec. TWIWA TTL Sana Kh.H. Agha Al Nimer Sr Water & Sanitation Spec. MNSWA Engineer Zeynep Zerrin Koclar Technical Specialist ECSSD Engineer Jolanta Kryspin-Watson Operations Officer ECSS6 Technical

Frank Van Woerden Senior Environmental Engineer ECSS3 Solid Waste Specialist

Ibrahim Sirer Senior Procurement Specialist ECSO2 Procurement

Zeynep Lalik Sr Financial Management Specialist ECSO3 Financial

Management

Supervision (June 2007 - October 2009) Seema Manghee Sr Water & Sanitation Spec. TWIWA TTL Sana Kh.H. Agha Al Nimer Sr Water & Sanitation Spec. MNSWA Engineer Zeynep Zerrin Koclar Technical Specialist ECSSD Engineer Ibrahim Sirer Senior Procurement Specialist ECSO2 Procurement

Zeynep Lalik Sr Financial Management Specialist ECSO3 Financial

Management Supervision/ICR (October 2009 – July 2011) Mara Warwick Country Sector Coordinator ECSSD TTL Elif Ayhan Urban Specialist ECSS6 Engineer

Daniel R. Gibson Lead Social Development Specialist ECSOQ Social Safeguards

Frederick E. Brusberg Lead Social Development Specialist ECSS4 Social Safeguards

Chukwudi H. Okafor Sr Social Development Specialist ECSS4 Social Safeguards

Ayse Seda Aroymak Sr Financial Management Specialist ECSO3 Financial

Management Ibrahim Sirer Sr Procurement Specialist ECSO2 Procurement Salih Erdurmus Procurement Specialist ECSO2 Procurement

Esra Arikan Environmental Specialist ECSS3 Environmental Safeguards

Xiaoke Zhai Transport Specialist EASCS Engineer

30

(b) Staff Time and Cost

Stage of Project Cycle

Staff Time and Cost (Bank Budget Only)

No. of staff weeks USD Thousands

(including travel and consultant costs)

Lending FY06 39.53 FY07 272.66 FY08 10.84

Total: 323.03

Supervision/ICR FY08 114.10 FY09 146.30 FY10 156.60 FY11 189.44 FY12 54.24

Total: 660.68

31

Annex 5. Beneficiary Survey Results Not Applicable

Annex 6. Stakeholder Workshop Report and Results Not Applicable

32

Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR

RePUBLIC Of rURKEY

PRii'viE viiNISTRY 1'111: Cndcrsccretariur c;fTrc-aslU"y

Ref: 1195-!024.204.11 .06

i\ lr. Flori:m Fichtl L~ad Opcr:1tions Ot"tic.::r Europe and Ct:ntralt\sia Region The World Bani.. Ankara Ofticc

Ankara,

1 2. 09. 2 0 13 • 1 4 6 7 0

Rei": Your lcll..:r dated June 14. 20 I J regarding btanhul ~vlunit:ipal lnli":!struc!un: Project Impleme-ntation Completion and Results RcpJrt-Rrquests for Conllllt:nts

Dear Mr. Fichtl.

R.:gan.ling l:;tunbul Municipul lnlbstructure Project Implementation C<lmplction and Results Report, please lind altach.:d the comments of Undersecrata riat of Treasury, Ministry of Development and Istanbul ,vktropo!itan Municipality.

Yours sincen.:ly.

~~Y/1 . ' . . . .. ' ' J , • w .. l' l 1 , .. ; · ,.

,\Llin;.: Dcpu:_, I lir~cto;· Ci-.:nt.:r:ll Ji.n F.·t..:ign EconomiL Rc!:llton~

S :AN. 'tfD f .E p ' --... . .... 0¥0 ,.., 1 :\ .5 '~' ....... 110 • -AY ..-ll.EtQ.~,.,•ILNC:tOR/11I'ESWCcn\:J,o,o.,.,.,_

j,~~nll lluhnr, \\1. J(, l; llll:"- 1)(,5 1(1,\~,KAR:\·------- ·----·-~·:N d,:!:ukd intiliiO<Hion; ~ .A Yl)r\.~ i:\j)Ci1

lei: 104 'i.L!£,1.1~': ~(I~ 7Jft7 ~.:-pn-i;a : il!.!.£.1!1S:IIhMirw !.!l)V~

33

COMMENTS OF THE UNDERSECRETARIAT OF TREASURY

ON THE ICR OF ISTANBUL MUNICIPAL INFRASTRUCTURE PROJECT

Implementation Completion and Results Report (ICRR) of Istanbul Municipal Infrastructure

