1 Document of The World Bank Report No: ICR00001138 IMPLEMENTATION COMPLETION AND RESULTS REPORT (IBRD-46190 TF-50265) ON A LOAN IN THE AMOUNT OF EURO 33.5 MILLION (US$ 30.0 MILLION EQUIVALENT) TO THE REPUBLIC OF BULGARIA FOR A REGISTRATION AND CADASTRE PROJECT July 31, 2009 Sustainable Development Department Central Europe and the Baltic Countries Unit Europe and Central Asia Region Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized
Transcript
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Document of The World Bank
Report No: ICR00001138
IMPLEMENTATION COMPLETION AND RESULTS REPORT (IBRD-46190 TF-50265)
ON A
LOAN
IN THE AMOUNT OF EURO 33.5 MILLION (US$ 30.0 MILLION EQUIVALENT)
TO THE
REPUBLIC OF BULGARIA
FOR A
REGISTRATION AND CADASTRE PROJECT
July 31, 2009
Sustainable Development Department Central Europe and the Baltic Countries Unit Europe and Central Asia Region
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CURRENCY EQUIVALENTS (Exchange Rate Effective July 23, 2009)
Currency Unit =
€1.00 = US$1.4625 = BGN 1.95
FISCAL YEAR
ABBREVIATIONS AND ACRONYMS
CA Cadastre Agency CAS Country Assistance Strategy EU European Union GOB Government of Bulgaria IISCPR
Integrated Information System for Cadastre and Property Registration
IRR Internal Rate of Return KPI Key Performance Indicators LCPR Law on Cadastre and the Property Register MAF Ministry of Agriculture and Food MOF Ministry of Finance MOJ Ministry of Justice MRDPW Ministry of Regional Development and Public Works MTS Municipal Technical Services OSS One Stop Shop PAD Project Appraisal Document PDO Project Development Objectives PIU Project Implementation Unit RA Registration Agency TA Technical Assistance
Vice President: Shigeo Katsu
Country Director: Theodore Ahlers
Sector Manager: John Kellenberg
Project Team Leader: Anna Georgieva
ICR Team Leader: Anna Georgieva
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BULGARIA REGISTRATION AND CADASTRE PROJECT
CONTENTS
Data Sheet A. Basic Information B. Key Dates C. Ratings Summary D. Sector and Theme Codes E. Bank Staff F. Results Framework Analysis G. Ratings of Project Performance in ISRs H. Restructuring I. Disbursement Graph
1. Project Context, Development Objectives and Design ............................................... 42. Key Factors Affecting Implementation and Outcomes .............................................. 93. Assessment of Outcomes .......................................................................................... 144. Assessment of Risk to Development Outcome ......................................................... 195. Assessment of Bank and Borrower Performance ..................................................... 196. Lessons Learned ....................................................................................................... 217. Comments on Issues Raised by Borrower/Implementing Agencies/Partners .......... 22Annex 1. Project Costs and Financing .......................................................................... 23Annex 2. Outputs by Component ................................................................................. 24Annex 3. Economic and Financial Analysis ................................................................. 40Annex 4. Bank Lending and Implementation Support/Supervision Processes ............ 51Annex 5. Beneficiary Survey Results ........................................................................... 53Annex 6. Stakeholder Workshop Report and Results ................................................... 54Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR ..................... 57Annex 8. Comments of Cofinanciers and Other Partners/Stakeholders ....................... 75Annex 9. List of Supporting Documents ...................................................................... 76
Implementing Agencies: Cadastre Agency Registration Agency Cofinanciers and Other External Partners: Government of the Netherlands Government of Japan - PHRD B. Key Dates
Process Date Process Original Date Revised / Actual
C.3 Quality at Entry and Implementation Performance IndicatorsImplementation
Performance Indicators
QAG Assessments (if any)
Rating
Potential Problem Project at any time (Yes/No):
No Quality at Entry (QEA):
Satisfactory
Problem Project at any time (Yes/No):
Yes Quality of Supervision (QSA):
None
DO rating before Closing/Inactive status:
Satisfactory
D. Sector and Theme Codes
Original Actual
Sector Code (as % of total Bank financing)
Central government administration 100 100
Theme Code (as % of total Bank financing)
Administrative and civil service reform 11
Land administration and management 22 60
Legal institutions for a market economy 22 20
Personal and property rights 23 20
Regulation and competition policy 22 E. Bank Staff
Positions At ICR At Approval
Vice President: Shigeo Katsu Johannes F. Linn
Country Director: Theodore O. Ahlers Andrew N. Vorkink
Sector Manager: John V. Kellenberg Joseph R. Goldberg
Project Team Leader: Anna Georgieva Lynn C. Holstein
ICR Team Leader: Anna Georgieva
ICR Primary Author: Joseph R. Goldberg F. Results Framework Analysis
Project Development Objectives (from Project Appraisal Document) Improve the coverage, completeness, accuracy and responsiveness of the cadastre and real property registration systems and, therefore, contribute to the development of secure tenure of real estate (and hence investments in housing, agriculture, commerce, manufacturing, and services), and of an efficient real property market.
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Revised Project Development Objectives (as approved by original approving authority) The project development objective was not revised during restructuring. During restructuring some output indicators were revised to reflect reduced project scope. A detailed table compaing the indicators in the PAD and revised indicators after restructuring is shown in Annex 2. (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 : Increased number of services of the Cadastre Agency and Registration Agency.
Value quantitative or Qualitative)
In 1999, the registration offices of the District Courts provided almost 300,000 services. Cadastre services were provided by municipalities and land commissions around the country, but no baseline data was available.
No target values.
For the CA 300,000 number of services per year and for the RA 696, 432 number of services per year.
CA services per year: 2007: 275,358 2008: 564,808 RA services per year: 2005: 735,397 2006: 802,402 2007: 1,029,828 2008: 769,777
Date achieved 05/25/2001 03/01/2007 03/01/2009 03/01/2009 Comments (incl. % achievement)
Indicator created during restructuring. Cadastre data became available once the newly created agency had established monitoring systems and had sufficient records stored to be meaningful. Achieved 100%.
Indicator 2 : Reduced transaction turn-around time on an annual basis for the registration office and information supply from cadastre offices.
Value quantitative or Qualitative)
Several days for registration in the district courts and large variety of time scales for cadastral data at municipalities and land commissions, where poor quality data often took weeks to be provided.
One day for registration offices and 3 days for cadastre offices.
No change.
One day for registration offices to register sales and mortgage in case of undisputed ownership and 3 hours to supply information. 1 day express service or 3 days regular service for cadastre offices.
Date achieved 12/31/2003 03/01/2007 03/01/2009 03/01/2009
Comments (incl. % achievement)
It should be noted that there were serious problems with cadastre data as records varied according to supplier and they very rarely matched reality on the ground. Disputes following registration were common. The targets were challenging and achieved 100%.
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(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 : 14 regional cadastre offices upgraded by 12/31/03 and the remaining 14 by 12/31/04 with renovation, staff training, equipment upgrading, at least IT systems support in place and in use.
Value (quantitative or Qualitative)
0 Offices completed and equipped.
28 offices completed and all equipped.
14 regional offices up-graded by December 31, 2002, and the remaining 14 by December 31, 2007.
28 offices completed and all equipped.
Date achieved 12/01/2000 03/01/2007 03/01/2009 03/01/2009 Comments (incl. % achievement)
The actions outlined were required to provide high quality customer services. Indicator target dates changed at restructuring. Achieved 100%.
Indicator 2 : Operations undertaken to create an approved cadastre map for 3 mln properties in the most active land market areas, covering approximately 20% of the country.
Value (quantitative or Qualitative)
0 properties covered.
Operations undertaken to up-date the cadastre in 30% of the country.
Operations undertaken to create an approved cadastre map for 3 mln properties in regional centers with an active land market covering approximately 20% of the country.
4,563,140 properties covered. New cadastre maps cover more than 30% of the country, but #approved# cadastre maps cover 17% of the country.
Date achieved 12/01/2000 03/01/2007 03/01/2009 03/01/2009
Comments (incl. % achievement)
Indicator changed at restructuring and a differentiation was made between #adopted# cadastre maps that were converted from existing records and #approved# cadastre maps that went through a process of resurvey. Original and revised targets were achieved.
Indicator 3 : Carry out systematic cadastre survey and mapping plus adjudication and registration in the cadastre system.
Value (quantitative or Qualitative)
No operations undertaken.
7,700 square kilometers of cadastre maps updated, surveyed
No change. 9,760 square kilometers completed.
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and digitized. Date achieved 12/01/2000 03/01/2007 03/01/2009 03/01/2009 Comments (incl. % achievement)
Target exceeded by 27% at project close.
Indicator 4 : Design and implement joint information technology cadastre and registration information system.
Value (quantitative or Qualitative)
Local systems at registration offices. Nothing at cadastral offices.
28 Cadastre and 112 court offices connected in a unified information system, and staff trained in its use.
No change. Completed.
Date achieved 12/01/2000 03/01/2007 03/01/2009 03/01/2009 Comments (incl. % achievement)
Target achieved. This has been one of the most successful parts of the project, providing clients with rapid, transparent and accurate information and services.
Indicator 5 : Geodetic Control Network Established.
Value (quantitative or Qualitative)
Local coordinate systems that were #secret# and in four different main systems.
Establish new geodetic network open to the users.
No change. Completed.
Date achieved 12/01/2000 03/01/2007 03/01/2009 03/01/2009 Comments (incl. % achievement)
Target achieved.
Indicator 6 : Training programs, public awareness campaigns, advisory services and efficient project management completed.
Value (quantitative or Qualitative)
No data.
All CA and registration office staff trained, judges trained and land holders knowledge of real estate rights, duties and procedures enhanced. Legal services provided.
No change in substance, but some changes in the details are outlined in Annex 2.
Completed successfully, and the PIU have been integrated into the CA as the #international department#.
Date achieved 12/01/2000 03/01/2007 03/01/2009 03/01/2009 Comments (incl. % achievement)
The final customer survey and other studies showed a marked increase in public awareness and quality of services provided Targets achieved.
Unwillingness or inability of two agencies to collaborate to the extent required to mount joint systematic cadastral/ registration surveys. Weight of integration then placed on a) sporadic registration as transactions occur, and b) interconnected databases via new IT system. Both methods are now working well.
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I. Disbursement Profile
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1. Project Context, Development Objectives and Design
1.1 Context at Appraisal
Preparation of the Bulgaria Registration and Cadastre Project began in 1998. In the context of the myriad of transition structural reforms, real estate and land privatization (including the restitution of agricultural land) was seen to require the creation of a modern, comprehensive land registration and cadastre system. At the time, what real estate records existed were totally fragmented, with restituted agricultural holdings recorded in local land commissions under the Ministry of Agriculture and Food (MAF) and urban land and apartments recorded in local municipal technical services. Since institutional development for the market economy was nascent, early project preparation included a seminar mounted by the Bank for senior Bulgarian government officials and parliamentarians, where most of the world's modes of organizing land administration were presented. Bank staff did not disguise the fact that their experience worldwide indicated that a single-agency model was easier to manage and brought a higher probability of success. Indeed, the project's PAD repeatedly states this conclusion. Nonetheless, it was felt that such a fundamental decision belonged to the polity, and the Bulgarian political leadership eventually indicated that they would opt for a two-agency model. One of these was a survey and cartographic agency in the Ministry of Regional Development and Public Works (MRDPW); the second was the Ministry of Justice (MOJ) and its regional courts. This model was institutionalized in a Law on Cadastre and the Property Register (LCPR) passed in April 2000, and the new Cadastre Agency (CA), under the MRDPW, was formally established on January 1, 2001. Thus, much basic groundwork was achieved during the preparation process itself. Organizationally, preparations for effective project implementation within MOJ appear to have lagged behind those within MRDPW. Creation of a management unit for property registration within MOJ was only covenanted in the Loan Agreement, not a “fait accompli” as with the CA. Eventually, a Registration Agency (RA) was created under MOJ in 2004. Thus, gradually the administration of the legal aspects of real property ownership and transactions were migrated from the courts themselves to a professional cadre working in an MOJ agency devoted to establishing and maintaining registries for companies and for statistical collections in addition to real property. RA offices are located in all 112 court towns of Bulgaria (often still in courthouses), because the jurisdictional basis for the registry is still those court districts, and the final approval of all property transactions is still by judges operating as "entry judges" for part of their working time. The project implementation unit (PIU) was placed in the newly established CA for logistical reasons—available space and vacant staff positions.
Aside from fragmentation of records of real property ownership into four systems and large numbers of physical sites, as well as little consistency of information among these dispersed repositories (especially between the location/geographic and the verbal legal records), the information was difficult for the public to access. These were obviously good conditions for a suspected high degree of fraud and corrupt practice, which did not provide a conducive environment for real estate market development.
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Rationale for Bank Assistance. The Project was prepared under the FY98 CAS which stressed privatization and related trends, as large sectors of the economy were still in state hands. Indeed, in 1998, restitution of agricultural land from collectives to farmers was still not complete, and the first two actions in the CAS listed under Agriculture and Rural Development (in the section for Private Sector Development: Structural Reforms, Market Liberalization, and Infrastructure) were to establish and maintain an improved framework for land transactions, including leasing, and to complete land restitution. Thus the initial project slot allocated to this activity was an FY99 one for a land restitution project. As agricultural land restitution was completed with domestic and EU funds, and as the economy commenced a more dynamic growth path, the agriculture sector declined gradually in relative terms and development of urban (and later, recreational) land markets assumed overwhelming importance. Thus by FY2001, the PAD places no special emphasis on agriculture, beyond the indication that the MAF and land commissions would transfer records of restituted agricultural land ownership to the new cadastral system when the latter was ready to accept them.
1.2 Original Project Development Objectives (PDO) and Key Indicators
The Project Development Objective was “to improve the coverage, completeness, accuracy, and responsiveness of the cadastre and real property registration systems.” This proposed achievement was then linked to secure tenure of real estate, creation of markets in land and real estate, the overall reform process and private sector development, investment, and other critical goods. Complete coverage of the country with the new property registration system was not a goal of the Project - rather the Project was meant to support only the first five years of a 15-year program. This is indicated in Annex 1 of the PAD as stated: “to update the cadastre in 30% of the country.”
There were a very large number of indicators offered in the PAD, including many which were not quantitative (e.g. "well functioning real property....markets") or which would have been very hard to measure (e.g. "percentage of urban and rural plots accurately described..."). There were, however, a large number of non-quantitative but important institutional and technological objectives whose achievement was presented as indicators, including the formation of a unified cadastre system and a national cadastre information network; beyond this, development of a joint IT system linking the cadastre and registration databases was a major intermediate objective; introduction of business planning for both the CA and the proposed MOJ registration unit; legal adoption of grievance procedures and indeed quality assurance guidelines; adoption of human resource planning and performance standards by the agencies was also envisaged. Essentially, the whole panoply of modern organizational management and practice was strongly recommended to the nascent project agencies, and embodied in the objectives and indicators. Regarding numeric indicators, consistent attention was paid to transaction turn-around times—e.g. reducing maximum processing times for registration of sales and mortgages first to 5 days, then gradually to 1, and similar scale reductions for provision of information and maps. This measure made sense in that delays in processing these transactions are the main typical causes of public complaints with land administration systems generally, and also main sources of corruption, where side payments are typically made for expedition, though the starting points in Bulgaria were much less
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severe than in many countries. That measure of reduced transaction time/cost by the general public, along with coverage of the nation's real estate by an integrated, accurate registration and cadastre system, as measured by the revised outcome indicator of 3 million new parcels registered and 7,700 square kilometers of cadastre maps updated, surveyed, and digitized, were probably the most important set of quantitative indicators.
