Brazil: Municipal Lending Program I Belo Horizonte Urban Upgrading and Inclusion Project Vilas Urbanizadas Resettlement Framework Executive Summary

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1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Brazil: Municipal Lending Program I Belo Horizonte Urban Upgrading and Inclusion Project Vilas Urbanizadas 1. Program objectives: Resettlement Framework Executive Summary RP300 v.1 The Belo Horizonte Urban Upgrading and Inclusion Project (BH Urban Upgrading) has as its principal objective to increase the urban and social inclusion of low-income communities within the formal city of Belo Horizonte, especially the Taquaril and Vila São José slums. The Project will have an overall very positive impact on the local social environment and on the quality of life of the residents of the Project s low-income target areas. Through consolidated interventions, the Project will undertake urban upgrading interventions in the Taquaril and Vila São José low-income communities, with the aim of eradicating the appalling living conditions, the lack of planning, and the seriousness of related problems brought about by the disorganized occupation which has occurred in these two areas. The Project will contribute to the strengthening of community mobilization and organization in the Taquaril and Vila São José communities, as a result of the community participation work to be undertaken during Project implementation. The Project comprises three components: (i) Taquaril Urban Upgrading and Inclusion, which includes Urban Environmental Improvements and Revitalization, Housing Restructuring, Social Development, Land/Housing Tenure Regularization, and the associated studies, engineering design and supervision. (ii) Vila São José Urban Upgrading and Inclusion, which includes the same activities set out in Component 1 plus the Main Roadway Intervention. (iii) Capacity Building and Integrated Management of Social and Urban Policies, which includes Management Support to Structural Programs, Capacity Strengthening for Monitoring and Planning Activities in the ZEIS (Zones of Special Social Interest) and in Areas of Risk, Consolidation of Post-Settlement and Post-Regularization Policies, and Project Management 2. Background information The municipality of Belo Horizonte, which is the capital of Minas Gerais state, is located in the Southeast of Brazil and borders the municipalities of Nova Lima, Brumadinho, Sabará, Santa Luzia, Vespasiano, Ribeirão das Neves, Contagem and Ibirité. It occupies an area of approximately 330 km 2 and has a population of some 2.2 million people (Brazilian Statistics Bureau IBGE, 2000). Approximately 400,000 inhabitants (20%) of this population live in areas called Vilas and Favelas (precarious settlements, often called slums or shanty towns), in which social and urban vulnerability is rife. This is the case of the Taquaril and São José settlements, which are objects of the BH Urban Upgrading Project. As the municipality is the centre of a metropolitan region which is home to some 5 million people, it also faces constant problems brought about by the pressure of disorganized settlements in areas of risk which have no physical and social infrastructure, and thus provide no reasonable living standards. Belo Horizonte currently contains some 180 areas considered to be slums and shanty towns, in addition to 22 low-income housing complexes. These areas are called ZEIS (Special Social Interest Zones). In light of the problems which have been brought about by disorganized settlement in Belo Horizonte since 1937, and the difficulties of managing and operating public services in the ZEIS areas, a Strategic Plan of Guidelines for Operating in Slums, Shanty Towns and Social Interest Housing Complexes was drawn up in 1998 which surveyed living conditions in these areas and established general guidelines and priorities for the actions and operations to be performed there. A method for establishing the priority of the actions and operations in the ZEIS was created by associating this Plan to other studies, such as the Diagnosis of Hazardous Situations