Project has some evaluations on government performance. Our comments on these

evaluat ions are as follows;

1) Regular Project Financing

There are regular steps that need to be followed for loans provided for project financing

guaranteed by the Turkish Treasury.

a- Concept Note needs to be finalized by incorporating the comments of relevant

institutions

b- According to Law on Regulating Public Finance and Debt Management,

Undersecratariat of Treasury asks Ministry of Development whether the project is in

the annual investment program and has priority, in order to get their view on the

total project amount and appropriations at the stage of obtaining foreign financing

for such projects. The Project cannot be externally financed if it is not in the

investment program and loan amount cannot exceed the external financing amount

envisaged in the investment program

c- Following affirmation of Ministry of Development, technical discussions or

negotiations can take place between the implementing agency together with the

Undersecratariat of Treasury and the Bank

d- After signing the agreed minutes as a result of the negot iilt ions World Bank Board

'lpproves the Project

r!- Luiln :111d ~udrJntee ,1greemen ts take their fin.ll ver~ions to be sigrwd

f- Effectiwness orocess starts to le~alize the ln'ln

For this project, our regular project financing procedures could not be followed because of

the ambitious timeline and as a result of this; problems have been occurred for the w hole

project cycle.

2) Inefficient project preparation

Timeline was set for the project at the beginning. The preparations of the project were not

mature enough to start negot iations. Therefore, technical discussions have been held in

order to discuss the project with all re levant parties (namely, Ministry of Development,

Treasury and istanbul Metropolitan Municipality). However, technical discussions were

upgraded to negotiations although the problems were not completely solved and the

Project was not completely included in the Investment Program. Presenting the Project for

the Board approval before solving the problems caused long delays and implementation

problems.

34

The reasons for the delay in process are twofold:

- Although the project was not in the 2007 Investment Program, and this fact is

known by the Bank it was submitted to the Board for approval.

-Project was included in 2008 Investment Program. However, the components of this

project as in the Project Paper were not aligned with the 2008 Investment Program.

Therefore, project was amended by the Bank in 2009.

- Guarantee agreement was signed with the Bank 19 months after the Board

approval since sovereign guarantee statutory limits were 2 billion dollars in 2008 and the

limit was already reached when the istanbul Metropolitan Municipality Project Loan and

Guarantee Agreement were ready to sign. Therefore, the Guarantee Agreement could not

be signed before 2009. The Bank knew that situation but preferred signing the agreement.

Lessons from the Project:

One the most outstanding lessons to be taken from this project was the importance of the

preparation and the design stage of the project. It is essential to note that rushing at the

preparedness stage weakens t he project and affects the development objectives. Technical

discussions or negotiations should not be started unless the project is included or is about to

be included in the Annual Investment Program as envisaged in the Concept Note and Project

Paper.

35

' T.C.

iSTANBUL B0Y0K$EHiR BELEDiYE BA$KANLIGJ Mali Hi:t:metler Daire Ba~kanhg1 Finansman Mildilrlilgil

Say1 : 76308294-853.99 h "\' -· ! :;·~ ...; : ....

Konu: istanbul Belediyesi Altyap1 Projesi

T.C. BA~BAKANLIK

HAZiNE MUSTE$ARLIGI (Dl$ EKONOMiK iLi$KiLER MUDURL0GU'NE)

ANKARA

11gi : 24.06.2013 tarih ve I 0196 sayll1 yazrmz.

·"."""r.u:.·<.\'lOf!ooe#A OUNYII KGLT~HX~02~1l

t ·~· "1 ; .. ~~~~- ..... ...::n

. .. .108/20 13

Bilindigi Uzerc, istanbul Bilyilk~ehir Belediyesi, Milste~arhgmJZ garantorltigunde Otinya Bankas1 kaynaklan ile finanse edilen belediyemizin altyap1 yat:mmlan finansmanmda kullanllmak ilzere faiz ve diger masraflar hari~ 322.150.000 ABO Dolan ilzerinden kredi sozle~mesi imzalanrm~ ve bahse konu krediden 22.505.375 USD kullarum yapilmi~ttr.