1.3 Revised PDO (as approved by original approving authority) and Key Indicators, and reasons/justification The project started slowly, with many of the Bank staff fears regarding progress under a two-agency land administration system borne out in practice. While even the cadastre/survey side of the program was not effectively implemented during the early years, it at least moved forward in fits and starts. The legal registration side, on the other hand, barely commenced at all. The management unit for property registration was not created in MOJ until October 2002—16 months after project approval. Thus by 2004, three years after project approval, 51% of the Component A (Cadastre System Development) program allocation had been disbursed, 27% of Component B (Property Registration System Development), and only 11% of Component C (Cadastre and Property Registration Operations). With Component C, collaboration and joint action by the two agencies was required if the two-agency system were to deliver high-quality land administration services to the public. In 2004 the Bank was still officially requesting the Ministry of Justice to nominate the name of an official with whom the PIU (located in the CA) and the Bank should correspond on project matters, and to establish service standards (seven days were mentioned) for replying to project correspondence, e.g. with the CA. Thus the Project was declared "unsatisfactory" by the Bank in June 2004 and the Project was formally restructured in May 2006. In August 2004, the Registration Agency was finally created in the MOJ, but even this long-sought development at first helped little due to immediate assignment to the RA of the task of creating a Commercial Registry, and also to rapid turnover of RA directors. The eventual changes to the Project's legal and results frameworks do not appear major. The formal PDO was not changed at all. The major operational changes were indeed highly technical. The original intention was to "cover" Bulgaria through joint cadastre/registration resurvey operations "systematically." This would have meant teams from both agencies simultaneously checking parcel boundaries, building footprints, histories of legal ownership transactions, details of current mortgages and other encumbrances, on a unified geographic basis. Here a major divergence opened when the CA decided to abandon an a priori geographic approach and "follow the market," by focusing on areas with high real estate market activity. Thus they organized surveys (on contract) of major cities outside of Sofia (already fairly well served by its Metropolitan Technical Service—MTS), the Danube River littoral region, and—due largely to tremendous new demand by EU citizens for ski and seaside recreational properties—the entire Black Sea coast and selected mountain regions. While this approach did not include most of the country's geographical area, it covered 80% of all real estate market activity. In all other areas, CA resurveyed one lot at a time when a proposed transaction
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forced the issue. In retrospect, this approach seems economically rational. The MOJ, on the other hand, failed to initiate the legal land registration certification process on a systematic district by district basis, a process known as “the declaration of preliminary lots.” The main difference between the “systematic” and “sporadic” approach is that with the first all information including for past periods is entered “systematically”; while with the second this is done in a demand driven way – as property transactions occur. By 2006, the Bank accepted that the two agencies would not mount joint systematic survey operations, and instead changed certain indicators which assumed a common approach. Thus "operations undertaken to update the cadastre in 30% of the country," "carry out systematic cadastre survey and mapping plus adjudication and registration in the cadastre system," and "2.0 million real parcel objects formed into preliminary lots in the court registry offices," were together replaced with "operations undertaken to create an approved cadastre map for 3 million properties in regional centers with an active land market covering approximately 20% of the country;" the cadastral maps were in fact, however, done using a systematic approach. This revised objective/indicator, embodied in the countersigned amendment package of May 12, 2006, was actually far surpassed, with over 4.5 million properties included in approved cadastre maps by project closure on March 1, 2009. The relinquishment of the approach of systematic registration means that the two agencies and their databases are brought together through "sporadic registration," the approach based on handling of actual transactions, the preferred method in dozens of countries worldwide. Meanwhile the quality of legal ownership data collected during the cadastre surveys seems to have been high: it was reported in November 2006 that of the nearly 3 million properties then contained in the approved cadastre maps, only 400 complaints had been received for hearings by review commissions, i.e. about one complaint per 7,500 cases. The key performance indicator “Reduced cost of land transactions” was dropped and substituted by the indicator referring to number of services provided: “Increased number of services of the CA and RA.” During restructuring it was agreed that the indicator referring to number of services rendered would capture more accurately the development and good client service of the two agencies. The original indicator was dropped as the cost of transactions depends to a great degree on the value of the property (as the notary fee is calculated as a percentage of the cost) while the fees of the state agencies CA and RA were found to be very modest. The above-mentioned changes were proposed by the Cadastre Agency and Registration Agency and agreed after discussions with the Bank team which increased project ownership. For further details on indicators, see Annex 2.
1.4 Main Beneficiaries
In the PAD, much of the discussion of beneficiaries and target population concerned farmers and the agriculture sector, as if creation of real property markets and access to credit were primarily of interest to them. In the end, the Project was presented as having a national interest, indeed with initial benefits to be largely observed in the larger towns.
A major beneficiary group has indeed been the professional groups who intermediate between the public, the project agencies, and the government. These include notaries, real estate agents, mortgage bankers, attorneys, and surveyors, all of whose work is now
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faster, more accurate, and more focused on professional matters rather than merely establishing the basic facts of property ownership.
1.5 Original Components
The project design was tailored to the Bulgarian choice to follow the "two-agency" approach to land administration, an approach sometimes called the "Austro-Hungarian System" since it was spread throughout Eastern Europe under the Hapsburg Empire; Hungary, however, has converted in recent years to a single-agency system. Component A was therefore to be executed by the CA to develop the cadastre survey functions; Component B to be executed by the MOJ and the court system (later reinforced by the RA), and a Component C for joint cadastre and registration operations. Component D covered project management, training, and TA to help develop new draft legislation and regulations, including for mortgage and condominiums. There was also TA for legal assistance to vulnerable citizens, for public awareness, IT development, and monitoring and evaluation. In terms of costs, Component A was largely focused on creating 28 regional offices of the new Cadastre Agency, furnishing them, equipping them, improving software systems, and providing the recurrent costs; as late as 2005 the great bulk of operational funds of the CA derived from the project. Component B covered a largely analogous program for the Ministry of Justice, to establish land registration offices in the 112 district courts. Component C was much larger (over $19 million of Bank funding) as it was to cover systematic joint field survey operations over 30% of the country. The second largest cost item in Component C was for design and implementation of the Integrated Information System for Cadastre and Property Registration (IISCPR) intended to tie together the two data bases for cadastral information and ownership registration information, each of which had first to be composed from several others developed by various ministries and municipalities. Component D handled remaining management and policy tasks.
1.6 Revised Components
While major changes in implementation approach and philosophy occurred in the early years of the project, the actual revisions in legal documentation (e.g. inclusion of the new Registration Agency) and component descriptions were small, as noted above.
1.7 Other significant changes
A significant development was the granting of a trust fund by the Government of the Netherlands, specifically to support this Project. In the amount of US$2 million equivalent, it financed much of the crucial technical assistance and training under the Project. It used the University of Architecture, Civil Engineering, and Geodesy of Sofia to train 600 staff of the CA, RA, and notaries in cadastre and property registration topics and information technology. From February 13, 2002 to December 31, 2008, the grant also funded project activities providing legal advice to the CA’s clients, a public awareness campaign, monitoring and evaluation, a land consolidation pilot scheme, a land market study, the IT strategy and other studies and reviews. Most of the activities
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begun under the trust fund are now being financed by the state budget, namely: training, legal advice in the CA, monitoring and evaluation, and business plan preparation. As such, the trust fund was an integral part of project implementation, and a very important factor in its success, helping share knowledge and yielding best international practice.
2. Key Factors Affecting Implementation and Outcomes
2.1 Project Preparation, Design and Quality at Entry
The major design issue in the Project was that already mentioned above, the choice–eventually by the Bulgarian Parliament in the LCPR of 2000—of a two-agency land administration system rather than a single agency. It should be noted that there are dual agency systems which function quite well (e.g. Austria) and that dual agency systems are still common in Europe. Practically speaking, worldwide experience had shown that even less prosperous countries, with lower levels of technical competence, but with single-agency systems of land administration, typically achieved higher levels of performance and client satisfaction than did much more developed societies with a two-agency system. In the Europe and Central Asia region, this was already becoming clear, for example, in the Kyrgyz Republic (which adopted a single agency) and Slovenia, which retained a dual-agency system. In the former, transactions in one day quickly became the norm, whereas in the latter, backlogs of weeks or even months remain common. No formal study has been done of the essential causes of this pattern, but it may be surmised that much is due to common patterns of organizational communication and collaboration. As was noted above, poor communication and joint work between the two agencies here involved was a major obstacle to the execution of this project. While communication and other problems within each agency were sometimes severe, they were dwarfed by the need within a two-agency system for continuous collaboration across agency boundaries. In land administration, the problem is compounded by the disparity of the professional cultures whose contributions must be brought together—essentially those of lawyers and engineers. This may be the basis of the worst problems experienced in this Project, and indeed in two-agency systems in general.
The question may thus be raised whether proceeding with a project establishing a two-agency system was a failure of quality at entry. The judgment of this report is, no. First, the team raised this issue to the highest levels of the Government of Bulgaria, and made its recommendations repeatedly clear, over a period of 18 months, according to the PAD. Worldwide experience on the issue, however strong it was in 2000, was not as strong as it is today. Finally, the democratically-elected legislature of the borrower made a clear decision. If the Bank were to make any positive contribution to land administration in Bulgaria, it had to accept that decision at that time. Such decisions are not inherently permanent: in Romania the same decision was made, also leading to problematic implementation and service for many years, and then, near the end of the project, the government recognized the problems (which included the cluttering of the court system with routine land transactions), and reversed course toward a single-agency system, with the Bank present to help implement the change. Thus staying engaged remains a viable strategy.
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On the other hand, the Bank might have been stronger in demanding compensating measures. Even within single land agencies, it typically appears that the engineering group adapts more quickly to project development disciplines—including specifications development, costing, and procurement—than does the legal/judiciary group. Yet the first focus here was on creating the Cadastre Agency, duly achieved before Project approval, while only a covenant to create a land registration unit within the MOJ was accepted, and a Registration Agency was not formed until 2004. When it came time to locate a PIU, it was thus natural to do so in the CA under the MRDPW, whereas it could be argued that MOJ needed such help and proximity more.
2.2 Implementation
Project implementation started slowly, and seemed to take a turn for the worse in 2002 when a new government resulted in a new Deputy Minister within MRDPW, Executive Director of the CA, and PIU manager. The new government appeared to pay little or no attention to Bank comments on revision of the basic law (LCPR) or of agency regulations, or warnings regarding delays in procuring international consultants for an Integrated Information Cadastre and Property Registration (IISCPR) system. By April 2003 there had been no progress in implementing the training plan or an expected joint public awareness program; indeed there was a proposal to split the latter between the CA and MOJ, indicative of the failure of the two agencies to cooperate in virtually any way. Much of 2003 passed with no formal manager of the PIU, and the two agencies were essentially proceeding in their own directions, ignoring the fact that serving the public required their collaboration in a two-agency system.
Following the May 2004 supervision mission, the project was rated Unsatisfactory, based on continuing lack of interagency coordination and lack of progress on the joint information system and creation of preliminary lots. A six-month action plan - the first of several - was worked out with the CA and MOJ. A mid-term review mission five months later found progress still unsatisfactory, resulting in a new action plan and the first invocation of the possible extreme remedies of project restructuring or full cancellation of the loan. While the IT system and systematic registration were still making no progress, the CA's cadastre program was beginning to attain momentum, the agency was improving its 28 regional offices, and their staff was actually working on their business plan. But the new action plan had to mandate such fundamental procedures as the Executive Director of the CA and Secretary General of the MOJ taking operational decisions rather than referring them to the advisory Project Steering Committee (which met twice per year); and that the CA, MOJ, and PIU should meet once a week and inform the Bank of the issues discussed.
In May 2005 the next supervision mission found unsatisfactory completion of the previous action plan, and continued unsatisfactory implementation, despite some acceleration of disbursements (from 17% in May 2004 to 31% in May 2005) due mainly to CA programs. The Bank turned its focus to project restructuring, starting with the fundamental shift from systematic to sporadic registration, while shifting emphasis towards simplifying regulations to improve service delivery. It should be noted, however, that the cadastral maps have been established using the systematic approach; the critical
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shift from sporadic to systematic occurred only in the Land Registry. The restructuring proposal, to a newly elected government, requested agreement of the new government to detailed restructuring actions and amendment of certain regulations with a deadline of September 30, 2005, after which loan suspension steps would begin. It should be noted here that the team, by Bank rules, had no option other than to proceed in this manner, once a project had been in unsatisfactory status this long. The GOB did respond in a timely manner, but without agreeing to several important amendments. Left unresolved were proposals to prepare agreements with major municipalities (i.e. Sofia, Plovdiv, and Varna) on provision of cadastre services; provision of a list of court districts where CA would (under LCPR) become the sole provider of cadastre services; and amendment of regulations. When the Bank proposed to commence suspension proceedings, a GOB letter of November 22, 2005 agreed to the major points stipulated by the Bank, but the government then failed in several cases to take the promised steps by December 2005. This provoked a high level letter from the Bank in late January 2006, informing that suspension was now imminent. In February and March 2006, the promised government actions were finally taken, the threat of suspension was lifted, and a restructuring was effected which:
shifted the technical approach to new registration of land parcels from the systematic to sporadic;
cancelled 4.78 million Euros from the loan of 33.5 million Euros, due to abandonment of systematic registration, a reduction in cadastral map coverage (since now 20% of the country, with the most active land markets, rather than 30% of the country, would be covered), and government funding of legal aid to vulnerable clients of the RA; and
extended the loan closing date from March 2007 to March 2008 to allow for completion of the IT system.
The restructuring did not immediately result in a wholesale improvement of project implementation. The November 2006 supervision mission found that activities under the CA (and the PIU within it) were indeed progressing well, with that agency most likely energized by various streamlining measures adopted through the restructuring. Their cadastre maps now included 2.6 million properties against an original target of 3 million, disbursements were accelerating, and the Dutch grant (see Section 1.7) was 84% disbursed. But Component B, now under the RA, was still barely moving, and working relations between the two agencies were still poor enough for the Bank to again raise the possibility of changing to a single-agency system, as it did again through mid- 2007.
It is worth reviewing how the CA was able to generate so much momentum on the cadastre side of the program. The bulk of the work under Component C concerned the creation of cadastre maps and registers. This work was done in two ways that became known as C6 and C7 contracts. The C6 contracts were tendered with a requirement to prepare digital cadastre maps in the national geodetic framework for large areas. The work involved the conversion of existing information held by various sources (including municipal technical services and land commissions) and the creation of single composite
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cadastre maps and registers. The results were analyzed for accuracy and conformance with reality on the ground. If an area within the map was considered to be 50% or more inaccurate the area concerned would need to be resurveyed completely. If the errors were less than 20% the area could be accepted and the cadastre map adopted. If anything in between, the maps could be utilized but would not be officially approved until corrections were made. This was a very pragmatic approach that has enabled over one-third of the country to be covered with a usable cadastre. As 40% of the rest of the country is mountainous, depopulated rural areas or encompassing large State forests, this leaves only a small part of the country (in terms of property numbers) to be completed. The remaining areas do not have major property market activity, except Sofia, which was covered by the Project, thanks to a formal agreement between the municipality and the CA. In the project documentation, the data verification, cleaning, and conversion of land commission records were planned to be completed in a separate contract, but in fact this work was integrated with the C6 and C7 contracts. Areas that required complete resurvey were included in the C7 contracts. An area of 9,760 sq km was covered under these contracts, far beyond the 7,700 sq km envisaged during project preparation. Without this extensive use of the private sector, progress on the cadastre side would have been only a fraction of that achieved. Even faster progress might have been achieved were it not for what the Bank considered excessive control (checking) by the CA of all field survey work by checking up to 5% of all survey points. The Bank recommended less physical checking, in line with international practice.
RA performance improved gradually but substantially over the last two years (2007-2009) of project implementation, with more focus on the land registry now that the establishment of the new commercial registry is under control, and with new management requiring progress reporting from all its district offices on virtually a daily basis. Therefore the focus of Bank supervision was directed increasingly to one central activity, the development of a joint information technology system (IISCPR) which would tie together the ownership rights work of the RA with the geographic survey work of the CA, into an integrated system. To permit the time required for this to occur and test the system in real conditions in 2007, the Project was extended for one year, until March 1, 2009.
Siemens Business Services (SBS), headquartered in Vienna, won the major TA contract to do this work, but started poorly. First, the international expertise which earned SBS the contract was not supplied; instead they were replaced by a local team from the Bulgarian subsidiary, with little experience in international norms for land administration systems. Second, contrary to the TOR for the work, the consultant began designing two separate systems for the two agencies, with a single linkage, which would have lost much of the benefits of electronic integration. Even in the system pilot, in the town of Vratsa, two separate systems were installed, and demonstrations failed to link the two. On this topic the Bank detailed the failings of the embryonic system in repeated aide memoire annexes devoted to IT aspects. Eventually both the supervision team and the RA contacted executives in SBS headquarters and demanded changes, resulting in reinforcement of consultant staffing with international experts, and redesign of the system in line with the TOR. By January 2008, detailed reports—while still finding flaws and drawbacks—were starting to show real progress toward a working integrated system. The Bank also pressed
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for openness of the system to stakeholders outside the agencies, especially to notaries, real estate agents, and lawyers, as well as to the general public. By June 2008, some of these goals seemed attainable, and the system has improved from then until early 2009, when stakeholders generally praised its user-friendliness. The system was redesigned, developed and rolled out within 1.5 years, with strong support from the two agencies and collaboration with a highly-qualified senior project manager, senior test managers, and a senior training manager from SBS. The focus of both the Bank and the agencies themselves over the last year and a half of project life, on developing a working integrated IT system for registration and cadastre, and then training the hundreds of agency staff in its operation, was perhaps the most positive and successful episode in the history of implementation of this project. Moreover, this is one of the few integrated web-based systems in ECA introduced nationwide and one of the most successful IT systems in a Bank-funded project in the region. The system provided a useful best practice example as delegations from the Western Balkans visited the official IT system launch in February 2009.