2 (URBEL, 1994) the land administration regularization (URBEL, 1998), and the mapping-out of hillsides (IGC/UFMG, 1998), among others. This mapping and planning approach reveals that Taquaril is in desperate need of integrated urban improvement actions, socio-economic development, land administration regularization and, above all, eradication of areas of risk. According to BH municipality s table of priorities for the 202 ZEIS, Taquaril has the maximum priority ranking under the following sub-criteria: Urban Renewal, Eradication of Areas of Risk, amalgamated needs for physical and socioeconomic improvements, as well as for integrated actions entailing Urban Improvements, Socio- Economic Development and Land Administration Regularization. It is also ranked second in the table for Employment and Income Generation needs. In addition to the requirements set out above, Taquaril is also in need of better social service provision, the shortage of which further worsens living standards in the settlement. Taquaril has accordingly been chosen as a priority area of intervention under the BH Urban Upgrading Project, given that the Project entails actions which aim to reduce the urban and social vulnerability facing the population. The Vila São José settlement, however, has never been included in the municipality ranking for establishing the priority of urban operations. This settlement is located in the lindeira strip which runs along the São José stream and has a high population density. The families in this area are exposed to extremely precarious sanitary and environmental conditions, live in poor quality housing, amid highly unhealthy conditions which are subject to instability and risk. The living conditions are so bad in Vila São José, and the residents so poor and marginalized, that previous administrations and the current administration have never considered it an area for in situ upgrading, as the population s living standards can only be improved by displacing and resettling the families. In addition to this, there are two other reasons which afford the Vila São José settlement priority for actions under the Urban Upgrading Project: this situation has existed since the 1970s, since when no effective solutions have ever been introduced, and the illegal settlement represents a physical barrier with regard to local access, and municipal- and metropolitan-wide road access given the strategic position it occupies between the ends of two strategic main roadways. The implementation of the link between these two roadways will bring huge benefits for the city s urban network and public transportation system Brief Considerations about the areas, the problems and possible solutions The Taquaril settlement is located in the Eastern Zone of Belo Horizonte, and borders the settlements of Alto Vera Cruz, Saudade and Granja de Freitas and the Municipality of Sabará. It occupies an area of ha and is home to some 30,204 inhabitants (see Figure 1). The Vila São José settlement is located in the Northern zone of the city, occupying an area of approximately 14.5 ha, with a population density of 593 inhabitants per hectare. Its area is enclosed by the districts of Jardim Alvorada, Alípio de Melo and São José, with Avenida Pedro II and the ring road being important urban landmarks (see Figure 1). As mentioned above, the major problems encountered in the Taquaril and São José settlements originated from the kind of disorganized occupation which took place in these areas and brought substantial environmental degradation with it, transforming the settlements into pockets of poverty, in which unhealthy conditions are rife. Both areas suffer serious problems and deficits related to environmental sanitation (water supply, wastewater management, drainage, and solid waste management), and are subject to geological risk. Moreover, both areas are served by a road network which is not compatible with the basic requirements which enable safe, comfortable access. Although the problems facing the two settlements under scrutiny are the same, the solutions proposed for each area differ greatly, because the introduction of structural solutions takes precedence over resettlement in Taquaril, where the opposite can be said for São José.

3 The proposed operation in the Taquaril settlement entails urban and environmental rehabilitation, through the restructuring of road, environmental, sanitation and housing systems in the area, while considering the challenging topography in the area. The only families which will be resettled are those whose homes are located in areas of high geological risk, areas of environmental conversation, or in areas in which new roads will be built. The two sectors of the Taquaril settlement (13 and 14) which are located in the neighboring municipality of Sabará are not included in the Project. These areas also contain settlements in areas of environmental and geological risk (areas of permanent conversation, areas with steep slopes and areas with geological profiles similar to the other sectors in Belo Horizonte) but, being in the neighboring municipality, fall outside the scope of responsibilities of the Municipality of BH. Institutional ties should therefore be established with: (i) COPASA, with a view to restructuring the wastewater collection system in the basin of the Olaria stream, in the section located in the Municipality of Sabará and (ii) the Sabará Municipal Government, with the view to a possible agreement or commitment to complementary activities which would provide overall benefits to the entire Taquaril settlement. With regard to the São José settlement, the area of direct operation targeted by the current Project is currently witnessing a highly precarious situation. The São José stream runs through a densely populated area in which around 2,300 families live alongside the stream in appalling sanitary and environmental conditions. In addition to this, the São José settlement constitutes a physical barrier to local access and surrounding areas due to the strategic position it occupies, i.e. located between the end of Avenida Pedro II and the beginning of Avenida Presidente Tancredo Neves (a region in which the implementation of an important road network is being considered which will link the central area of Belo Horizonte to the North-west and Pampulha regions). The hazardous nature of the area, the risk of flooding and the requirement to establish a road link between the two aforementioned Avenidas (streets), therefore mean consolidating the settlement in this area is not appropriate. The planned operation is therefore split into two major actions: resettling the families living in the São José settlement to neighboring housing complexes, and implementing the 3.15 km of link road. In this regard, the BH Urban Upgrading Project will make it possible to achieve the following objectives: The eradication of the areas of risk located in the Taquaril settlement, using engineering solutions to solve the serious problems arising out of the geological-geotechnical risk Resettling families living in areas considered risky and/or which directly interfere with the Project s interventions Improving the living standards of the resettled residents, especially providing them with improved environmental sanitation and housing conditions Environmental rehabilitation of the areas immediately surrounding the river/stream courses in both regions, including conservation of the APPs (Environmental Conservation Areas) Reducing the rate of water- and excreta-related diseases, and of the areas which are foci for the transmission of such diseases by insects and rodents Improving the traffic conditions on the ring road, providing the region with a further access option for traffic Ensuring the creation of additional access ways to other areas in the municipality and consolidating the Avenida Pedro II corridor as a key roadway in the Pampulha Basin Providing the areas inhabitants with alternatives in terms of leisure and recreational activities Furthering the inclusion of the settlements inhabitants into the formal urban and social fabric of the city