Bunun ilzerine, Belediyemiz 15.05.2013 tarih ve 90479 sayllt yaz1 ile bahse konu kredi kapsammda kullantlmayan yaki~Lk 299,6 mil yon ABD Dolarmm iptal edildigini ve soz konusu projenin 3 I Arahk 2011 tarihi itibari ile kapandJgLm belirterek, Miiste~arhgm1za bildirmi~tir.

tlgi yazmtz ilt:, Bartka tarafmdan Projeye ili~kin haz1rlanan "Uygulama Tamamlama ve Sonu~ Raporu (Implementation Completion and Results Report ·- ICR)" ile kurumumuzun diizeltme ve gtiril!?leri talep edilmektedir. Bu dogrultuda, Kurumumuz, Rapor ile ilgil i degerlendirme ve goril~ lerimizi tamamlam1~ olup; ektc Miistc~arhgmiza ekte tarafm1za gundcrilmcktedir.

' " s ilcrini;i ·•rz ::!.:rim.

Ekler: 1-Rapora lli~kin Goril~lerimiz (lngilizceffOrk~e) 2-Dere 1slahlan Odeme listesi (lngilizcerrOrk~e)

' i . 'I

I ''

t 1a"bul RO)Ok.jthir B<led•y.:so Mall Ho<meUer Oaore B~kanhA• FinammOll MOdariUAU Me.hmtr Nezohi 6m~tn Mahalle." KaSlm Sok fl

ill"~ Kar 1 34010 Mencr-<OOng.oreniiS1 ANBUL "II f. 0·2 12-449 40 70-711 / Faks. 0-l l2-449 40 74

·.~

36

COMMENTS ON THE COMPLETION OF THE iMPLEMENTATION AND THE RESULT

REPORT OF WORLD BANK INFRASTRUCTURE PROJECT

As is known, Istanbul Metropolitan Municipality signed a loan a!:,'Tt:ement with the World Bank on

25.07.2008 with an amount of 322. 150.000 USD under the guarantee of the Undersecretariat of

Treasury. After a Guarantee Protocol was s igned with the Undersccretariat of Treasury on

13.01.2009, the loan went into effect and the Undersecretariat of Treasury gave 100% guarantee for

this loan agreement. T he aforementioned loan agreement was amended on 23.09.2009 and the

validation of the loan was extended until 2013.

The loan agreement was signed for funding the following:

I. Stream rehabilitation

2. Bridge and Viaduct Reinforcement

3. Rehabilitation of Fire Brigade Services

4. Mapping and Microzoning of European Side Southwest Region

5. Rehabilitation of the former landfill

6. Service procurement for sea pollution and environmental cleaning

Regarding the Stream Rehabilitation Constituent of the loan with the amount of 322.150.000 USD,

tenders were made for 14 streams and 22.505.375 USD was spent for the construction of 9 s1ream

rehabilitation which are quoted below:

1- Construction of the I st Section of <;:ckmekoy Kemerderesi Stream Rchahil itation

l.- t.:onstruction of the 2nd Section of <;:ekmcki:iy Kemerdercsi Stream Rehabilitation

>· l.-ullMru<.uon u1 tile o , , .;c~.ollull . ,, ,,u.,:uJ...,:..:koucc.: o'lai-.!<a~ticn:~i ·:1r::am ;{,_habilita tion

4- Construction of the 2nd Section of Kiioyiiko;:ekmece Nakka~deres i Stream Rehabilitation

5- Construction of the 2nd Section of Beykoz (Akbaba, Dereseki) Stream Rehabilitation

6- Construction ofKad1kiiy Kurbagahdere Stream Rehabilitation

7- Construction of the I st Section of Haram idere Stream Rehabilitation

8- Construction of the 2nd Section of Haramidere Stream Rehabilitation

9- Construction of the 3rd Section ofHaramidere Stream Rehabilitation

The unused amount of the loan which is 299.644.625 lJSD (322. 150.000 USD - 22.505.375 lJSD =

299.644.625 USO) was terminated on 11.07.201 1 with the approval of the World Bank and the assent

of the Undersecretariat ofTreasury.

Our Comment~ Regarding the Negative Points io the Report

As in all loans receiv~d for the projects of our municipality, the munic ipality b~:gan working eageoly

and with excitement for this loan so that constiwents of it can be rea lized immediately. Including, the

37

positive approach of the employees of World Bank Ankara Office, necessary work conducted by

responsible units of our municipality on the coustituents of the loan, all employees put efforts to bring

this project to tender phase as soon as possible.