2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization
Serious activity on monitoring and evaluation (M&E) started with engagement of a local consulting firm in 2005. The firm produced five quarterly reports well into 2006, but focused exclusively on CA activities. By late 2006, responsibility for M&E was shifted to staff of the PIU, and the Bank was including an M&E specialist on supervision missions to advise on improving coverage. The specialist recommended including indicators of real estate market development, such as number and value of real estate sales and mortgage loans, average prices per square meter of apartments in Sofia and Varna, interest rates on real estate loans, number of real estate agencies, and more. All these were subsequently tracked in increasingly sophisticated fashion, on a quarterly basis, from the beginning of 2007 to date. Baselines are given for all of many dozens of indicators stretching back to 2005. Analysis of outcomes below and in Annex 2, are based directly on these reports, which by now include brief analysis of trends in the real estate market as well as statistics.
2.4 Safeguard and Fiduciary Compliance
Financial management and procurement performance followed two contradictory courses through the life of the project. Ratings of procurement performance closely mirrored Bank ratings of both project management and the overall project, with unsatisfactory or moderately unsatisfactory ratings from mid-2004 to mid-2006, over five successive supervision missions. Essentially the same approaches to managing other aspects were reflected in the contracting function. All aspects improved together, once the climax of the approach to loan suspension was faced, and all sides seemed to realize that the Bank was prepared to abandon the Project in the condition it had reached. On the other hand, financial management was rated satisfactory throughout Project implementation. There have been no social or environmental issues in this project.
2.5 Post-completion Operation/Next Phase
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The two main operational issues facing both agencies are a shortage of staff relative to the demands of the business as it stood before the current financial crisis, and a large number of old cadastre and registry records which need to be scanned into the new electronic system. An example of the staff shortage is the fact that in 50 of the RA offices only one staff is assigned. Good practice would demand a backup in each office eventually. The scanning of the historical (mainly pre-1990) records of the RA by contract would require an estimated six years, with reasonable budgeting. CA has different staffing and scanning needs, but of roughly similar magnitude. These staff will be necessary soon, but both agencies indicate that the currently reduced flow of work (due to the global financial crisis) may allow the current staff to cope. In the longer term, financing of these needs may be somewhat easier than in other sectors, for two reasons—the fact that the revenues of the two agencies together far exceed their expenditures (see Section 3.3 below), and increasing Government recognition of the strategic nature of their service. Thus while the RA earned BGN 70 million in 2008 from property registration work, it handed over all of that to MOF, and received a state budget allocation of only BGN 10 million. The agency is legally entitled to retain 25% of its earnings, and indications are that henceforth it will receive this share. Its first capital expenditure in 2009 with this enhanced funding will be acquisition of a building in Sofia to house its headquarters staff and the Sofia Registry Office. Meanwhile, CA has seen its budget allocation rise from less than BGN 3 million in 2003, to 27 million BGN in 2008, plus BGN 12 million for "strategic cadastre development." It seems likely that both agencies will have the resources to address their critical needs in the years to come.
3. Assessment of Outcomes
3.1 Relevance of Objectives, Design and Implementation
The project objectives were of the highest possible relevance when the Project was formulated, and if anything grew in importance as EU accession for Bulgaria occurred. In 1998, when preparation began, the transition from Communism was in process but had stalled in many ways. To ensure the security of the largest asset most families will ever hope to own, and to help create a viable market in such assets, so that homes, buildings, and land might be bought, sold, leased, or mortgaged, was central to the creation of a market economy. In the chaotic conditions of those days, it was not obvious this would happen. Later on, EU accession brought the prospect of higher standards for all fundamental aspects of public administration, including land administration. For both reasons the EU was heavily involved in financing the original restitution of agricultural land (so that there was no need for Bank financing), and in several large land titling pilots. Finally, EU accession brought an expected demand for land market services, in the form of tens of thousands of EU citizens wishing to invest in recreational housing and land near the Black Sea coast and in ski mountain regions. It is fortunate the Project prepared Bulgaria for all of this, and that the CA quickly spotted the latter trend and redirected its efforts to facilitate it.
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Regarding design, the choice of the two-agency system and the weaker readiness of the MOJ to implement the Project were noted above. Other design features, such as the emphasis on systematic registration, and later lack of progress of the MOJ towards that goal slowed down work enormously through the Project restructuring in 2006. The change in approach by the CA, to focus cadastral survey on regions with active land markets, validated by a change in indicators at restructuring, was a major step towards reclaiming project relevance.
3.2 Achievement of Project Development Objectives
The development objective of the project is to improve the coverage, completeness, accuracy and responsiveness of the cadastre and real property registration systems and, therefore, contribute to the development of secure tenure of real property and of an efficient real property market. Ultimately, the project aimed to contribute to the development of a real property market in Bulgaria. As demonstrated below in Section 3.3, the latter has been achieved; indeed the country has enjoyed one of the longest and strongest real estate booms on the European continent since 2005. Even with a 15% decline in the average price for an apartment in Bulgaria between third quarter 2008 and first quarter 2009—obviously due to the worldwide financial crisis—the market price is still €609/sq meter (€1012 in Sofia, €1013 in Varna). In general, and as noted below, on a wide variety of measures of market value and volume, the Bulgarian real estate market increased in 2005-2008 between four and five times.
Much of the enthusiasm of the real estate community - notaries, bankers, real estate agents, surveyors - when interviewed about the new land administration system, is due to the new electronic linkage of the two agencies and the general public, achieved in the last six months of the project. This IT system, accessed through a module called the One Stop Shop (OSS), is described in some technical detail in Annex 2. It gives immediate on-line access to the records of huge swaths of the country (and most of the active market), with a degree of accuracy, transparency, and user-friendliness which could not have been anticipated at project startup. The system is fully centralized for property registration which guarantees that all legal data are available in real time. The system for the cadastre, on the other hand, is decentralized. The cadastre data are copied twice a day to the central database. All backups are performed online daily during off-peak hours to avoid any additional load on the servers and storage controllers during working/peak hours.
On-line access to cadastre information for cadastral surveyors provides huge time and cost savings for the private sector, and these time and cost savings can be passed on to the public. Every aspect of the real estate industry, from title searches to issuance of sketch maps, is now conducted faster, easier, and more securely, by orders of magnitude. While decades of older records and titles going back to the 19th century remain to be scanned into the system, the framework now works so well that enthusiasm to complete these tasks is high. Thus the largest objectives of the project, those most difficult to quantify, have obviously been met.
Numbers of properties in approved cadastre maps are now 50% over the restructuring target and reduced transaction times (at least those processes under RA and CA control)
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were met several years ago. The area coverage (17% of Bulgaria) of the cadastre maps is slightly below target (indicated as approximately 20%), but given the focus on the active market, this can be considered a significant and relevant achievement. Fuller coverage of area will now come quickly due to much slower development of the remaining territories. Numbers of services provided to the public by the two agencies are also beyond targets, though it is interesting to note that RA performance in this regard is quite dependent on real estate market demand, while the CA production steadily increases year after year with improved capabilities to meet unmet demand. One interesting statistic is that 660,000 properties have been converted during the project years, from the old deeds system (identified by owner) to the parcel-based system (with geographic identifiers) on a transactional, case-by-case basis. This is the sporadic system of registration in action.
3.3 Efficiency
No internal rate of return (IRR) was calculated for this project, either at appraisal or for this report. There is a good reason for this. Although IRRs are sometimes calculated for land administration projects, there is always a severe attribution problem underlying them. When, as in this case, there is spectacular growth in desired stocks and flows such as the value of the country's real estate or annual sales, the value of the stock of mortgages or annual issuance, or the taxes and fees paid on transactions or mortgages, the increments in such parameters absolutely dwarf the costs of the project. Depending on what small percentage of the increases are arbitrarily attributed to the project itself or to overall improvements in registration, among many other factors, any IRR desired can be generated. Hence the significance of such a number is doubtful.
It is better to simply review the progress of the real estate market in Bulgaria over recent years, in comparison to a total project investment of €38.22 million, including €28.72 million from the Bank loan, €1.6 million from the Dutch grant, and €7.9 million equivalent from the Bulgarian budget. First, the number of real estate sales increased from 65,000 (average for 1999 and 2000) to 310,000 in 2008, although the latter level was rather stagnant for 2006, 2007, and 2008. The number of issued mortgages also increased roughly fivefold in that period, from 15,000 to 72,000, though again the number of mortgages declined somewhat from 2007 to 2008 due to the arrival of the worldwide financial crisis in Bulgaria. The aggregate value of sales and new mortgages declined more substantially in 2008 than did their numbers, due to obvious financial market factors. Still, the outstanding value of mortgages in Bulgaria had risen fourfold from €1 billion in 2005 to €4 billion in 2008. Of course many factors operated here, but the spread of coverage of approved cadastre maps to territories including 80% of all real estate market activity, and improvements in the RA and CA office facilities, processes, and interconnections, would necessarily seem to be among them.
Another way of looking at return on costs of this operation is to compare revenues of the two agencies (CA and RA) for their real estate market services, as against their costs. Granted that together they may be characterized as a monopoly system, it is still roughly true that citizens in a democracy will not long pay fees for services far in excess of the value to themselves. The combined real estate revenues (the RA also has revenues from non-real estate registries) in 2008 was BGN 81 million, while their costs were BGN 40
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million. Thus in one year the agencies profit and hand over to the Treasury an amount roughly equal to the total costs of the entire Project. The Project was thus clearly an excellent financial investment for the GOB, aside from the much larger economic benefits to society.
Finally, the fiscal impact of the overall development of the real estate and related financial markets, of which this Project was a part, was much greater than the above receipt of agency net revenue. With real estate sales in 2008 at over BGN 12 billion, estimated transfer tax revenue to the Treasury was over BGN 240 million, over €112 million. Mortgage initiation, at nearly twice the volume (or BGN 23 billion), would have yielded about €220 million equivalent. Project investment was a negligible part of this annual flow. Real estate rose from the fifth largest industry in terms of foreign direct investment in 2005, to second in 2006, to first in 2007 and 2008. Thus much of the increase in national asset values and taxes in recent years came from foreign investors, attracted in part by increasing ease of doing business and security of real estate transactions.
3.4 Justification of Overall Outcome Rating Rating: Satisfactory
The rating judgment here is not a simple or obvious one. When it started, the Bank accepted a sub-optimal organizational pattern chosen by the Borrower, and did not decisively insist on total project preparedness by the weaker agency, the MOJ. Organizational problems did in fact help precipitate years of weak performance, causing the Bank to nearly suspend the Project. On process grounds, therefore, the Project experience has been highly problematic. On the other hand, the outcome today is a successful one. Except for the current worldwide financial crisis (in part caused by mortgage industry problems), Bulgaria's real estate market has performed excellently, very well supported by the Project and the two agencies created under it, especially in the last two years of project life. Revised indicators have been met or substantially exceeded, and current service standards are among the best in Eastern Europe, and in some aspects surpass countries in Western Europe. With the heaviest work done, and the most active parts of the national market already covered by project-financed systems, coverage of the rest of the country and inclusion of older records is only a matter of time and budget, and the latter will be only a part of the earnings of the two agencies handed over to the national treasury. Thus despite extremely severe problems during the course of the project, the Project outcome must in the end be rated satisfactory.
3.5 Overarching Themes, Other Outcomes and Impacts (a) Poverty Impacts, Gender Aspects, and Social Development
While the Project was not aimed at poverty alleviation, its outcome does provide the most basic form of security to the 1.7 million rural families who depend on their small farms for a substantial portion of their subsistence. While it is common in agricultural circles to downplay subsistence agriculture as a serious industry, in a setting of incompletely developed and funded safety nets for all citizens, it is not clear what would replace the livings extracted from farms of 3 hectares and below. These holdings are now securely
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recorded. Regarding gender, all aspects of Bulgarian land administration treat women the same as men. (b) Institutional Change/Strengthening One of the project agencies (CA) was created as a precondition of the Project, the second (RA) during the Project to strengthen the extremely weakly staffed functions of the MOJ management of the many registry offices. Both agencies experienced periods of poor management, but are now well and professionally managed. Both the CA, now with nearly 400 staff, and the RA, with nearly 300 (aside from 190 entry judges rotated from the courts), needed more staff at the height of the real estate boom in the first half of 2008. With recovery of the market, the RA especially will require more staff, but the present lull in activity will likely permit both agencies to consolidate their work programs during 2009. One excellent and beneficial development was the integration of the PIU as a regular unit of the CA (international relations department) when the project closed, a development often discussed in theory but rarely achieved.
Two IT departments were established: one in the RA and one in the CA, and staff were trained. The smooth operation and maintenance of the IISCPR are ensured with several long-term contracts, signed by both agencies. The necessary communication infrastructure is available at all levels, including the optical fiber connections between the two data centers. (c) Other Unintended Outcomes and Impacts (positive or negative) None.
3.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops
A series of surveys were conducted in July, August, and September 2008, of clients of the project agencies (including in many regional offices throughout the country), staff, media, and the public, related to agency performance at that time. The resulting report is entitled "Land and Real Estate Market: Customer Satisfaction and Problems Related to the Activity of the Cadastre Agency and the Registry Agency." It should be emphasized that the Project was not completed and, in particular the IT system linking the two agencies and both of them to the public, had not been rolled out. Indeed, one of the main registered complaints was lack of such a coordination system. Several other areas of complaint have been addressed since publication to improve offices and their processes, which was the main purpose of the surveys.
First, to put findings in perspective, it should be noted that 73% of CA clients and 70% of RA clients were satisfied with their service, much higher in villages, much lower in district towns. This may of course be linked to less crushing volume of business, personal relations between clients and agency staff, and other advantages of small town life. The main complaint was lack of efficient customer handling in offices, leading to the need to stand in multiple lines for long times. Part of this inefficiency consisted of insufficient prior warnings of documents needed and fees to be paid - each of which often
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required waiting in lines to discover. Physically, and related to this lack of client orientation, customers wanted information desks, near the front of each office and benches to sit on if waiting is necessary. They also wanted bank branches nearby or in the same building to facilitate their payments, and copy machines since copies are needed of many documents. Some called for some distance established between clients served and the rest of the line, to avoid complete loss of privacy regarding sensitive topics like family finances. Many of these sensible recommendations are actually now fulfilled, at least in some offices. But the main request was simply for more staff to be hired to accelerate processing and reduce queuing. It is likely the RA and CA managers would agree.
4. Assessment of Risk to Development Outcome Rating: Moderate
The project closed on an upswing, with the best performance, the best management, and the most enthusiastic stakeholder response - at least according to stakeholder interviews during the ICR mission—registered during the project life. Even with a weakening real estate market, the agencies together earn far more than they cost. But the agencies do have the knowledge, experience, technology, and resources to further improve their coverage and performance, and at this point the management and institutional morale to avoid any backsliding. However, much of this positive momentum depends on the personalities in place and their staff. A return to previous patterns of management turnover could still impact outcomes.
5. Assessment of Bank and Borrower Performance
5.1 Bank Performance (a) Bank Performance in Ensuring Quality at Entry Rating: Moderately Satisfactory
As noted in section 2.1 above, the Bank should have demanded a higher degree of readiness to actually implement the Project within the MOJ, before Board presentation. It may have taken considerably longer to reach approval, but perhaps the seriousness which was finally conveyed in 2006 could have been achieved in 2001 or 2002, saving several years of implementation. On the other hand, many aspects of technical preparation and appraisal were very well done, leading to a moderately satisfactory performance rating for this stage of project development. (b) Quality of Supervision Rating: Satisfactory
The Bank was faced with poor implementation almost from the start (see section 2.2). Even the combined Government team that had written the new fundamental law (the LCPR of 2000) ceased to be involved shortly after startup, leaving the agencies with little project ownership or commitment to systematic registration. Faced with this, the question may be raised whether the Bank waited too long (2001-2004) to downgrade the Project to unsatisfactory status. The Bank task team seems to have followed Bank rules well
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through the long approach to suspension, remained open to improvement, but also firm on what was needed for project and program success. Their interventions near project end helped make the IT system development and rollout a true success. One aspect of Bank supervision may deserve special mention. In critically important periods, such as 2004 (when the Project was recognized as coming under threat of failure), 2006 (as the Project was gradually worked out of crisis mode), and 2008 (as the problems with IT system development were recognized and rectified), supervision frequency increased far beyond the traditional twice per year, or the once per year internally regulated minimum. Thus there were five supervision missions between June 2005 and June 2006, through the most intensive period of project restructuring, and four between January 2008 and January 2009, when the critically important IT system development process was being redesigned and rolled out. In each case and as needed, specialized HQ and consultant technical expertise was brought in for these missions, augmenting locally based officers, until resolution was achieved. This is not done enough and showed responsiveness to realities on the ground rather than mere bureaucratic practice. Supervision intensity changed after the Project was downgraded and the team leadership decentralized to the country office. This allowed daily interaction with the client. Decentralization of procurement supervision to the country office also provided better guidance to the client in applying Bank procurement guidelines which were initially found challenging. Had it not been for the Bank team's perseverance, the project would not have seen the turnaround in progress and achievement of development objectives, particularly with the introduction of the joint IT system. Overall, performance during supervision was fully satisfactory. (c) Justification of Rating for Overall Bank Performance Rating: Moderately Satisfactory
There were weaknesses in the preparation of the Project. Thus, despite that all targets were reached and some exceeded, despite the good final outcomes thanks to the strong role played by the Bank team in supervision especially in the last years, the overall rating is Moderately Satisfactory.