4 Furthering the social inclusion of the population directly and indirectly benefiting from the interventions, by leveraging complementary activities from the BH Cidadania Project, thus offering the target population greater access to primary education facilities, health care, higher earnings, etc. 3. The strategy for preparing the population resettlement plans under the project In order to comply with the World Bank s involuntary resettlement safeguard requirements, and to plan the resettlement of the affected families, a resettlement framework has been prepared for the Vila São José and the Taquaril components, for which Involuntary Displacement and Resettlement Plans (PDRI) will be prepared during the first year of Project implementation together with the detailed engineering designs for the respective interventions. The decision to prepare a resettlement framework for the two areas is due to the fact that a number of the interventions have yet to have their preliminary engineering design undertaken for the Taquaril settlement, and the existing preliminary designs for Vila São José will be revised over the coming months The number of families estimated to undergo resettlement in the two regions takes into consideration all the families which have settled in areas of risk, in areas of environmental conservation, and in areas which will be affected by the physical operations. In addition to the families following within the above groups, in Taquaril the resettlement estimate also considers those families which, despite not being located in areas subject to resettlement following the proceeding criteria, will become physically isolated and thus also resettled for the reasons described above. The total resettlement estimate is therefore highly conservative. The resettlement framework prepared for Taquaril estimates that 1,167 families will be displaced. The reasons for the resettlement are set out in the table below: Reasons for Resettlement 1 Environmental conservation areas/apps Environmental conservation areas/apps + extreme risk areas Estimated Number of Families to be Resettled Interference with construction work Interference with construction work + extreme risk areas 5 Areas of extreme risk Total 1,167 A total of 2,020 families are estimated to be resettled in Vila São José. The resettlement framework prepared for Vila São José contains summarized preliminary figures for the resettlement types, defined according to the settlement's demographic features (1998 census) and on the proposed resettlement options. According to the PDRI, 706 families will undergo Monitored Resettlement or receive Financial Compensation, and 1,314 families will undergo Resettlement in Housing Complexes. 4. Compensation options for the population to be resettled 4.1 The offer of housing built by the project Homes will be built for the purposes of the resettlement in both areas. For the Taquaril housing estate the program includes the construction of 300 (three hundred) homes in the adjacent housing estate of Granja de Freitas. The area projected for the São José housing estate is also adjacent to the area which is currently settled. The Project entails 1, 2 and 3 bedroom homes (44 to 53 m 2 ) to be built on plots belonging to the Belo Horizonte Municipality, with regularized land tenure. On average these homes will cost

5 BRL 30,000 (thirty thousand Brazilian reals) and will be offered to the families free of charge. Two hundred and eight (208) families from the São José housing estate have already been resettled in similar homes. The good living standards enjoyed by these families are highly visible and serve as great encouragement for families awaiting the chance to move. The conditions established for the offer of homes include: - Delivery of a property deed upon conclusion of the land tenure regularization (approval of the land division, planning permission, construction permit, occupancy permit, registry office records). Law 9.075, enacted January 18, 2005, provides for the sale of municipal public land to families embraced by the project in the plots intended for the establishment of social interest settlement. - property deed made out in the name of the head of the family (under URBEL and Municipal Housing Office practice, most of the property finance contracts performed under the Municipal Housing Policy are made out in the woman s name) - the establishment of hydraulic installations which enable water consumption to be measured separately for each home, thereby minimizing local conflicts (it should be noted that most of the homes, built using Municipal Housing Fund funds, have the minimum consumption level social water and electricity tariff) There is no law which prevents people from selling the homes, although such people are not entitled to further benefits from the Municipal Housing Fund. However, social work will be carried out assist the resettled families. Compensation to renters: Renters will receive as compensation an amount equal to four months rent. 4.2 Offering homes in other neighborhoods The Municipality of Belo Horizonte has the Resettlement Program for Displaced Families due to Public Construction Work or Disasters (PROAS), created by Decree in 1996 (amended by Law in 1998), which provides for resettlement in homes for sale in the market. The PROAS program has the following main features: the home of the family which is to be resettled is valued; PROAS uses this valuation to specify a value to subsidize the new property; the family to be resettled looks for a property on the market; the family is assisted by the social team to ensure the new property is purchased properly. The funds are not released if the purchase transaction is not regular. Families which own property evaluated at an amount not exceeding BRL 12,500 are eligible for this option. 4.3 Compensation for improvements Property worth over BRL 12,500 (twelve thousand five hundred Brazilian reals) is eligible for this option. The compensation offered includes: valuation of the property and payment of the valuation amount. 4.4 Compensation for productive activities The offer of homes in other districts and the compensation of improvements are alternatives to enable the families to seek solutions in order to continue the productive activities performed in their homes. Families which choose the homes built under the Program should be provided the possibility to replace or maintain productive activities, through either of the following options: - cash compensation for the commercial improvement:

6 - construction of commercial and/or service units in remaining areas or areas close to the new settlements In the São José settlement, where families use horse and carts to make a living, the introduction of parking lots for the carts and areas to care for the animals should be introduced, after the exact number of workers and the level of expectation to continue carrying out the respective activity has been precisely ascertained. 5. Legislation supporting the compensation for resettlement The São José and Taquaril housing estates have been declared Special Social Interest Zones (ZEIS) by municipal decree, which means they are eligible for public funds to improve living standards, to achieve land tenure regularization and to build homes for resettlement. The PROAS Law (law 7.597, enacted November 6, 1998) establishes the legal grounds for compensating improvements and offering homes free of charge to families whose homes are at risk or lie in the path of public construction projects. 6. Principles of the Resettlement Standard For the Urban Reform Program The underlying objective of the Program s resettlement activities is to ensure the living standards of the families embraced by the venture are maintained, both in physical terms, i.e. loss of abode, and in other aspects, such as loss of earnings (interruption to productive activities), losses stemming from disruption to the local support network and local relations. In order to uphold these principles, the Municipality of Belo Horizonte undertakes to perform the criteria and good practices set out below: To minimize the number of properties to be vacated To ensure different options are available To ensure living conditions are maintained or improved on To ensure it is possible to maintain productive activity To ensure availability of social services, such as: education, health care, public transport, etc To continuously seek to minimize the social and/or environmental impacts on the population. To reinforce the application of these principles, the following good practices will be adopted: Construction work will only be performed under a suitable timetable and a resettlement timetable The affected population will be able to choose their option, within the specified criteria The population will have access to effective procedures for complaints Clear explanation to the affected population as to which institutions are responsible for running the Program and the authority held by each one. Running of campaigns to disclose and explain the Program To provide free legal and social assistance to the population To ensure a high degree of interaction between the resettlement team and the team in charge of carrying out the construction Negotiations with the population to be resettled will only take place when all the options are available to them. 7. Procedures for preparing the Resettlement Plan The Resettlement Plan will be prepared jointly and will include the detailed technical projects to be prepared for the São José and Taquaril housing estates. A multidisciplinary team will be made available to carry out the plan, including professionals from the following areas: social sciences, civil and environmental engineering, architecture and town planning, land administration and urban law, and anthropology. The main activities of the plan are described