Due to the fact that the guarantee of the Undersccretariat of Treasury was granted 19 months later than

Board's approval, there has been a major delay in the project. However, this delay is not directly a

result of our municipal work. Istanbul Metropolitan Municipality (IMM) cannot affect the decision

process of an independent authority.

IMM cannot be claimed to be unfamiliar with international financing. After the Undersecretariat of

Treasury, IMM has the most efficient management system of taking and using external debt. Until this

agreement was signed, our municipality took loans for countless projects. Moreover after this project,

externals loans were taken and used for 5 more projects. The amount of this loan is not even the I 0%

of total external financing oflMM.

Relevant work for micro-zoning and mapping of Southwest Region in European side started at the

beginning of 2009. Due to the fact that appropriate purchase document did not exist in the Bank, the

preparation of a new purchase document based on examples sent to Directorate of Earthquake and

Ground Analysis and its translation was a significant progress. As the bank provided wrong documents,

documents had to be changed twice. Moreover, a lthough all requests of the Bank were met by our

directorate on short notice, the approval of final purchase document and re turn of it took a long time.

The Bank continued sending feedback for different and new requests every time. In addition to this,

the fact that fo r the negotiation of requested technical changes, the Bank Jid not have any compt:tcnl

·-.,~·"<"nncl md t;lr that onntler :1 o:on~uhant was ~ou~ht a lter fnr the techn ical i~~ucs. \~hich c::mscd

important delays.

Concerning another constituent, Rehabilitation of Fire Brigade Services, working on tender documents

with the World Bank took some time and the Project has been brought to tender stage. However, as the

credit was cancelled, the project could not be finalized.

One of the goals set by our Municipa lity is to prevent spates caused by heavy ra in at specific periods

in the year and casualties resulting from these incidents. Jn this respect, it is necessary to note that

stream rehabilitation must be taken into consideration. This constituent is the most difficult to

coordinate among other constituents. It does not only include construction work. In addition, it

includes social evaluation reporting topics. socia lization processes and cadastral sheets. This

constituent requires many departments -within our Municipality to work closely together in

coordinatiou and simultaneously.

38

Our Municipality paid strict attention in order not to aggrieve citizens during expropriation and

repositioning activities as a pan o f tht: implication of stream rehabilitation constituent. As some of

stream beds are expropriated and some arc occupied, stream beds are carefully selected, nevertheless

some problems occurred.

The expropriation of Beyroz (Akbaba, Dereseki) stream connections project that is projected to be

funded via World Bank loan was initiated in 20 I 0. 70.534,86 m2 of land was included io the

expropriation program. So far, a total sum of7.644.685.-TL. was paid in return for expropriation of

16.287,50 m2 of land. The expropriation of28.646, 18m' treasury revenue, 4.992,00 m2 forest land,

13.690,34 m2 land was cancelled. The legal process for the remaining 6.918,84 m' is still continuing.

Failure to complete applications on time resulted from the extension oflegal process.

Land in tbe Project

(m') 70.534,86

Treasury Revenue 28.646,18

Forest Laud (m2) 4.992,00

Cancelled Land (m') 13.690.,34

Completed Laud (m') 16.287,50

Paid Sum (fL.) 7.644.685

Remaining Sum (m') 6.918,84

b propriution of Silivri Bogluca :-itrt:arn, Jllother expropriation projc~.:t, was initiated in 20 10. I he

;;roJCCL CIIClHIIpa"c> .111 J I j / . .i .. oil" i.111J Ull.i .).) :noduingS wuh 2J 7 inclcp c llllCIIL .• ~CliiJIIS Ill l<lWI ·;, ith in

the expropriation project. So far, a total of 24.3 15.597.-TL has been paid to expropriate 8.058,68 m2 of

land and 272 independent sections in total. Lega.l process on the expropriation oftht: remaining 103,66

m2 and 15 independent sections on top of it is in progress.

Area in project (m2) 8157,34

Number of buildings 55 (287 independent sections)

Completed area (mz) 8053,68 (272 independent sections)

Price paid (TL.) 24.315.597

I Remaining area (m1) 1103,66

Istanbul Metropolitan Municipality Dire<:toratc of Domiciies carT)· out wcrk to designate and assess in

~:trcam Rehabilitation projects to evacuate slums on stream bt:ds.