5.2Borrower Performance (a) Government Performance Rating: Moderately Unsatisfactory
While the Government took several good steps during project preparation, such as the creation of the CA and the passage of the LCPR, this ownership and interest was lost soon after project startup. MOJ particularly put little effort into staffing a registration unit, and did not actually create a registration agency until three years into the Project. When faced with an unsatisfactory rating, Government failed to observe action plans it agreed to—indeed until faced with a credible threat of loan cancellation. Recovery started in 2006, but did not mean an immediate resolution of outstanding issues. The Government did not show itself capable of ensuring the inter-agency collaboration required to make a two-agency land administration system work well, a system it had chosen against Bank
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recommendations. A two-year extension was necessary to meet the project objectives and targets.
Due to prolonged periods of acceptance of poor performance in advancing the Project and the sector, and despite improvements at the end of the Project, the Government performance is rated Moderately Unsatisfactory. (b) Implementing Agency or Agencies Performance Rating: Moderately Unsatisfactory
In general, over the long life of the Project, the CA performed better than the MOJ and then the RA, and indeed carried the Project for many years. But even the CA saw early mismanagement, quick change of management, and poor procurement practice. The RA has had six directors in its five years of existence, with only the last consistently devoted to hands-on management, constant review of results, and proper procurement. Regarding collaboration of the two agencies, while failure to do so well is a common pattern around the world, it is not pre-ordained that this should occur. It is possible for two management teams to decide that they will make a partnership work. This is now a distinct possibility given the quick stimulus provided by the encouraging performance of the new IT system, which links them and their databases together. Performance of the two agencies at present might be judged satisfactory. But when judged over the entire nearly eight years of the Project, or even the five years that both agencies have been in existence, their performance, like that of the Government, has been Moderately Unsatisfactory. (c) Justification of Rating for Overall Borrower Performance Rating: Moderately Unsatisfactory
Based on the two ratings directly above, the rating of overall borrower performance is Moderately Unsatisfactory.
6. Lessons Learned
The project preparation period was lengthy and very comprehensive. The management of the CA at that time was fully behind the major design features. However, the preparation period extended long enough for most key counterpart staff to change, with new officers neither understanding nor appreciating much of the detailed, comprehensive work. Therefore, the lengthy and detailed implementation plan became largely a waste of time and money. The most obvious example was the IT system, which was fully designed and ready to be tendered and implemented before the Project started; the detailed training plan was also discarded. A simpler and quicker preparation phase—with greater flexibility built into the project design—would have been better.
Single-agency land administration systems, for some obvious reasons, do present a higher probability of successful performance. There are enough problems of a management and organizational nature which can arise and hinder the performance of any single agency. When collaboration of two different agencies
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is required to complete an important public service for citizens, the chances of failure to do so increases geometrically. Where and when a choice of system presents itself, e.g. during the many reorganizations of government which occur in most countries from time to time, the Bank should advocate the adoption of a single agency system as forcefully as is deemed proper.
It is valuable for the Bank to be involved in registration and cadastre projects for the leverage the Bank brings in dealing with contractors. It would have been almost impossible for the Project to have been completed so effectively without the Bank intervening on behalf of the country to deal with the IT consultant. The projects may still get done, but at a much slower pace and with a low-quality output.
Frequency of supervision should vary with the needs of a project over time. Although it may require some managerial risk, Bank units should explicitly consider both increasing supervision frequency when troubles arise, and until they are resolved, and diminishing it when no such case presents itself. The question to ask of a portfolio should thus be: why are so many projects supervised a conventional twice per year, rather than more or less often, based on need?
Declaration of unsatisfactory status of projects is indeed the first step to radically remedying the situation. The explicit recognition of a serious situation prepares the way, for remedial steps, including a marked increase in the planned frequency of supervision. This step should be taken more often, i.e., perhaps sooner in the cycle of poor performance.
7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners (a) Borrower/implementing agencies In their comment on the ICR, the MO F states that the implementing agencies should be the ones providing feedback on the ICR. In their comments on the ICR, the Director of the RA estimates the implementation of the project "as a real success which is internationally recognized" and thanks all institutions involved for their support, adding that the RA fully agrees to make the report public. The director of the CA thanks the Bank for the cooperation in the implementation of this difficult but successful project, which has achieved all of its targets and objectives, and provided for future sustainable development. The Director made comments on the substance that were taken into account, and on the rating of the implementing agencies. (b) Cofinanciers (c) Other partners and stakeholders (e.g. NGOs/private sector/civil society)
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Annex 1. Project Costs and Financing
(a) Project Cost by Component (in USD Million equivalent)1
Components Appraisal Estimate
(USD millions)
Actual/Latest Estimate (USD
millions)
Percentage of Appraisal
CADASTRE SYSTEM DEVELOPMENT
5.11 9.83 192.37
PROPERTY REGISTRATION SYSTEM DEVELOPMENT
5.76 10.41 180.73
CADASTRE AND PROPERTY REGISTRATION OPERATIONS
21.96 25.96 118.21
PROJECT MANAGEMENT AND DEVELOPMENT OF A POLICY AND LEGAL FRAMEWORK
Borrower 7.07 10.36 146.53 International Bank for Reconstruction and Development
30.00 37.10 123.67
The Netherlands Grant 2.00 n/a
1 Subtotal in Euros converted to USD using weighted average historical exchange rate of €1=USD$1.3137.
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Annex 2. Outputs by Component The Project Development Objective was not revised during restructuring. During restructuring, however, some output intermediary outcome indicators were revised to reflect reduced project scope.
PAD Target Outputs by Component Key Performance Indicators (from PAD)
Agreed Performance Monitoring Indicators after restructuring
A. Cadastre System Development: Design and implement a unified cadastre system nationwide in regional offices, including restituted farm and forestry real properties and urban properties; national cadastre information system network established; business plan approach followed by the Cadastre Agency.
Output Indicators: 14 regional offices up-graded by December 31, 2003, and the remaining 14 by December 31, 2004, with affordable technical standards development and regulations, staff training, equipment upgrading, office up-grading, private sector re-training, information system development and implementation, and able to handle customer transactions. Operations undertaken to update the cadastre in 30% of the country. Grievance procedures are drafted into legislation and passed. Quality assurance guidelines are drafted and placed into regulations. Performance standards are drafted into regulations.
14 regional offices up-graded by December 31, 2002, and the remaining 14 by December 31, 2007, with affordable technical standards development and regulations, staff training, equipment upgrading, private sector re-training, information system development and implementation, and able to handle customer transactions. Operations undertaken to create an approved cadastre map for 3 mln properties in regional centers with an active land market covering approximately 20% of the country. Grievance procedures are drafted into legislation and passed. Quality assurance guidelines are drafted and placed into regulations. Performance standards are drafted into regulations.
B. Real Property System Development: Upgrade the registration system in the selected areas to undertake both demand driven and allow systematic first time registration; develop a structural unit to manage real property registration in the MOJ, run along business principles.
IT systems introduced. Business plan introduced in the new unit. Human resource plan introduced. Quality assurance guidelines adopted and applied by the property registration office in the courts. Performance standards adopted and applied by the district courts. Percent increase in the number of requests for deeds per quarter. Number of requests for deeds broken down by gender and ethnicity.
IT systems introduced. Business plan introduced in the new unit. Human resource plan introduced. Quality assurance guidelines adopted and applied by the Registration Agency. Performance standards adopted and applied by the Registration Agency. Percent increase in the number of requests for entries per quarter. Investigations made to ensure equality of recordation of rights regardless of gender and ethnicity.
C. Cadastre and Real Property Registration Operations: Establish an improved geodetic control network; carry out systematic cadastre survey and mapping plus adjudication and registration in the cadastre system; create preliminary lots in the district court system and link them to the cadastre system; design and
480 control stations established and surveyed. 7700 square km of cadastre maps updated, surveyed, and digitized. 2.0 million real parcel objects formed into preliminary lots in the court registry
Geodetic control network established. 7700 square km of cadastre maps updated, surveyed, and digitized. 28 cadastre and 112 court offices connected in a unified information system, and staff trained in its use.
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PAD Target Outputs by Component Key Performance Indicators (from PAD)
Agreed Performance Monitoring Indicators after restructuring
implement joint information technology cadastre and registration information systems.
offices. 28 cadastre and 112 court offices connected in a unified information system, and staff trained in its use.
D. Project Management and Development of a Policy and Legal Framework: Set up a Project Implementation Unit (PIU) within the CA; complete legal framework for the cadastre and property registration systems; carry out a land market study; development and implementation of an information technology and information management strategy for service provision linking MRDPW, MOJ, MAF, MOF, municipalities, and other; establish training programs for cadastre and real property registration staff and others; conduct public awareness campaigns; provide legal advice to the most disadvantaged citizen on a regular basis in the municipalities and in the registry offices in selected district courts.
PIU set up and functioning efficiently, with PIU staff trained. Amendments to the mortgage law submitted to Parliament. All regional cadastre offices staff trained. All district courts registration staff trained. Judge workshops held on the new Law. Increased land holders knowledge of cadastre and property registration systems and their rights and duties. Increased knowledge of the systems by notaries and other support professionals. Legal advisory extension service established in selected locations, first on a limited basis, then extended into other project areas. Number of disputes resolved by the legal advisory extension service per quarter. Percent of users satisfied with the legal advisory extension service.
PIU set up and functioning efficiently, with PIU staff trained. Reviews of mortgage legislation completed and action taken to ensure the necessary steps are proposed to the responsible authorities. All regional cadastre offices staff trained. All district courts registration staff trained. Judge workshops held on the new Law. Increased land holders knowledge of cadastre and property registration systems and their rights and duties. Increased knowledge of the systems by notaries and other support professionals. Legal and procedural advice supplied at selected cadastre and registration offices.
Revised indicators are given in Italics in the third column above. The reasons for the revisions made during the project restructuring are as follows: Revised indicator: “14 regional offices upgraded by December 31, 2002, and the remaining 14 by December 31, 2007, with affordable technical standards development and regulations, staff training, equipment upgrading, private sector re-training, information system development and implementation, and able to handle customer transactions.” Reason for revision: The dates in this indicator were revised to reflect the quicker upgrade of 14 offices by December 31, 2002 instead of December 31, 2003 and the more realistic plan for the upgrade of the remaining 14 offices. Revised indicator: Operations undertaken to create an approved cadastre map for 3 mln properties in regional centers with an active land market covering approximately 20% of the country Reason for revision: The reasons for this revision are given in detail in Section 1.3. By 2006, the Bank team essentially accepted that the two agencies would not mount joint systematic survey operations, and instead changed certain indicators which assumed a common approach. Thus
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"operations undertaken to up-date the cadastre in 30% of the country," "carry out systematic cadastre survey and mapping plus adjudication and registration in the cadastre system," and "2.0 million real parcel objects formed into preliminary lots in the court registry offices," were together replaced with "operations undertaken to create an approved cadastre map for 3 million properties in regional centers with an active land market covering approximately 20% of the country." This revised objective/indicator, embodied in the countersigned amendment package of May 12, 2006, was actually far surpassed, with over 4.5 million properties included in approved cadastre maps by Project closure on March 1, 2009. The relinquishment of the approach of systematic registration means that the two agencies and their databases are brought together through "sporadic registration," the approach based on handling of actual transactions, the preferred method in dozens of countries worldwide. Meanwhile the quality of legal ownership data collected during the cadastre surveys seems to have been high: it was reported in November 2006 that of the nearly 3 million properties then contained in the approved cadastre maps, only 400 complaints had been received for hearings by review commissions, i.e. about one complaint per 7,500 cases. The above-mentioned changes were proposed by the Cadastre Agency and Registration Agency and agreed after discussions with the Bank team which increased project ownership. Revised indicator: Quality assurance guidelines adopted and applied by the Registration Agency. Reason for revision: The mention of the “Registration Agency” was introduced in this indicator instead of “property registration office in the courts” to take into account the establishment of the Registration Agency. Revised indicator: Performance standards adopted and applied by the Registration Agency. Reason for revision: The mention of the “Registration Agency” was introduced in this indicator instead of “district courts” to take into account the establishment of the Registration Agency. Revised indicator: Percent increase in the number of requests for entries per quarter. Reason for revision: The word “entries” is used in the revised indicator instead of the word “deed” to reflect more accurately the fact that in Bulgaria property registration is done by making “entries” in the Registration Agency which does not issue deeds. Notary deeds are issued by notaries. Revised indicator: Investigations made to ensure equality of recordation of rights regardless of gender and ethnicity. Reason for revision: During the Project restructuring GOB representatives explained that there is no discrimination in Bulgaria for property ownership by gender and ethnicity, and this is guaranteed by the Antidiscrimination Law. The original PAD indicator wording was deemed to be offensive and this is why the wording was changed. Revised indicator: Geodetic control network established. Reason for revision: The wording was changed because the GOB decided to finance the densification of the geodetic control network with its own recurrent funds. Also, more modern technology enabled the use of far fewer control stations than the 480 formerly envisaged.
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Revised indicator: Reviews of mortgage legislation completed and action taken to ensure the necessary steps are proposed to the responsible authorities. Reason for revision: The revision was made to reflect the fact that following stakeholders consultations and legislative review the Bank team and the GOB established that no new laws were necessary and that there was no impediment in legislation to the development of mortgage. Revised indicator: Legal and procedural advice supplied at selected cadastre and registration offices. Revised indicator: The wording was changed to reflect more accurately the type of advice provided on the procedures of property registration. Detailed explanations on the individual components’ achievements are found below. Component A. Cadastre System Development The “pre-project” scenario. Prior to Project effectiveness the Cadastre Agency (CA) did not exist. There was some staff located in the 28 regional offices that were officially employees of State owned enterprises that undertook surveying and mapping work for the Ministry of Regional Development. However, these were in run-down premises with no resources or equipment and just a few people. Part of this ‘structure’ and premises were taken over by the new CA. Both the main building and all regional offices have been refurbished under the Project. Previously, they were in very poor condition. Nearly all of the staff are new and have been trained under the Project. Prior to project commencement sketches that were used by Notaries for the preparation of deeds were provided by municipal services in towns and by land commissions in rural areas. The quality of work varied tremendously, but was universally inadequate, confused and extremely time consuming for the public to acquire. Apart from inefficiencies there were problems because of the existence of (a) ‘regulation plans’ that depicted how planners thought the town should develop, (b) actual occupation that occasionally was supported by descriptions in deeds and (c) the property locations that were the subject of restitution. These three descriptions of the property rarely matched and the information in property deeds very rarely matched reality on the ground. Officially deeds were supposed to show the regulation plan boundaries for properties even though these hardly ever matched reality. The situation was chaotic and disputes were frequent. Civil works and human resources. The Project funded civil works and the purchase of equipment, vehicles, furniture, software, archive furniture, etc. A thorough and comprehensive training program ensured that staff can now undertake their work with efficiency. “No project” scenario.