7 below. We emphasize that the population and its leaders, be they official or otherwise, should participate in the entire preparatory process. Stage 1 - Data Collection Study of the Operation-Based Project / Full definition of the affected areas Registering the Properties and Affected Families Notification Survey on the Socio-Economic Profile of the Affected Families (socio-economic register) Property Register (Technical Register of Displacement ) Document Proving Authority over the area; Study of Personal Documentation Land Bank/Definition of Division Model Community Participation. Stage 2 Plan Preparation Analysis of the Affected Families Socio-Economic Profile Analysis of the Valuation of the Affected Property Definition of Affected Area Level Quantitative and Qualitative Definition of Policy for Attending Families Needs Definition of the Eligibility Criteria Community Participation/Claim Procedures 1. Operating schemes for preparing and executing the Resettlement Plan The resettlement plan will be prepared by expert consultants to be hired by the Municipality of Belo Horizonte under the Urban Reform Program. The Resettlement Plan (social and legal assistance for displacing and resettling families) will also be prepared by expert consultants or companies to be hired by the Municipality of Belo Horizonte under the Urban Reform Program 8. Status of the resettlement area The areas for resettlement of the Taquaril housing estate and for 1680 (one thousand six hundred and eighty) homes in the São José housing estate have now been expropriated and the go-ahead has been given for construction work to begin. Funds are projected to expropriate other areas: to attend the other families in the São José housing estates; to build commercial units; or to meet road construction requirements. 9. Consulting the population The population has participated and been consulted on several occasions. In the Taquaril housing estate this consultation was performed while the Directive Plan was being prepared and updated, which was performed in line with the Municipal Participatory Budget. In the São José housing estate this participation was more in-depth as it involved a census register and partial update of the property, under the first stage of the Pedro II Project, which has been executed by the municipality. 10. Community Participation The community should participate in the entire process. Meetings will be held with the population embraced and/or affected by the Program in order to present the project, clear up any doubts and above all provide information concerning the resettlement process. Through URBEL, the Municipality of Belo Horizonte will maintain clear, transparent and objective social communication with all the affected families throughout the process, thereby preventing rumors from circulating which could cause disquiet and anxiety among the families. The BH Urban Reform Program will have an office in each of the areas for attending affected families, which is accessible and will be staffed by experts during business hours on working days

8 throughout the entire process. The program will seek to ensure that the most vulnerable groups (the elderly, families headed by single mothers, widows (widowers), families headed by young parents, etc.) are heard, so as to uphold their rights. 11. Institutional Responsibilities for the family resettlement activities The Belo Horizonte Town Planning Company - URBEL will be responsible for the resettlement activities (coordination, social monitoring, registers, PROAS). 12. Definition of the Eligibility Criteria Families will be eligible whose property is located in the area when the register is compiled. This register will be rendered invalid should the Municipality of Belo Horizonte fail to perform the activities established for resettling the population within a term of two years as from compilation of this register. 13. Monitoring the resettlement URBEL will be responsible for monitoring the resettlement with a view to achieving the following objectives: Verifying whether the actions proposed by the Involuntary Resettlement Plan are being carried out and implementing corrective measures should any deviations be identified Identifying difficulties, obstacles and opportunities to introduce the actions, identifying the path in due time for overcoming the former and optimizing the latter Assessing the Program s effects on the affected population, considering the situation before, during and after project implementation Setting up a database, which can serve as a reference for future projects.

9 2. Resettlement Timetable (Preparation and Execution) São José and Taquaril areas STAGES YEAR 1 YEAR 2 YEAR 3 YEAR 4 QUARTER Preparation of the Resettlement Plans 2- Social Mobilization 3 Freezing the Areas and Determining the Target Public 4 Consolidation of the resettlement alternatives 5 Introduction of the compensation process 6 Introduction of the PROAS 7 Resettlement in Housing Estate 7.1 Project Detailing Construction Moving 8 -.Monitoring 8- Assessment

10 18 ESTIMATED RESETTLEMENT COSTS SÃO JOSÉ AND TAQUARIL DESCRIPTION TOTAL (BRL) SOCIAL MOBILIZATION AND MONITORING Institution Responsible Mobilization, Social Assistance and Monitoring PBH/URBEL Technical Team (4 graduate technicians; 4 high school) ,00 São José - 4 years Technical Team (2 graduate technicians; 4 high school) ,00 Taquaril 2 years Monitoring and Assessment* ,00 Activity Total ,00 Socio-economic Register PBH/URBEL Socio-economic Register - São José 66,000,00 Socio-Economic Register - Taquaril 9.000,00 Activity Total ,00 Technical Register of Displacement PBH/URBEL Technical Register of Displacement - São José ,00 *Technical Register of Displacement - Taquaril ,00 Activity Total ,00 Infrastructure PBH/URBEL ,00 Activity Total ,00 Subtotal - Implementation of the Resettlement Plan ,00 Construction of homes São José PBH/SUDECAP ,00 IPROAS ,00 I Compensation ** ,00 Subtotal São José ,00 Construction of homes Taquaril PBH/URBEL ,00 IPROAS ** I Compensation ** Subtotal Taquaril ,00 Grand Total ,00 Source: BH Urban Reform Program, PBH/URBEL 2005 * includes monitoring of all the operations projected under the Program (urban reform, environmental, social and legal operations) ** The costs take the home option into account 10

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