39

In other words. for instance, within the context of the rehabilitation of Uzundere (located in the

Sultanbeyli District) and its branch Naldoken Stream, 29 buildings were evacuated and 2.220.961 TL

was paid as price of debris and 23 houses were allocated in return . Prices of debris were appropriated to

the prices of houses and installment plans up to 20 years were designed for the remaining debts. Prices

of debris were paid to those who did not receive any housing in return. That way, no rightful party was

put in disadvantage and they were granted healthy housing and livable environments in all the stream

rehabilitation projects.

During meetings between the World Bank and Directorates of lnfrastructural Services, Expropriation

arrd Domiciles, these issues were tabled in detail. Within the context of the World Bank credit, Istanbul

Metropolitan Municipality commissioned an independent firm to come up with reports that were

submitted to the World Bank on the expropriation, social and economic activities for the Beykoz and

Silivri (Bogluca) Streams which require expropriation or resettlement.

Within the scope of Stream Rehabilitation constituent, while Istanbul Metropolitan Municipality has

used 32.342.222,86 TL of the loan granted by the World Bank for 14 streams, Istanbul Metropolitan

Municipality used 78.164.307 TL from equity capital to complete the rehabilitation process of the

remainmg steams and realized 94% of the tender price although the loan agreement haJ been

cancelled. For the remaining part, studies are continuing. Apart from that, as a consequence of the

protocol with our subsidiary iSKI in 2007, 2008, 2009 and 20 I 0, an amount of3 I 6.896. 723 TL was

paid to iSKI for the rehabilitated streams and the construction of rain channels. Stream rehabilitation

has not entered the agenda of Istanbul :~fter the loans granted by the World Bank; there had already

' ::.:11 l i::::m ;::h:rhilitation act iv ir ic~ hd r,re the nroiect ·md 1h<:se rchahilitntions •v il1 1·1kc place ·dh:r the

project a~ well. Apparelllly, the claim in the report that '·Istanbul Metropolitan Municipal ity is not

interested in the minimization of the destructive risks and casualties of tlood disasters" fail s to reflect

the truth. Istanbul Metropolitan Municipality could never adopt such a point of view.

Despite all the activities and endeavors, the settlement of the increasing disputes has not been feasible

as the procedure, regulations and rules between o ur municipality and the World Bank differ especially

on Stream rehabilitation constituent. The aforementioned lending agreement has therefore been

cancelled with the joint resolution of the World Bank, Undersecretariat ofTreasury and Istanbul

Metropolitan Municipality, resulting in the abolishment of the loan agreement.

Kindly submitted to your infom1ation.

40

Progress To tal (Total Total Stream rehabilitation

Signing Da~, Total Payment Total Payment Paymet/ Length to be length at the PhySical of tho '"'hreement Total (TLJ ( World Bank [TL) Agreement rehabilitated( las t payment Progrrss

Job Description Agreeme •. (I AT mcluded) (TL) Loan) ( Equity Capital) Total)% m)(l) zone (m) (2) ((2) 1 (1).%