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In the early years the only funding that the CA had came through the Project. If there had been no Project there would probably have been no cadastre agency and the existing municipal technical services (MTS) and land commissions would have continued their work. In Sofia and Varna Cities the MTS were quite efficient and even today the MTS continues to provide cadastral services in Sofia City for by far the majority of the City. The CA took the sensible approach of providing cadastral services to other main centers before Sofia because Sofia already had a reasonably good service. They have recently commenced production of the cadastre for Sofia because all other main urban areas are completed. Improved Service Provision. The ‘before’ and ‘after’ situation for the provision of adequate services is quite spectacular. All 28 regional centers have completed cadastres (with the exception of Sofia as described above and some small areas of Plovdiv and Varna), and about 85 of the 265 municipal centers also have completed cadastres. The whole of the Black Sea Coast area and mountain resort areas have completed cadastres. The CA provides good quality cadastral services for the areas in which 80% of the non-Sofia property market occurs. The handover of responsibility from MTS and land commissions for cadastral work has been completed efficiently after some initial resistance. It would have been impossible to establish a national, web based information system providing cadastral services according to good international standards (as has been done) if the MTS and land commissions had retained a local level responsibility for providing these services. The Mid-Term Plan (MTP). The midterm plan produced prior to project appraisal by the government specified a systematic approach for completing the cadastre along geographic lines. Each of the 112 ‘court districts’ would be declared as coming under the Act and the cadastre would be developed in coordination with property lots prepared by the Ministry of Justice (MOJ) until the entire district was completed. The midterm plan covered 2000-2015. Changes of management at the CA and the MOJ resulted in non-adherence to the MTP. The new management at the CA took that view that it was more important to start with areas of high real estate market activity so that services could be provided more quickly. This was a reasonable decision, but it did make it impossible to meet the requirements of the law with regard to completing entire court districts, and coordinating the work of the creation of Lots by the MOJ was not done. The MTP was officially amended in 2007 to fit the actual situation but no corresponding amendments to the law were made. The entire national coverage of cadastre maps is expected by 2013. Business Planning.
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The Project envisaged development of a business plan covering the management of records, human resources, standards and procedures, finances (including cost recovery) and general customer services. The initial plan was completed in 2006 and has been updated annually. It is used by the CA in discussions with the Ministry of Finance during budget discussions. It is a successful project outcome. Public Private Partnerships. It was recognized during project preparation that the CA would probably need assistance in (a) the maintenance of cadastre records; (b) the checking and approval of deliveries of new cadastral maps; and (c) the maintenance of the IT system once it was developed. The CA had virtually no human resources prior to project effectiveness and government salary levels would make it difficult to hire staff with sufficient expertise for this work. Funds were allocated in Components A and C for this assistance. As time went by it has been possible to hire many good specialists, but contracts for the checking, approval and initial maintenance of the deliveries by contractors of cadastral maps in electronic form have been ongoing and successful. This work is continuing even after project completion using government funds. Legal Extension Services. Although covered under Component D, it should be mentioned that the CA have been providing legal advisory services, funded by the Project, in each of their offices. This has been a successful program in high demand and it continues using government funds after project closing. Performance Monitoring Indicators. The Project developed a comprehensive system for monitoring and evaluation during 2005 following the mid-term review. The report includes reviews of all real estate market activity as well as monitoring the progress with completion of cadastral work. The CA has found this to be very valuable and intend to continue maintaining the tables even though the Project is now closed. The CA have also included the members of the PIU in a new international relations department. The performance indicator related to the Project Development Objective for the cadastre was that the regional cadastre offices would supply cadastre maps and other information to customers within 3 days by the December 20, 2005. This was achieved and is now standard practice for sub-divisions and introduction of new cadastre data. Cadastral information (provision of an extract) for the public now generally takes only 3 hours. Faster service for urgent requests is also possible. Surveyors now have on line access and can get real time information on line, thus negating the need for a visit to the cadastre office at all. They find this an invaluable benefit. The Key performance indicators for Component A were as follows:
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Objective Performance Indicator Actual Outcome Design and implement a unified cadastre system nationwide in regional offices, including restituted farm and forestry real properties and urban properties.
14 regional offices upgraded by December 31, 2002 and remaining 14 by December 31, 2007, with affordable technical standards development and regulations, staff training, equipment upgrading, private sector retraining, information system development and implementation, and able to handle customer transactions.
Offices were renovated on time and all training successfully completed. The information system is operational and utilized by both the CA staff and the surveying professions. Customer transactions are handled efficiently and customers are satisfied. Fully accomplished.
National Cadastre information network established.
Operations undertaken to create an approved cadastre map for 3 million properties in regional centers with an active land market covering 20% of the country.
Cadastre maps and cadastre registers created for 4,563,140 properties. New cadastre maps cover over 30% of the country and these are in use by MTS, land commissions and the CA. These are considered ‘adopted’ cadastre maps. ‘Approved’ cadastre maps that have gone through the legal acceptance procedure and that are used by the CA offices only (i.e. the MTS and land commissions have ceased their role in providing sketches) cover about 17% of the country geographically, but this covers 80% of the non-Sofia real estate market activity. Half were completed using project funds and half using government funds.
Business plan approach followed by the Cadastre Agency.
Grievance procedures are drafted into legislation and passed.
The Cadastre and Property Register Act (CPRA) allows for the organization, funding, creation, administration and use of the cadastre and the property register. The business plan is developed annually and utilized.
Quality assurance guidelines are drafted and placed into regulations.
Regulation No. 19 from 12/28/01, “For Control and Approval of the Cadastral Map and the Cadastral Register” is
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the basic Act for quality assurance for cadastral data.
Performance standards are drafted into legislation.
Regulation No. 3 from 4/28/05, On the Content, Creation, and Maintenance of the Cadastral Map and the Cadastral Registers regulates the standards, procedures, and content of the cadastral data.
Summary for Component A: All requirements fully achieved and exceeded. Component B - Property Registration and System Development Systematic and sporadic registration. There are two main methods for registration of properties so that details can be recorded in the registration system:
- systematic, in which details of all the properties in a selected area are identified and investigated at one time, and the results recorded; and
- sporadic, in which details of properties are investigated and recorded on a case by case basis, generally when a transaction with the property takes place.
Both approaches are widely used throughout the world and produce the same results. In general, systematic registration is preferred because the cost per unit of property investigated and recorded (in terms of money and time) is less than for sporadic. As the cost of systematic registration is often borne by the government and sporadic registration by the land owner, systematic registration involves a significant one off investment by the government. The Registration Agency. The Registration Agency (RA) was established under the Ministry of Justice (MOJ) in 2004 and is responsible for registration of land transactions and supplying information on land ownership. Formerly, the responsibility rested with the courts. The Registration Agency has supervisory, advisory, IT and policy units at its headquarters in Sofia. The Agency is also responsible for the company register and the statistical register, and has 80 HQ staff. The centralized data base on property information is housed at the headquarters. There have been six directors of the Agency, with one director holding office for only one month. The current director was appointed in late 2008, was deputy director for 2 years prior, and was closely involved in operations, particularly the establishment of the computerized company register in 2007.
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There are 113 local offices responsible for registration of land transactions, with 297 staff. The location of the offices corresponds to the court districts, with each office serving a local community. When the RA was created in 2004, many of the local offices were relocated to premises outside the court houses. In 2008, the RA earned 70 million BGN in revenue from the property register. The funds go to the state budget, and an allocation is made to the Agency for its expenses. The state budget allocation for the Agency in 2008 was 10 million BGN. The RA is entitled to retain 25% of its earnings, but has not done so to date. Following recent negotiations with the Ministry of Finance, the RA is expected to be able to retain its share of income from 2009 onwards. On this basis, a building to house the Agency’s headquarters and the Sofia registration office has been identified and is to be purchased and refurbished by May 2009 using retained earnings. The Agency’s service standards are very high – all transactions are registered on the same day that they are lodged, and ownership reports are generally provided immediately. In both cases, the RA is meeting international best practice. This is a significant achievement given that elsewhere in the region, registration of a transaction can take over 100 days, as in Croatia, and people often wait half a day or more to receive ownership reports. As a result of such performance, the local offices have no real backlog of cases. Public access to the Agency’s information. The new IT system has allowed internet access to the Agency’s data. This is a major achievement, particularly in comparison to other countries in the region, and it will greatly reduce the cost (in terms of time and money) of obtaining property information. The information is now delivered to the public through the One Stop Shop (OSS) facility, which is a module of the new IT system. The OSS gives access to the RA and the Cadastre Agency’s data, ensuring that both legal information (ownership, mortgages, leases) and cadastral (property measurements) are easily and rapidly available. Users must be registered and there is a small fee for each enquiry. There are currently 5,000 registered users (who are mostly professionals), but the OSS facility is relatively new and the number of users can be expected to expand significantly over the next year. The service is available 24 hours a day, seven days a week. The most common users at this early stage are lawyers, private bailiffs, real estate agents, surveyors, bankers, and notaries. Sale process. All property sales go through notaries. The owner must provide various documents to the notary to begin the process, including the deed by which he or she acquired the property, a property identification sketch, tax assessment and perhaps other documents, depending on the circumstances (inheritance document, marriage certificate, declarations). Each of these documents is issued by a different agency and takes varying periods to produce.
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The notary checks the ownership on behalf of the clients, prepares the transfer deed, witnesses the signing of the deed, and then organizes the registration of the deed. Notaries charge 0.3% of the value of the sale for their services. The notaries also collect the state tax, which is 2% of the value. Performance Monitoring Indicators. The Key performance indicators for Component B were as follows: Objective Performance
Indicator Actual Outcome
Upgrade the registration system in selected areas to undertake demand driven registration
IT system introduced
The registration system has been “upgraded” in all 112 local offices throughout the country, and demand driven registration is undertaken. The new registration system is an improvement over the four systems that previously existed because it has greater security, is parcel based, uses a centralized data base, and is standard throughout the country. There are many other benefits to the new system as well, such as the document scanning module, tracking facilities, reporting options, and management tools. The new system also facilitates internet access to the data. By the end of January 2009, records for over 660,000 properties had been entered in the new system on a sporadic basis.
Percent increase in the number of requests for entries per quarter
Statistics on the number of deeds lodged for registration each quarter show that there has been a slight increase in the number of deeds lodged for registration between 2005 and 2008: 2005: 735,397 2006: 802,402 2007: 1,029,828 2008: 769,777 Increase: 34,380 from 2005-2008 = 4.46%
Investigations made to ensure equality of recordation of rights regardless of gender and
Statistics on deeds lodged by gender and ethnicity were not produced due to restrictions in the anti-discrimination legislation. Further, no specific investigations have been made to ensure
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ethnicity
equality of recordation of rights regardless of gender and ethnicity. The RA routinely states that there is no discrimination in Bulgaria, and in fact, such discrimination is illegal under the Anti-Discrimination Protection Act.
Develop a structural unit to manage real property registration in the MOJ, run along business principles
Business plan introduced in the new unit
A Property Registration Control and Management unit within the MOJ was established in October 2002. The RA was established in August 2004, under the MOJ. The business plan was drafted in 2006, and a revised version was made in 2007.
QA guidelines adopted and applied by the Registration Agency
QA guidelines do not appear to have been produced as a specific document. It is unclear what is meant in the PAD by “QA guidelines”. Assuming that the expression refers to a standardized, clear set of procedures, then the new IT system and associated training could qualify as a QA mechanism.
Human resources plan introduced
The human resources plan is incorporated within the business plan.
Summary for Component B: All requirements fully achieved and exceeded. Component C – Cadastre and Property Registration Operations. Component C covered the surveying, digitizing and cadastre map production required to establish the cadastre. It also covered the creation of preliminary Lots for establishment of the registers required under the law leading to the registration in the cadastre and legal registration system of 2 million rural land parcels and 600,000 urban and settlement properties. However, the Project did not manage to establish any preliminary Lots by the mid-term review and this activity was dropped during project restructuring. The outputs were also modified to include more properties (3 million). Geodetic network. Prior to project commencement there were four geodetic reference frameworks in use in Bulgaria and the Project planned to unify these into one national system. This work was completed within the first two years of the Project using government funds only and the project funds for this activity were re-allocated. Survey work and adjudication.
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The bulk of the work under Component C concerned the creation of cadastre maps and registers. The work was done in two ways that became known as the C6 and C7 contracts. The C6 contracts were tendered with requirements to prepare digital cadastre maps in the national geodetic framework for large areas. The work involved the conversion of existing information held from various sources (including MTS and land commissions) and the creation of one composite cadastre map and cadastre registers. The results were analyzed for accuracy and conformance with reality on the ground. If an area within the map was considered to be 50% or more inaccurate the area concerned would need to be resurveyed completely. If the errors were less than 20% the area could be accepted and the cadastre map adopted. If anything in between the maps could be utilized but would not be officially approved until corrections were made. This was a very pragmatic approach that has enabled over one third of the country to be covered with a usable cadastre. As 40% of the rest of the country is mountainous or encompassing large State reserves this leaves only a small part of the country to be completed. The remaining areas do not have major property market activity (except Sofia, as explained under Component A, above). In the Project documentation the data verification, cleaning and conversion of land commission records were planned to be completed in a separate contract, but in fact this work was integrated within the C6 and C7 contracts. Areas that required complete resurvey were included in the C7 contracts. 9,760 square km were covered under these contracts (7,700 square km were envisaged during project preparation). Separate contracts for quality control and supervision were awarded. The contractors were based at the regional cadastre offices and provided support in the acceptance procedure and the ongoing maintenance of the digital cadastre index maps. Information System Development. Component C included the information system development component. The Integrated Information System for Cadastre and Property Registration (IISCPR) was rolled out to all 28 cadastral offices in late 2008 and to all 113 registration offices in early 2009, providing the cadastre and the registration agencies’ staff with efficient and secure tools to perform their daily operations. It is now possible to link legal data with cadastral data, using the unique property identifiers (property identification numbers). The system links property and cadastre data that were previously scattered throughout several agencies, including the land commissions under the Ministry of Agriculture, municipalities, entry courts, and the Cadastre Agency.
The new system contributes to information security, reducing the likelihood of fraud cases in real estate transactions, as data can now be verified by the interested parties and exchanged in real time. The system also contributes to transaction transparency by providing public access to information according to international best practice.
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Consequently, the time required for registering property in Bulgaria has been reduced to just one day for an average case, while property information can be obtained in a few minutes—compared to 5 days before.
Moreover, the One-Stop Shop provides online access to the property registration and cadastre information to all public institutions and ministries, professionals (such as notaries, surveyors, and real estate agencies), banks, telecommunication companies, tax authorities, and citizens, guaranteeing transparency and equal access to data. Streamlining the information-gathering process for different professions leads to saved time and money.
The IISCPR is linked with the Personal ID register and Commercial register, minimising data entry errors and streamlining data entry. The system also allows data to be uploaded from other external systems (e.g., data from the Ministry of Agriculture and Forestry, data from private surveyors). The system can then provide this aggregate data to other government institutions, as long as their IT systems are able to import data and have signed agreements on type of data to be provided, data structures, and terms and conditions.
The IISCPR system architecture is made up of two mirror data centres (one for property registration and another for cadastre), which are linked with a fiber optical connection. The system is fully centralised for property registration which guarantees that all legal data are available in real time. The system for the cadastre, on the other hand, is decentralised. The cadastre data are copied twice a day to the central database. All backups are performed online daily during off-peak hours to avoid any additional load on the servers and storage controllers during working/peak hours. Performance Monitoring Indicators. The Key performance indicators for Component C were as follows: Objective Performance
Indicator Actual Outcome
Establish an improved geodetic control network.
Geodetic control network established.
This was completed by 2003 using government funds. Since then private sector entrepreneurs have established a continuously operating reference network for the use of GPS survey equipment linked to the national geodetic network. There are now no impediments to effective survey work.
Carry out cadastre survey and mapping.
7700 square km of cadastre maps updated, surveyed and digitized.
9760 square km completed. (C7 contracts).
Design and implement joint information
28 cadastre and 112 court offices connected in a unified
Completed with some delays. The Project extensions were granted so that this activity could be completed. The end
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technology cadastre and registration information systems.
information system, and staff trained in its use.
result is an advanced system in accordance with international standards.
Summary for Component C: All requirements fully achieved and exceeded. Component D: Project Management and Development of a Policy and Legal Framework The Key performance indicators for Component D were as follows: Objective Performance
Indicator Actual Outcome
Set up a Project Implementation Unit (PIU) within the CA.
PIU set up and functioning efficiently, with PIU staff trained.
The PIU was established at commencement of project (May 1, 2001). Training was conducted for all staff of the PIU.
Complete the legal framework for the cadastre and property registration system.
Reviews of mortgage legislation completed and action taken to ensure the necessary steps are proposed to the responsible authorities.
Law on Cadastre and Property Registration was enacted in 2000. Amendments to Law were made in 2005 to, amongst other things, recognize creation of RA. A draft Mortgage Law was prepared as envisaged in the Loan Agreement. The draft Mortgage Law was not enacted. The Bank considered that the legislative arrangements were satisfactory because the current law worked well. The Condominium Law was passed.
Carry out a land market study.
The land market study was produced in September 2008.
Development and implementation of an information technology and information management strategy for service provision linking MRDP, MOJ, MAF, MOF, municipalities, and
Increased knowledge of systems by notaries and other support professionals.
The land market study of 2008 contains some evidence indicating that the KPIs were met. Overall, the study suggests that professionals and the public have an understanding of the system, as demonstrated by their answers to questions regarding the system.
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others. Establish training programs for cadastre and real property registration staff and others.
All regional office cadastre staff trained. All district courts registration staff. Trained. Workshops for judges held on the new law.