~ekmckoy Kemerdercst Stream 1 Reha bilita tion Project Phase 1

07.05.20l u 7,339,010.06 5,0<1 0,784.98 ~ .. l~ll.771,6'.' 69 1,48 1,45 98

Kil~iik~ekmece Nakka~deresi

2 Stre"m Rch3billtation Project Phase 07.05.20l u 9.1a7 11868 7 166,209.83 78 1.25 945 76

~ekmekiiy Kemerderesl Stream 3 Rehahilltotlon Project Phase 2

14.06 201 1. o.4i15,632 uo 6,951.970.27 1. ~z:~.:-:u<; zn 109 900 900 iOO

Kii~k~ekmece Nakka~deresi

4 Stream Rehahilitation Project Phase 2

15.06.20111 G,U'J9.146 00 4,817,892.42 "?.1 Ht:"• • ·t,3'~ 59 910 680 75

Beykoz (Akbaba, Deresekl) Stream 5 Rehabilitation Project Phase 2

29.06 20 1 .. ~.~~9.153.32 6,167,338.85 . .,.070.0 i 9.Z5 62 2,54 5 2,18 06 -

Kad1koy Kurbagahdere Stream 6 Rehabilitation Project

06.08.2CJ .. 5,107,438.60 1,055,110.07 ; 1!),1_297,[; "! 36 900 Z30 26

Osktldot· llekar Stream 7 Rchab11ita t1on Project

09.01\.20; .. 5.d99 544.51 ~.u5:,_1:·J"''· tt 0 822 0 0

Oeyllkdfiztl, Kavakhderul Stream n RehabilitatiOn ProJect Phase 1

06.10.201u u,ul7,032 20 o.~33S6~.'?~ 0 2,1 0 0

Bcyllkduzu, Kavakhderesi Stream 9 Rehabilitation Project Phase 2

06.10.201 u 8,250,702.12 ~.4%.~57,10 0 3,7 0 0

llaramidere Stream Rehabilitation iO Project Pha<e 1

25.02.201. 11.270,909.24 477,580.92 9.680.! >ll,7<, 4 1,546 0 0

Haramidcre Stream Rehabilitation II Project Phase 2

25.02.201. 9.c~J 234.H 410,603.12 d.JH.799,79 4 1,4 0 0

Haramidcre Rehabilitation Project 12 Phase 3

25.02.201 . 'l). ~31..604.b4 45·.,732.40 \2.l';,l.c: ;2 li} 4 1,3 0 0

Esenyurt Haramidere Stream ' 13 Rehabilitation Project

19.0•;.201. 1 1.43& St>B.24 ·~.835.527,20 0 1,5 0 0

Kurukrekmecc Hasanoglu Stream 14 Rehabilltotion ProJect

1£1.04.:1~1 . 9.75~.2 i6 20 9.056.3?3,7il 0 1,65 0 0

Total t-·119,096,440.14 33 342.222,86 70.164.:107,R5 12,231 6,305

Equity Capital Totai -··"---·

41

-· ---·-·----~·- ., .._ --~ ---- - • · - - • ·- . fl • \ A

T.C. K<\LKINMA BA.KAJ'ILIGI

Sosyal Sektorlct· ve Koordinasyon Gene! MUdUriUgti

Say1 Konu

88799753-952.04.04.01-4067 Istanbul Belediyesi Altyap1l"tojesi 16/08/2013

HAZ~ MOS~ARLICINA

ilgi: Hazinc Mils~hgmm 24.06.2013 tarib ve 11954024.204.11.06/10196 say1h yaz1s1.

llgi'de kay1tlt yaz1 ile, DUnya Bankas1 tarafmdan finanse edilen ve istanbul BUytl~ehir Belediyesi tarafmdan ytlrllttilen Istanbul Belediyesi Altyap1 Projesinin 31 Arollk 20 11 tarihi itibanyla kapand1g1 bildirilerek Dllnya Bankas1 taraf1odan projeye ili~kin hazJrlanan "Uygulama Tamamlama ve Sonus: Raporu" gonderilmekte ve taslak ltapora ili~kin gtl~lerimiz talep edilmektedir.

Bilindigi Uzere, Bakanhgmnz beledlyelerin talebi Uzerine d1~ kredi ile yap1lmas1 planlanan projeleri degerlendirmekte ve uygun goriilenltri Yatmm Program1 ile ili~kilendirmektedir. D~ kredi ilt: finanse edilecek projelerin iyi ettid edilmesi, proje ihtiyac1 ile proje yonetim sUre9lerinin iyi tasarlwu11as1 Bakanhg1m1Zm projeleri degerlil!dirirken ancelik verdigi hususlard1r. Bununla birlikte, Bakanlt 1m1z taraftndan_?nwanan proj.,lerde uygulama safhastnda meydana selebilecek deg1~1 1 ertn . 1 1m1Z 1 e ~aitere~@.!tmas1 onem arz etmektedtr. !Ju kaP.sa~ ...

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42

Annex 8. Comments of Cofinanciers and Other Partners/Stakeholders Not Applicable

Annex 9. List of Supporting Documents 1. Istanbul Municipal Infrastructure Project (IMIP), Project Appraisal Document (PAD)

2. IMIP World Bank Implementation Supervision Reports

3. IMIP World Bank Aide Memoires and Back to Office Reports

4. Istanbul Metropolitan Municipality Project Progress Reports

5. Correspondence between the Istanbul Metropolitan Municipality, Undersecretariat of the Treasury and the World Bank

6. Consultant studies and reports relating to the creek rehabilitation activities

Büyük HalkaliBüyük Halkali

TopsakizlarTopsakizlar

GüngörenGüngören

EsenlerEsenlerEyupEyup

AtiAtişalanalan

ÇamurluhanÇamurluhan

YenihanYenihan

KemerburgazKemerburgaz

YenimahalleYenimahalle

YeYeşilköyilköy

AlibeyköyAlibeyköy

AyayorgiAyayorgi

RumelifeneriRumelifeneri

şaKöy

KeçilikKeçilik

Riva KöyRiva Köy

DeresekiDereseki

PolonezköyPolonezköy

ÇubukluÇubuklu

AnadoluhisariAnadoluhisari

KandilliKandilli

DudulluDudullu

KüçükbakkalKüçükbakkal

KisikliKisikli

RumellhisariRumellhisari

BebekBebek

PaPaşabahceabahce

Yali MahallesiYali Mahallesi

I s t a n b u lI s t a n b u l

ErenköyuErenköyu

KadiköyKadiköyBakirköyBakirköy

ArnavutköyArnavutköy

BeylerbeyiBeylerbeyi

BeykozBeykozYeniköyYeniköy

SariyerSariyer

28°45’E

29°00’E

29°00’E 29°15’E

41°15’N

41°00’N41°00’N

Büyük Halkali

Topsakizlar

Güngören

EsenlerEyup

Atişalan

Çamurluhan

Yenihan

Kemerburgaz

Yenimahalle

Yeşilköy

Alibeyköy

Ayayorgi

Rumelifeneri

şaKöy

Keçilik

Riva Köy

Dereseki

Polonezköy

Çubuklu

Anadoluhisari

Kandilli

Dudullu

Küçükbakkal

Kisikli

Rumellhisari

Bebek

Paşabahce

Yali Mahallesi

I s t a n b u l

Erenköyu

KadiköyBakirköy

Arnavutköy

Beylerbeyi

BeykozYeniköy

Sariyer

Black Sea

Sea of Marmara

KüçükçekmeceGölü

Taşli Dere

Kum

luk

Deresi

Alibey DeresiH

asanoğ lu Deresi H

amam

D

eres

i

Halkali D

er esi

Sazli Dere

Kanli D

er e

Sey tan Deresi

Riva Deresi

Kaldir

im D

eres

i

(Bosp

horus)

I s t a n b u l

St r

a i t

aşllii Derre

resi Ha

KööKöy

Çekmeköy KemerderesiRehabilitation Project 1st StageRehabilitation Project 2nd Stage

Beykoz (Akbaba, Dereseki) CreekRehabilitation Project 2nd Stage

Kadiköy KurbağahdereRehabilitation Project

Küçüçekmece NakkaşderesiRehabilitation Project 1st StageRehabilitation Project 2nd Stage

ANKARAANKARA

IstanbulIstanbul

SYRIAN ARABSYRIAN ARABREPUBLICREPUBLIC

IRAQIRAQ

ISLAMICISLAMICREP. OFREP. OF

IRANIRAN

ARMENIAARMENIA

GEORGIAGEORGIA

TURKEYTURKEY

BULGARIABULGARIARUSSIAN FEDERATIONRUSSIAN FEDERATION

AZER-AZER-BAIJANBAIJAN

AZER.AZER.

GREE

CE

ANKARA

Istanbul

SYRIAN ARABREPUBLIC

IRAQ

ISLAMICREP. OF

IRAN

ARMENIA

GEORGIA

TURKEY

BULGARIARUSSIAN FEDERATION

AZER-BAIJAN

AZER.

GREE

CE

Black Sea26°E 30°E 34°E 38°E

42°E30°E 34°E

36°N

40°N

This map was produced by the Map Design Unit of The World Bank.This map was produced by the Map Design Unit of The World Bank.The boundaries, colors, denominations and any other informationThe boundaries, colors, denominations and any other informationshown on this map do not imply, on the part of The World Bankshown on this map do not imply, on the part of The World BankGroup, any judgment on the legal status of any territory, or anyGroup, any judgment on the legal status of any territory, or anyendorsement or acceptance of such boundaries.endorsement or acceptance of such boundaries.

This map was produced by the Map Design Unit of The World Bank.The boundaries, colors, denominations and any other informationshown on this map do not imply, on the part of The World BankGroup, any judgment on the legal status of any territory, or anyendorsement or acceptance of such boundaries.

GSDPMMap Design Unit

CREEKS REHABILITATEDUNDER THE PROJECT

TOWNS/URBAN AREAS

MAIN ROADS

SECONDARY ROADS

IBRD 40569

DECEMBER 2013

TURKEYISTANBUL MUNICIPAL

INFRASTRUCTURE PROJECT

0 3 6 Kilometers