There was extensive training for staff of the RA for implementation of the new IT system. Training began in 2008, and all local office staff attended at least two sessions. Training continues during 2009. From February 2005 to February 2006, the Law and Internet Foundation provided training for the RA. This included 72 courses for 777 participants in basic computer systems and technology, and 4 courses for 57 participants on the legal aspects of the CPRA and its application. The University of Architecture, Civil Engineering and Geodesy provided five courses lasting several days each on topics ranging from property rights to modern surveying technology and software solutions in use at cadastre offices. A total of 187 participants were involved. The university has established a permanent training centre through the Project and this is to be used
for: continuing the training started under the Project; for training staff of other agencies; and for training undergraduates that intend to specialize in cadastre work. New courses are planned to cover several new issues, including legal aspects of cadastre work (including property disputes and conflicts) and further courses on the use of modern technology. The workshop for judges was held in 2002. Workshops and information sessions for notaries and other land market professionals on the new IT system began in late 2008. There is regular contact between the RA and professionals to publicize the new system.
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Conduct public awareness campaigns.
Increased land holders knowledge of cadastre and property registration systems and their rights and duties.
The public awareness campaigns were late to start. The PAC started with a sociological survey which established a very low degree of awareness of cadastre and property register issues. The PAC was carried out through a media campaign, using mainly newspapers, to highlight the advantages of the new cadastre and registration system. Meetings with users of the system and press conferences were held in Aprilzi, Lovech, Petrich and Blagoevgrad. Three seminars were conducted with journalists and experts in the field. Two brochures were published: a) one for the general public in 400,000 copies; and b) a more specialized brochure with instructions for users of the system distributed through the CA offices. According to the RA, the journalists training was very effective and led to the publishing of numerous articles on the subject. The PAC activities were considered very important by the CA and RA and future expansion plans include TV clips, films and increased work through the regional media.
Provide legal advice at cadastre and registration offices as needed.
Legal and procedural advice supplied at selected cadastre and registration offices
The CA has a lawyer in each of its 28 offices to provide free legal advice to the public. The RA has a contract with a law firm (Bratanov & Co Legal Company) to provide legal aid, which started in 2007. As almost every person making a transaction with property must use a notary, and as notaries can provide certain legal advice, many users of the RA’s system would not require legal aid.
Summary for Component D: All requirements fully achieved.
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Annex 3. Economic and Financial Analysis Summary: This Annex is organized in five distinct sections consisting of (i) analysis of project costs and benefits, (ii) analysis of the national real property market and project’s impact on this market, (iii) analysis of the Project impact on the implementing agencies’ financial capability (financial self-sufficiency analysis), (iv) impact of the Project on government revenues and costs (fiscal impact), and finally (v) analysis of the Project’s impact in attracting foreign direct investments and the share of real estate in FDI. The basic project design (PAD of 2001) contains a qualitative cost effectiveness analysis. It also provides a wide array of sectoral analyses as well as offering projections for the targets to be achieved under the Project. The PAD did not compute the standard investment efficiency parameters such as NPVs and ERRs. This Annex will do likewise, and not compute NPVs and ERRs. However, some qualitative efficiency analysis may be pertinent to investigate whether the costs involved in achieving project objectives were reasonable in comparison with both the benefits and with recognized norms (“value for money”). This will be part of the cost benefit analysis indicated above. For this Project, four of the most significant economic and market performance indicators are the number and the monetary value of property sales and residential mortgages. To a large extent, the economic, financial and fiscal impact of the Project can be assessed by examining the baseline and current data for these key indicators. On the cadastre side, the number of sketches issued and the revenue raised from this activity are significant indicators, which, in one way or another, are tied to the sales and mortgage related composite indicators mentioned above. Overall, in both instances of property sales and mortgages, the Project has helped generate impressive results. The number of property sales increased by about five fold from some 65,000 transactions (average of 1999 and 2000) to some 310,000 transactions at the end of 2008. The increase in the estimated monetary value of sales has been even higher. As for mortgages, the number of mortgages in the base year was less than 15,000 (average of 1999 and 2000), while at the end of 2008, this parameter has increased to 72,000, corresponding to another five-fold increase in mortgages. Likewise the value of outstanding mortgages has increased dramatically. Whilst not all of this positive impact can be attributed to the Project itself, beyond any reasonable doubt, some portion of this improvement is definitely associated with the outputs and achievements associated with the Project. Worthy of mention is the fact that under the Project a very good M&E system has been designed and implemented which can inform many types of analyses, including those mentioned above. However, additional data gathering for the economic and financial analysis was still needed in order to address some of the issues raised above.
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PART I: ANALYSIS OF PROJECTS COSTS AND BENEFITS Project Costs: Project costs at completion were estimated at EUR 38.22 M comprising contributions from the Bank, Bulgarian Government and the Dutch Government, which seem reasonable for a project of this length (almost 8 years), scope and for the size of the country in question (111,000 km2). The Project did not need any additional funding from the Bank. Due to project restructuring, change in registration approach, and downsizing in cadastre coverage objectives, the Bank loan was reduced in size from €33.5 M to €28.72 M in 2006. However, the actual disbursed amount is higher due to the exchange rate changes between the US$ and EURO over the course of the Project. This effort constitutes a first generation land administration and management project (LAMP) covering basic cadastre and property registration. Given the Project’s success in achieving its objectives, which will be discussed below, it is likely to be succeeded by more advanced stages in cadastral and property registration interventions, such as improved municipal land management, urban planning and infrastructure development, property taxation, real estate valuation, support to environmental management etc. This facility of easier transition to a higher level of sophistication is a benefit or package of benefits in itself. Project Costs Original total loan amount EUR 33.5 M, modified to EUR 28.72 M in March 2006 Dutch grant US$ 2 M / EUR 1.6 M Bulgarian GOVT Contribution EUR 7.9 M Total modified budget EUR 38.22 M Total funds used EUR 38.22 M Loan approval date 5 July 2001 Project completion date 1 March 2009 (initially agreed date was 1 March 2007) Implementing agencies Geodesy, Cartography and Cadastre Agency (CA)
Registry Agency (RA) Analysis of Property Transactions Costs: Reduction in property transaction costs (in terms of time, number and steps and amount of money spent) is an important goal for all first generation LAMPs, and these parameters appear among the key performance indicators for this Project. In general, acquiring property in Bulgaria has become a simple and straightforward process. Foreign non-residents can purchase a structure (apartment, a condo unit, etc.) on a plot of land but cannot acquire freehold land directly. However in 2006, the Government decided that foreigners in Bulgaria will be able to buy and inherit landed property. The new legislation will be enforced seven years following Bulgaria’s accession into the EU in 2007, and will hence become effective in 2014. The time to register documents on sales and mortgages at the entry offices has been reduced from seven days to one day. Correspondingly, the cadastre offices can issue
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sketches needed for transaction in one day. Most other data supply and confirmation steps needed by the real estate industry have been similarly accelerated at least the areas now covered by the digitized cadastre maps (see project map at the end of this ICR). The major property transaction cost at present is the typical municipal tax (generally 2%) on the value of the property. This tax is collected by the notaries who handle the legal aspects of transactions. The notary fees themselves are actually quite small (0.1% - 1.5%), with the lower end of the range prevailing at typical residences’ costs. PART II: ANALYSIS OF THE NATIONAL REAL PROPERTY MARKET Overview of Mortgage and Housing Markets in the EU2: Since Bulgaria became a member state in the EU in 2007, it would be useful to start this section by giving an overview of the mortgage and housing markets in the larger EU. Mortgage credit markets represent an important element of the economy in all EU Member States. In 2005, residential mortgage loans outstanding in the EU amounted to some EUR 5.1 trillion, representing 47% of combined EU GDP. The size of national mortgage markets, however, varies considerably ranging from EUR 1.4 trillion in the UK and EUR 1.2 trillion in Germany to EUR 1.3 billion in Slovenia. The market in Bulgaria which was only EUR 1 billion as late as 2005, grew to EUR 1.745 billion in 2006, and 2.868 billion in 2007, a truly impressive rate of growth, indicative of the boom in the housing market in the country. The global financial crisis has affected all EU countries, including the mortgage and property markets, resulting in a visible slowdown in market activity. The slowdown which characterized the housing and mortgage markets as of 2007 seemed to be the beginning of a correction process after record levels reached at the end of the extraordinarily buoyant past cycle. The same trend continued in 2008 and the beginning of 2009 with a clearly discernible worsening and shrinkage in the markets. The slowdown in the property markets was not uniform across the EU countries. Housing starts and building permits issued fell significantly in several EU countries. The fall in housing activity further sharpened in the second half of 2007. Certain Central and Eastern European countries did not show the same signs of economic depression as the rest of the EU. Bulgaria, Lithuania, Poland and Romania were the four EU countries that initially seemed to be somewhat unaffected by the regional downturn in the property markets.
2 Hypostat 2007, A Review of Europe’s Mortgage and Housing Markets, European Mortgage Federation (EMF), page 21
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Housing and Mortgage Markets in Bulgaria: Bulgarian housing and mortgage markets largely benefited from the buoyant macroeconomic environment and from the positive evolution of personal income, which offset the negative effect of mortgage rate hikes. Accession of Bulgaria into EU has also been an important motivating factor that helped elevate the county’s attraction in real estate investments, particularly for foreign investors (topic to be resumed under discussion of FDI). Construction activity recorded positive results. In 2007, the total number of building permits increased by 8.1%, reaching 18,224. It should be noted, however, that there was a small decline in permits for dwellings, while a robust increase was recorded in permits for office buildings and other construction projects. The value of outstanding residential mortgage loans in 2007 reached €2,868 million, which corresponded to a growth rate of 64.4% from 2006 levels. This was the second highest annual growth rate in outstanding mortgage debt recorded in 2007 among EU27 countries. Booming mortgage demand was also reflected in housing market developments: according to the provisional estimates released by the Bulgarian National Institute of Statistics, house prices at the country level grew by 23.2% on a year-on-year basis. This was the fourth consecutive year whereby house prices had grown by over 10%. As stated above, the mortgage market size was only EUR 1 billion in Bulgaria in 2005. However, at the end of 2008, and despite the global financial crisis, the country’s mortgage market had already quadrupled, exceeding EUR 4 billion. Despite the excellent growth performance of recent years, even when compared with other Eastern EU countries, Bulgaria’s mortgage market still remains small compared to its GDP. Without the enhanced security of property ownership and the confidence in property rights, a positive climate largely created by the Project, the real estate market would not have manifested the above described performance. How much of this performance is due to the Project is impossible to isolate, but even a very modest impact would more than suffice to justify the use of project’s investment funds in upgrading the cadastre and registration services in the country. Below are some statistics comparing Bulgaria with the rest of the EU. The figures are all as of the end of 2007. The EU and Bulgarian Real Estate Markets Compared (2007) Parameter EU 27 Bulgaria GDP growth
2.9%
6.2%
Unemployment rate 7.1% 6.9% Inflation 2.4% 7.6% % owner occupied 70.4% 96.5% Residential Mortgage loans as % GDP
50.1% 9.9%
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Residential Mortgage loans Per capita , Euro 1000
11.25 0.37
Total value of residential loans, € million 6,146,672 2,868 Annual % house price growth 7.8% 23.2% Typical mortgage rate (Euro area) 5.1% 10.4% Source: EMF, EUROSTAT, ECB, National Institute of Statistics, Bulgarian National Bank, SeeNews.com Real Estate Investment Trusts (REIT) in Bulgaria: REITS were introduced in Bulgaria in 2004 with the so called "Special Purpose Investment Companies Act". In reality, REITs are pass-through entities for corporate income tax purposes (i.e. they are not subject to corporate income tax), but are subject to numerous restrictions.
REITs account for some of the noteworthy recent developments in residential and retail property markets, where many residential units and shopping malls were constructed on the outskirts of the capital city on consolidated land from various owners in order to prepare the sites for larger scale construction. Given the significant investment requirements for REITs, their complex ownership structures and international character, REITs would hardly be possible to initiate in countries with uncertain property rights and security of tenure. Hence, this linkage between the Project’s outcome (enhanced ownership rights) and the emergence of REITs in Bulgaria should be highlighted.
Recent Market Trends in the Bulgarian Property Markets: The Bulgarian real estate market comprises of four distinct segments. These are: logistics and industrial, office and business parks, residential, and retail market (shopping centers and malls) segments. The latest market slow-down has hit worst the residential property segment, considered a safe bet until recent times. Holiday homes which have lured many foreign buyers to Bulgaria a few years ago were similarly affected. Demand for residential property has been affected mainly by the lack of financing. Potential buyers have either given up their plans to buy a new home or have been waiting for prices to fall further. Despite the real estate boom from 2005 to the end of 2007, the current year 2009 is carrying some sobering news. The National Statistics Institute (NSI) has recently reported that prices for residential real estate in Bulgaria's 28 largest cities and towns have dropped by an average 12.4% in the first quarter of 2009 on a quarterly basis. On a yearly basis, however, residential property prices decreased to a lower degree, by an average of 8.4%. The average price paid for residential properties in the areas covered by the NSI survey was BGN 1190/m2. The port city of Varna continues to benefit from the seaside real estate boom and still boasts the highest prices at an average of BGN 1982/m2. The capital city Sofia, which caters to the highest income groups in the country, ranks second, with an average price of BGN 1980 per square meter. As already mentioned above, it is the mix of global slow-down, restricted financing and fleeing investors which have caused the (hopefully temporary) shrinkage of Bulgaria's real estate market.
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Prospects: The mortgage loan market shrunk by 95% in the first two months of 2009 compared to the same period of 20083. This information comes from a research report issued by Residential Park Sofia in April 2009. Investments in the mortgage market amounted to only BGN 18 M in January and February of 2009, compared with BGN 355 M for the same period during the previous year. The report offers a pessimistic forecast until September 2009 but offers a more positive outlook for October, depending on the release of the frozen European funds and the signing of a safeguard clause with the International Monetary Fund (IMF). Hence, for all practical purposes 2009 seems like an unfortunate year for real estate activities in Bulgaria, as in much of the world. On a rather positive note, IMF4 reports that in Bulgaria the household sector is relatively less exposed, where household debt is 37 percent of GDP, only a third of which is for mortgages. Foreign currency loans from banks are only 8 percent of GDP. This makes Bulgaria somewhat less prone to the shocks originating from international markets. PART III: FINANCIAL SELF SUFFICIENCY ANALYSIS The table below has been constructed using the latest full year data for 2008. Costs presented are recurrent and do not include the investment costs (larger for the CA than for RA) of enlarging the cadastre and registry, such as the current Project’s costs). It is observed that both agencies (RA and CA) are capable of recuperating their operating costs, which is a precondition to long term financial viability. In 2008, the RA earned a total of BGN 58.70 million from property and mortgage registrations against a recurrent budget of BGN 15.71 million. In the same year, CA earned BGN 15.71 million against an operating cost of BGN 9.20 million. It is worthwhile noting that RA’s revenue is several times that of CA. All of the revenues earned are returned to the central government, while some 25% of the revenue should stay with the agency that has helped generate the revenue. For instance, the RA was allowed to purchase a headquarters building of its own last year, which corresponded to this entitlement. Both agencies are expected to turn out a positive balance, which the RA already has a very large gross margin. According to current plans, the CA is expected to become fully financially self sufficient after 2012, and will be able to recoup both investment and operating cost.
Operating Costs and Revenues of Cadastre (CA) and Registration (RA) Agencies in 2008 – Million BGN Description CA RA Total O&M Costs 9.20 15.71 24.91 Revenues 12.62 58.70 71.32 Gross Margin (revenues less O&M costs 3.42 42.99 46.41 Source: Data supplied by RA and CA, and M&E Report from the PIU. PART IV: PROJECT’S FISCAL IMPACT The fiscal impact of the Project can be assessed by studying three aspects: (a) property tax collection, (b) transfer tax collection, and (c) service fee collection by the two agencies, RA and CA. The PAD stated that the Project was expected to increase property tax collection revenues. The lack of ability to collect property tax was associated with the person-based system and obsolete keeping of entry records where there were "white spots" regarding the information on property ownership. In Bulgaria, owners of buildings or plots are obliged to pay property tax. Where a building has been built on a State or municipal plot, the value of the plot must also be included in the tax base. The tax rate is equal to 0.15% of the book value of the property. Arable land is exempt from local taxes. Although detailed information is lacking, there is some evidence that property tax collection has indeed improved. However, due to the low tax rate, improved collections of property tax do not yet seem to have had a major impact on municipal finance, where the tax is intended to be used5. The PAD predicted that there would be increases in the fees collected for information and documentation services provided as a result of the Project. Increased revenues were expected not as a result of the increase in tariff levels, as determined by the state, but mainly following the increased number of real estate transactions once the system becomes secure and effective. This prediction has largely come true. The below table shows the combined RA and CA service fee revenues, where it will be noticed that a single year’s revenue in 2007 amounting to EUR 41.32 M exceeds the entire project investment of EUR 38.22 M over 8 years. An incremental analysis could not be
5 The property tax can be paid by installments - by March 31, by June 30, by September 30 and by November 30. If the whole amount is paid by 31 March, a 5 % discount is offered. The tax is payable whether or not the property is actually used. Agricultural lands, forests and industrial buildings which are used for agricultural activities by farmers enjoy exemption. Properties restored to owners by law but in unusable condition, as well as buildings declared as uninhabitable have tax shelter for 5 years. Tax on rented properties is owed by the lessor.
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performed since information related to the baseline level of the combined RA and CA revenue was unavailable.
Fiscal Analysis - RA and CA Service Fee Revenues
Parameter or Description Unit 2005 2006 2007 2008
Total Fee Income Generated by the RA M BGN 25.02 32.47 73.38 58.70
Total Fee Income Generated by the CA M BGN 1.84 4.46 7.62 12.62
Total Income Generated by Both Agencies M BGN 26.86 36.93 81.00 71.32
Source: CPR Indicators for end of Quarter IV-2008, compiled in March 2009 The most significant fiscal impact is due to the improvement in property transaction or transfer tax collections which are not discussed in the PAD, and for which we do not have a baseline. This tax is collected at a rate of 2% of the market value of the property and is paid to the municipality in which the real property is situated. We would attempt to make a comparison of transfer tax revenue and project investment spending using a single year’s figures. The declared value of the property sales in Bulgaria was BGN 12.05 billion in 2008. Two percent of this amount yields some BGN 241 million in transfer tax revenue equivalent to some EUR 122.95 million, which is three times as large as the entire investment spending for the Project. For mortgages, the same tax rate of 2% applies on the value of the mortgages as well6, where the levy is called the stamp duty. The declared value of mortgages engaged in 2008 was BGN 23.12 billion. Computations reveal that the tax revenue (stamp duty) on mortgages in 2008 only would amount to BGN 462.4 billion (EUR 235.91 million), almost six times the Project investment spending. Hence, using the combined declared value of sales and mortgages in one year alone, we would observe that the tax revenue would be 9 times the Project investment spending using one year’s collections as a basis. Again, even a minuscule contribution by the Project would more than justify the cost of the investment in the Project. PART V: FDI IN BULGARIA AND LINKAGES TO THE PROJECT In recent years, FDI has shifted away from manufacturing towards other sectors in Bulgaria. In 2007, real estate, renting and business services accounted for over one-third of investment, with financial intermediation accounting for close to an additional third and construction accounting for about 12 percent. In 2007, some 38% of the FDI (net inflows) had to do with real estate, renting and business activities, and elevated itself to first rank in terms of ability to attract FDI into Bulgaria. Some of the recent trends in FDI are related to the construction sector boom in Bulgaria.
6 All mortgages have associated costs. For Bulgaria these costs are: Opening Fee: €50, Application Fee: €125, Valuation Fee: €125, Notary: 1%, Stamp Duty: 2%. Source: http://www.cfpworldwide.com/index.aspx?CountryCode=BG
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Indeed, the construction industry has become increasingly important in Bulgaria in recent years, reflecting the tremendous growth of FDI in the Real Estate, Renting and Business Activities. The private construction sector accounts for about 20 percent of the industrial gross value added and employs around 134,000 people or 9 percent of total employees with labor contracts. As such, it is one of the largest employers in the country. FDI inflows into the construction sector have grown substantially. In 1998, they represented only 0.5 percent of FDI inflows. By 2007, they accounted for 12 percent of inflows. FDI inflows in the Real Estate, Renting and Business Activities have grown even more spectacularly. In 2006 and 2007, they represented 28 percent (€1.7 B) and 36 percent (€2.2 B) of total FDI. The below table pictures FDI as a stock value, and establishes its links with the current account deficit, FDI stock as a percent of GDP, share of real estate and related sectors in the FDI stock and finally computes the rank of real estate in the FDI stock. Without elaborate analysis, it is observed that real estate has become the number one sector in its capacity to attract FDI.
FDI as a Percent of GDP 6% 10% 14% 14% 24% 29% Share of Real Estate in Total FDI Stock 7% 9% 7% 10% 16% 20%
Rank of Real Estate in FDI Stock 5th 5th 5th 5th 2nd 1st
Source: Bulgarian National Bank Without the security of the tenure and enhanced property rights, it would be next to impossible to have a 25 fold increase in Bulgaria’s FDI stock from 2000 to 2007. FDI is the type of investment that will remain in Bulgaria and not leave on short notice. Despite recent negative trends, the FDI inflows are still expected to grow as of the last quarter of the current year. The Project’s contribution to attracting FDI, by creating an orderly and integrated registration and cadastre system, will again be more than sufficient to justify the use of the Project investment funds.
Table 1: Analysis of Mortgage Markets in Bulgaria
Description Units 2005 2006 2007 2008
Mortgage registration fees earned by the State thru RA
M BGN 12.50 21.56 32.07 30.26
Declared value of mortgages registered B BGN 7.73 12.24 65.29 23.12
New Mortgages (Commercial + Residential) Number of mortgages (contractual) number 62,636 68,649 83,347 72,115
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Number of mortgages (statutory) number 12,729 12,804 7,358 Total new mortgages 62,636 81,378 96,151 79,473 Average value of a mortgage loan BGN 123,388 150,461 679,000 290,886 Number of mortgages closed number 37,312 45,164 104,795 GDP B BGN 42.80 49.36 56.52 66.73 Outstanding residential mortgage loans B BGN 2.03 3.52 5.89 8.26
Ratio of Outstanding Mortgages to GDP Percent 4.74% 7.13% 10.42% 12.37%Source: CPR Indicators for end of Quarter 4-2008, compiled in March 2009
Note: Please note that in the above table the (a) declared value of mortgages and (b) outstanding residential mortgage loans are not comparable. The first item (a) is an annual figure, whist the second one (b) is a running total (with additions and deletions along the way). The scope of (a) and (b) is also different, since (a) contains a good deal of commercial credit backed by mortgaged property (i.e., they are home equity loans with a much shorter term and higher circulation).
Table 2: Analysis of Property Transactions and RA Revenues in Bulgaria
Parameter or Description Unit 2005 2006 2007 2008 Total Income Generated by the Registry Agency M BGN 25.02 32.47 73.38 62.48 Sales registration fees earned by the State thru RA M BGN 11.80 12.04 22.25 14.73 Declared value of registered sales B BGN 3.92 10.44 16.33 12.05 Mortgage registration fees earned by the State thru RA M BGN 12.50 21.56 32.07 30.26 Declared value of mortgages B BGN 7.73 12.24 65.29 23.12 Registration fees from exchanges M BGN 0.19 0.16 0.38 0.63 Declared value of exchanges registered B BGN 0.12 0.20 0.30 0.27 Fees earned form sales, mortgages and exchanges M BGN 24.49 33.76 54.70 45.61 Percent of fees from sales, mortgages, exchanges Percent 98% 104% 75% 73% Number of Sales number 234,281 311,581 325,385 309,788 Percent of fees earned from registration of sales Percent 47% 37% 30% 24%
Average value of a sale operation BGN
16,717
33,514
50,189
38,892 Source: CPR Indicators for end of Quarter 4-2008, compiled in March 2009
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Table 3: FDI stocks in Bulgaria by industry (EUR Million) 1999 2000 2001 2002 2003 2004 2005 2006 2007*
Total FDI Stock (Cumulative Inflows less Outflows) 2174 2906 3342 3927 5045 7421 11756 17526 25397 Agriculture, hunting and forestry 5 17 17 17 41 47 54 77 106 Construction 42 79 83 105 69 151 339 858 1652 Education 0 0 1 1 0 0 0 0 0 Electricity, gas and water supply 162 68 71 91 71 737 548 870 1065 Financial intermediation 213 531 508 662 980 1264 1891 2680 4469 Fishing 1 1 0 0 0 3 3 3 4 Health and social work 1 1 1 1 1 1 2 1 1 Hotels and restaurants 32 58 63 79 86 98 152 251 395 Manufacturing 1050 1226 1455 1484 1756 1926 3218 4188 4489 Mining and quarrying 29 25 33 28 51 65 103 114 127 Other community, social and personal service activities 9 17 23 32 45 50 66 123 194 Real estate, renting and business activities 105 207 212 271 444 556 1120 2866 5071 Transport, storage and communication 262 216 265 470 571 1217 2422 2801 4445 Wholesale and retail trade 216 433 582 636 866 1290 1832 2656 3328 Non-classified 46 29 28 50 64 15 7 37 50 FDI Inflows 980 1851 2736 3152 6158 8488 FDI/ CA deficit (%) 243 190 209 117 132 117 FDI as a Percent of GDP 6% 10% 14% 14% 24% 29% Share of Real Estate in Total FDI Stock 7% 9% 7% 10% 16% 20% Rank of Real Estate in FDI Stock 6th 4th 5th 5th 5th 5th 5th 2nd 1st Source: Bulgarian National Bank
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Annex 4. Bank Lending and Implementation Support/Supervision Processes
(a) Task Team members
Names Title Unit Responsibility/
Specialty Lending Lynn Holstein Land Administration Specialist Task Team Leader
Milena Messori Deputy Task Team Leader Deputy Task Team Leader
Thomas O’Brien Project Adviser and Reviewer Frank Byamugisha Peer Reviewer Frederic de Dinechin Peer Reviewer Edward Cook Peer Reviewer Jennifer Ngaine Team Assistant Administrative
Gavin Adlington Land Registration and Administration Specialist
Land registration
Peter Creuzer Cadastre Specialist Cadastre
Dariusz Bogacki Information Technology Specialist Information technology
Paul Munro-Faure Urban Land Policy and Valuation Specialist
Urban land policy
Jaap Zevenbergen Real Property Lawyer Legal Tony Lamb Registration Lawyer Legal Renee Giovarelli Social Specialist Social Assessment
Vladimir Evtimov Surveyor, Valuer, Project Coordinator
Surveying
Supervision/ICR
Lynn C. Holstein Consultant ECSSDTask Team Leader (2001-05)
Anna Georgieva Task Team Leader ECSSDTask Team Leader (2005-09)
Gavin Adlington Land Administration Specialist ECSSDTechnical and Policy aspects
Ireneusz M. Smolewski Senior Procurement Specialist ECSPS Procurement Victoria Stanley Senior Operations Officer ECSSD Quality control Tony Lamb Consultant Registration lawyer
Rumyana Tontchovska Consultant Information technology
Suha Satana Consultant Financial analysis Joseph Goldberg Consultant ICR Alexandra Montealegre Junior Professional Associate ECSSD ICR Adelina Dotzinska Program Assistant ECCU5/7 Administrative
(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)
A series of surveys were conducted in July, August, and September 2008, of clients of the project agencies (including in many regional offices throughout the country), staff, media, and the public, related to agency performance at that time. The resulting report is entitled "Land and Real Estate Market: Customer Satisfaction and Problems Related to the Activity of the Cadastre Agency and the Registry Agency." It should be emphasized that the Project was not completed and, in particular the IT system linking the two agencies and both of them to the public, had not been rolled out. Indeed, one of the main registered complaints was lack of such a coordination system. Several other areas of complaint have been addressed since publication to improve offices and their processes, which was the main purpose of the surveys.
First, to put findings in perspective, it should be noted that 73% of CA clients and 70% of RA clients were satisfied with their service, much higher in villages, much lower in district towns. This may of course be linked to less crushing volume of business, personal relations between clients and agency staff, and other advantages of small town life. The main complaint was lack of efficient customer handling in offices, leading to the need to stand in multiple lines for long times. Part of this inefficiency consisted of insufficient prior warnings of documents needed and fees to be paid - each of which often required waiting in lines to discover. Physically, and related to this lack of client orientation, customers wanted information desks, near the front of each office and benches to sit on if waiting is necessary. They also wanted bank branches nearby or in the same building to facilitate their payments, and copy machines since copies are needed of many documents. Some called for some distance established between clients served and the rest of the line, to avoid complete loss of privacy regarding sensitive topics like family finances. Many of these sensible recommendations are actually now fulfilled, at least in some offices. But the main request was simply for more staff to be hired to accelerate processing and reduce queuing. It is likely the RA and CA managers would agree.
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Annex 6. Stakeholder Workshop Report and Results
Persistence pays off
How the Bulgaria Registration and Cadastre Project achieved all its objectives and demonstrated tangible results
The Bulgaria Registration and Cadastre Project was approved by the Board in 2001 and in the first years met with considerable difficulties resulting in delays and strained relationships. In 2005 implementation was rated “unsatisfactory” and the project was threatened with suspension. However after restructuring and extension, performance improved radically. In the last 3 years all project activities were successfully implemented and all targets reached. In 2008 the project was awarded in the ECA Improving Peoples’ Lives Competition for results achieved. At the closing workshop on March 19, 2009 Government counterparts and Bank staff took pride in the fact that Bulgaria is now among the few countries in ECA with nation-wide on-line access to cadastre maps and registry information. What are the factors behind this turnaround? According to Anna Georgieva, the TTL of the project, the most challenging part of the project, and the most important investment, was connected with institutions and people. This involved not only the challenge of establishing a new Cadastre Agency, and later a Registration Agency, but also coordinating with the numerous institutions involved in the cadastre and registration system. “What we brought to the project”, Georgieva said, “was not only funding but also knowledge and best practice, together with our strong desire to really help the country in this important sector. Good client relations are key for the project’s success”. The project financed with EURO 28.7 mln by the World Bank, a USD 2 mln grant by the Netherlands Government and USD 7 mln government, aimed to improve the coverage, accuracy and responsiveness of the cadastre and property registration system. The project achieved all its targets reducing transaction times for real estate, covering active land market areas with a cadastre map, and helping build efficient public institutions. Turnaround times for registering a real estate transaction are reduced from seven days to one day, and the time for providing information to just minutes. This is important for Bulgaria which has one of the highest property ownership rates in the world currently at 94%. Nearly 5 mln properties in active land market areas have been covered with an approved cadastre map, against an initial target of 3 mln, and over 40% of the territory covered with digitized maps. Now customers no longer have to wait for sketches to be drawn by hand but can receive a print out in minutes. The reliability of data has increased thanks to the passage from the person-based to the property-based system. All the 28 offices of the Cadastre Agency and 113 offices of the Registration Agency have been renovated and equipped helping them provide efficient customer service. The development and introduction of the joint IT system was the final and most remarkable achievement of the project. The system saves customers days of waiting and provides
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quicker and easier access to data thanks to modern technology and improvement of document flow.
The system unifies the data on property and cadastre that were previously scattered in several agencies: land commissions under the Ministry of Agriculture, municipalities, entry courts and the Cadastre Agency. Now all data are unified in a joint IT system and can be accessed by all public institutions and ministries, professionals such as notaries and surveyors, banks, telecommunication companies, tax authorities, citizens. The institutions involved now both provide and use data in real time. The system is fully functional in the 28 regional offices of the Cadastre Agency and the 113 offices of the Registration Agency since February 2009. This is a centralized nation-wide system developed in a short time, and one of the most modern and efficient in Europe.
The IT system also contributes to information security and helps prevent cases of fraud as data can now be verified by the interested parties and exchanged in real time. The system also contributes to transparency of the transactions by providing public access to information in line with best international practice. At the same time personal property data of citizens are protected by different levels of access for different users. Customers no longer have to go to different agencies but can just use the internet to retrieve cadastre and registration data. The advantages of the joint IT system were well-acknowledged not only by media, but also by professionals and government officials. According to Daniela Miteva, Director of the Registration Agency the project’s biggest achievement is the increased transparency and public access to information. “The system helps improve the internal and external control, and does not allow tampering with data. It has gained in one month more than 5,000 users and will allow further increase in services for a better investment climate”, Miteva said at the closing workshop. According to Tsveten Boev, Director of Cadastre Agency, project implementation was “difficult, but important and rewarding”. He also emphasized that the project set an “ambitious task for reforms” and created the basis for further modernizing the property and cadastre system in the country. “What we learned in the implementation will not be lost or forgotten, we will continue working” Boev assured. According to Gavin Adlington, ECA Land Program Leader, the project compares favorably to the 21 similar land administration projects that the Bank has helped support in ECA. “The project was about to be cancelled in 2004, was restructured in 2005 and in 2009 can be used as a best practice example”, Adlington said. “Many of the achievements happened in the last 3 years, including the on-line access to information. The future is to link this information with municipalities and other users, to help improve planning systems, use of public property, information and support to investors, transport systems, utilities, social services”. The ambassador of the Netherlands H.E. Willem Van Ee emphasized that the Dutch grant was a real demonstration of existing European Union solidarity. The Netherlands have supported Bulgaria in this sector since 1995 with pilot projects and are continuing to do so with a new project for improved customer service. The Dutch grant financed
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innovative activities for this sector in Bulgaria including a land consolidation pilot, business plans, monitoring and evaluation and many other “soft measures”. “We are happy to have supported Bulgaria in the implementation of this important project “, said Florian Fichtl, the World Bank Country Manager for Bulgaria at the closing workshop. He emphasized: “Modern and efficient registration and cadastre systems contribute to increased investments, economic growth and better living standards. In the past few years economic growth in Bulgaria surpassed that in the EU average on an annual basis, largely thanks to the growth of property markets. In the present times of global financial crisis the registration and cadastre system remains important - providing conditions for better use of EU grant funding and a better life for citizens”.
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Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR
REPUBLIC OF BULGARIA
CADASTRE AND PROPERTY REGISTRATION PROJECT
Loan No. 46190- BUL
BORROWER’S PROJECT COMPLETION
REPORT
The Geodesy, Cartography and Cadastre Agency and the Registry Agency are proud to report that the Project objectives as well as planned results have been fully accomplished, and within the budget. Bulgaria has now in place legislation, institutions and registration systems needed for servicing a secure and efficient land market and for European integration.
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Table of Content
Basic Information ......................................................................................................... 58 In short .......................................................................................................................... 58 Project background ....................................................................................................... 59 Project objectives and key indicators ............................................................................ 61 Benefits and beneficiaries ............................................................................................. 63 Project components and results ..................................................................................... 65 Project organisation ...................................................................................................... 66 Project implementation ................................................................................................. 67 Accounting and audits .................................................................................................. 67
Basic Information Project name: Cadastre and property registration project Loan
4619-BUL Original total loan amount: 33,5 mill EUR, revised to 28.72 in March 2006 Dutch grant: 2 mill USD / 1,6 mill EUR Bulgarian state subsidy: 7,9 mill EUR Total revised budget: 38,22 mill EUR Total funds used: 38,22 mill EUR Loan approval date: 5 July 2001 Project completion date: 1 March 2009
(originally agreed 1 March 2007) Implementing agencies Geodesy, Cartography and Cadastre Agency
Registry Agency
In short During the early 1990’s private real property rights and liberalized land markets were restored in Bulgaria. The farmland restitution produced nearly 8,3 million individual plots belonging to about 1,9 million former owners. However, both in urban and rural territories the registration system supporting the real estate market was impaired by poor quality of records and fragmented land information services, resulting time consuming transactions and numerous court cases. In 2001 the Registration and Cadastre Project was started to improve data coverage and accuracy and related services to users. The Project was funded by a loan from the World Bank of 27,8 million €, a grant from the Dutch Government of 1,6 million € and a contribution from the Bulgarian State budget of 7,9 million €. The implementing agencies, the Geodesy, Cartography and Cadastre Agency and the Registry Agency respectively, have been supplied with client – friendly offices, modern equipment an a new Information System. An up-to-data cadastral map has been produced for 4,3 million properties. 8 million pages of notary deeds have been scanned to digital form. As a result the state has established the fundamental infrastructure of laws, offices and information systems to efficiently service the fast growing real estate market in Bulgaria. Registration
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times for real estate transactions and mortgages and for cadastre map services were reduced from seven days to one day. The implementing agencies are proud to report that the projects objectives have been fully accomplished, and with no overruns to the agreed budget. In 2008 the Project was recognised by the headquarters of the World Bank for achieving outstanding results.
Project Background During the socialist period in Bulgaria, lasting from end of World War II till 1989, agricultural land was generally collectivised. In urban areas private ownership continues all through the socialist period except for larger buildings, which were confiscated or expropriated by the State. During the socialist period large numbers of blocks of flats were built by municipalities, public institutions or state companies, where individuals, families and employees of the respective organisations were offered apartments at low rents. Shortly after the collapse of the communist government in 1989, Bulgaria launched extensive land reforms. The restitution of private ownership to farmland was practically
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completed in year 2000 producing nearly 8,3 million individual plots belonging to approximately 1,9 million farmers. The forest restitution, completed in 2001 resulted in about 0,2 million plots. In urban areas tenants were offered to buy their flats at affordable prices, however related land generally stayed in municipal ownership. Bulgaria received significant assistance from the European Union to the restitution, inter alia, to the planning and setting out of new farmland boundaries, and by funding the establishment of related computerised registers of owners and digital parcel maps. In general each municipality would have a Land Commissions (LC’s) belonging to the Ministry of Agriculture, being responsible for maintaining registers and maps of farmland and forest. Cadastres for urban territories continued to be maintained by municipal administrations establishing municipal technical offices (MTS’s). All through the communist era local courts continued the person based deed registration system supporting private transactions in real estate, however not all transactions were registered. Also with the help of the EU, computerised systems were installed at the entry offices belonging to the local courts in the 1990’s for registering names of owners and other key information extracted from the notary deeds, however without having access to uniform property identifiers and thus continuing the person based registration system. It should be noted that Bulgaria continues to have a deeds based registration system meaning that the legally valid information are contained in the notary deeds. A large number of private surveying companies were established for the restitution. Licensing of surveyors was introduced with the new Cadastre and Property Registration Act in year 2000. Notaries were privatized in 1998. A new Geodesy, Cartography and Cadastre Agency was established in year 2000, and simultaneously the new Law of Cadastre and Property Register was enforced. Hence, by the time Bulgaria approached the Bank in 2001 for assistance to improving their land administration the situation can be summed up as follows:
285 Municipal Technical Offices maintaining registers and maps of urban properties, as well as issuing certificates needed for all types of transactions. Maps were of various quality, often out of date and available in digital form only for 10 % of the urban territories
A corresponding number of Land Commissions maintaining computerized registers and digital maps of agricultural properties and issuing related certificates
112 local courts operating a person based deed registration system with growing paper archives, however supported by a computerized system for key data extracted form deeds
A newly established Geodesy, Cartography and Cadastre Agency with headquarters in Sofia and regional offices in the 28 county capitals, largely understaffed, in poor facilities and without adequate equipments.
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Inadequate clarity of ownership, outdated registers and maps in urban areas, mismatch of boundaries in the contact zone between in urban and rural territories
A piling stock of paper documents at the court entry offices and lack of appropriate information system for extracted data
No use of common property identifiers making it very difficult to link cadastral information to information and documents at the entry offices
People having to contact different institutions to have certificates needed for making transactions issued, resulting in high transactions costs, lack of adequate land information for public and private users, and a growing number of land disputes
Project Objectives and Key Indicators The overall Project Development Objective agreed with the Wold Bank was to: Improve the coverage, completeness, accuracy and responsiveness of the cadastre and real property registration systems to enhance the security of ownership and thus support investments in housing, agriculture, commerce, manufacturing and services as well as facilitating an efficient real property market. By the end of the Project, entry offices should be able to register sales and mortgages in 1 day and to supply information from the registration system within 3 hours. Correspondingly the regional cadastre offices should be able to issue sketches within 3 days. Largely these performance targets are met throughout the country for entry offices and for the cadastre offices in areas where an approved cadastral map has been made, the latter for more than 4 million properties covering about 80 % of the active land market in Bulgaria. This has been achieved by creating new digital cadastral maps and registers, by renovating all offices and delivery of equipment, by implementing a modern information system, by improving laws, regulations and finally by enhancing the skills of the staff in both organizations.
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The status of agreed outcome indicators as of the end of the Project is as follows:
PDO Indicators
Baseline Value Progress To Date End-of-Project Target
Value Description Date Description Date Description Date
1. Increased number of services of the Geodesy, Cartography and Cadastre Agency and Registry Agency
No services as agencies did not exist. The CA provides a total of 28 types of services of which 8 major ones are monitored. For the RA only property registration services are monitored.
12/01/2000 For the CA 564 808 number of monitored services for 2008 (almost 100% increase on an annual basis) and for the RA 769 777 monitored number of services for 2008 (there are some fluctuations, resulting from the real estate market conditions).
12/31/2008 The target of the indicator is achieved. The CA almost doubles the number of its services each year, which is due to the increase in the area of regions serviced. The RA services depend very much on the RE market situation and the Project contributes mainly to the security of services and facilitates their providing.
12/31/2008
2. Shortening of transaction times on an annual basis for the registry office and information supply from cadastre offices.
No baseline data as agencies did not exist.
12/31/2003 One day for registry offices to register sales and mortgage in case of undisputed ownership and 3 hours to supply information. 1 day express service or 3 day regular service for cadastre offices.
07/04//2007 One day for registry offices and one day for cadastre offices.
03/01/2009
Intermediate outcome indicators
1. 14 regional cadastre offices upgraded by mid-term and the remaining 14 by EOP with renovation, staff training, equipment upgrading, at least IT systems support in place
0 offices completed and equipped.
12/01/2000 28 offices completed and all equipped.
01/18/2008 28 offices completed and all equipped.
03/01/2009
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and in use. 2. Operations undertaken to create an approved cadastre map for 3 mln properties in regional centers with an active land market covering approximately 20% of the country.
No operation undertaken.
12/01/2000 4.3 mln properties covered.
12/31/2008 3 mln properties covered.
03/01/2009
Benefits and beneficiaries The target population included current and future real estate owners, private investors in agriculture, housing and industry, commercial banks and other users of land information. The accession to the European Union has further underlined the need for up-to-date registers and maps and efficient services. The Inspire directive on harmonised and integrated geographic information across national boundaries mandates, inter alia, member states to prepare cadastral maps for the entire territory. Increasing foreign investments in land and property and the opening of mortgage markets to international competition will inevitably push member states to harmonise their registration services.
Bulgaria has experienced a booming land market during the period of the Project, including significant foreign investments in residential and commercial property, including in vacation homes along the Black Sea and at winter holiday resorts.
Services rendered by both Agencies for the period 2007-2008
The Project has established capacity to efficiently service the rapidly growing market in real estate. The time to register documents on sales and mortgages at the entry offices is reduced from seven days to one day. Correspondingly the cadastre offices can issue sketches needed for transaction in one day. In areas being covered by approved cadastral maps investors have during the two last years increasingly benefited from up-to data and accurate maps. Public at large and professional agents have throughout the country benefited from enhanced reception areas, especially at the 28 regional cadastral offices which all have been upgraded to modern and well equipped offices. The Project has established a solid platform for preparing up-to-date, complete and harmonized registers and maps for the entire country before 2015 as outlined in the Long Term Programme for the two agencies. The Project has ensured that legislation, working procedures, renovated offices, equipment and a modern IT-system are in place as required for this. Not least, management and staff of the two agencies have enhanced their skills and knowledge to develop and implement a land administration infrastructure for Bulgaria in line with best practices elsewhere in Europe, and as required for European integration. Tools and methodologies are in place to link legal information at the entry offices to the cadastral data by using the same property identifiers in both registers. Once an approved map is made for a larger area or for an individual property, the property lots can be made with the same cadastral identifiers, thus facilitating automatic access to the combined information. The Unified Information System, which has been rolled out to all 28 cadastral offices and 113 entry offices in late 2008 and early 2009, has provided the staff with more efficient and secure tools to do their work. The system allows that notaries and other professionals can order, pay and receive sketches and other information through Internet in the one-stop-shop facility, which simplifies and speed up transactions. The System is as well designed that notaries and land surveyors in the future can submit their deeds and applications in electronic form through the Internet, however amendments are needed to the Law to completely transfer from paper records to electronic records only. The Information System will gradually give access to more information as digital data are produced by the Geodesy, Cartography and Cadastre Agency and at the Registry Agency. Significant amounts of data have already been loaded into the Information System as a result of the Project:
Up-to-date and approved cadastral maps and registers for about 4 million properties covering all major urban areas 7 and territories with approximately 80 % of the active land market in Bulgaria;
7 Parts of Sofia are produced and will be completed in 2009 using State funds
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8 million pages of deeds at the entry offices are scanned and indexed for automatic search and facilitating preparation of lots;
Existing structured data about owners, mortgages and servitudes in digital form at the entry offices for about 1,2 million properties has been converted to the new System and made searchable
The Information System ensures automatic transfer on a daily basis of changes made to the respective register, meaning as an example, that the cadastral register is automatically kept up-to-date with names of owners and other information recorded at the entry offices. This significantly reduces the workload to the staff and removes the possibility of making errors when entering data manually. The Information System as well consists of central databases holding data for the entire country, enhancing security and providing access to data and services across administrative boundaries. Combined with retrieval of sketches and submission of applications through Internet, this should provide enhanced competition among notaries and land surveyors respectively. Databases with national coverage are a much improved platform for preparing statistics on land prices and mortgages etc. Information available on Internet is a strong tool in detecting and preventing illegal and corrupt transactions with land and property.
Project Components and results The main project components, related performance indicators and final results are presented in the table below. Due to slow progress on some components in the beginning of the Project, the Loan amount was reduced with 4,72 million EUR in March 2006. Correspondingly some projects components and related performance indicators were removed or changed:
The systematic preparation of 2 million lots at entry offices had proven more difficult than anticipated and was cancelled. It was agreed with the Bank to concentrate on sporadic preparation of lots following transactions with individual properties
The performance indicator for preparation of approved maps were changed from covering 7700 sq km to 3 million properties
Taking notice of the changes agreed in 2006, all main Project targets have been met. Main agreed output indicators and results Agreed output indicators Result Comment
Component A: Cadastre System Development, 7,36 mill EUR Geodesy, Cartography and Cadastre Agency Headquarters and all 28 regional cadastre offices upgraded with appropriate office space, renovation, equipment and training to efficiently service users
Accomplished Geodesy, Cartography and Cadastre Agency is the owner of all premises
Development of Geodesy, Accomplished
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Cartography and Cadastre Agency Business Plan Component B: Real Property System Development, 7,88 EUR Upgraded registration system introduced at all entry offices
Accomplished Software for use until final IT system is implemented
All entry offices supported with IT equipment and office equipment for efficient operation
Accomplished
Offices renovated Accomplished Basic renovation of offices belonging to local courts
Component C: Cadastre and Real Property Registration Operations, 20,52 mill EUR Cadastral maps and registers for 3 million properties approved
Accomplished Approved maps for sq km, number of parcels, % of land: Additional areas digitized
2 million lots prepared systematically at entry offices
Cancelled
All 28 regional cadastre offices and 113 entry offices connected to a uniform and integrated IT system
Accomplished Entry offices working directly on central database Cadastre offices working on local servers, updating of central databases once per day
Component D: Project Management and Development of Policy and Legal Framework, 2,46 EUR Project Implementation Unit set up and functioning efficiently
Accomplished Very efficient PIU
Laws and regulations revised as needed for efficient cadastral and land registration operations
Accomplished Amendments to mortgage law and new Law on condominiums cancelled
Public awareness campaign undertaken
Accomplished
All regional cadastre staff trained Accomplished All entry offices staff trained Accomplished Legal assistance to disadvantaged groups
Accomplished
Monitoring and Evaluation system in place and applied
Accomplished
Land Market Study Accomplished
Project organisation The Project has been implemented by the two agencies responsible for land and property registration in Bulgaria; the Geodesy, Cartography and Cadastre Agency in charge of the Cadastral Map and adjacent registers, and the Registry Agency in charge of the Property Register. A joint Steering Committee was established to supervise the Project. The minister of regional development and public works and minister of justice as well as the respective deputy ministers gave strong support to the Project during all lifetime and especially in some crisis moments. A Project Implementation Unit of was set up at the Geodesy, Cartography and Cadastre Agency headquarter from the very beginning of the Project. With a staff of 6 experts it has efficiently supported procurement, accounting, monitoring and reporting.
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A World Bank team has on average inspected the Project every six month, providing important support for its successful completion. The Project had in additional regular external and internal audit, always with very good marks for good, transparent and efficient implementation.
Project Implementation The Project was originally planned for 6 years. During implementation it became clear that more time was needed to accomplish all tasks. Especially developing and implementing the Unified Information System proved more complicated and time consuming than anticipated. The Bank therefore agreed to prolong the project duration by 2 years, setting completion date to 1 March 2009. In 2006 it was agreed to cancel some activities, and the loan amount was reduced by 4,72 mill €. A planned establishment of 2 property million lots was dropped. The entry offices would rather concentrate on preparing lots sporadically for individual properties affected by transactions. Costs for preparation of cadastral maps had shown significantly lower than anticipated, and production targets could be accomplished without using all loan funds. Government also committed to allocate additional funds from the state budget to cadastral mapping, reducing the relevance of using borrowed money. Project activities and related disbursement of loan funds lagged for several years behind schedule, largely due to the limited capacities and experiences of the two agencies to implement the very large project. During 2007 and 2008 such problems were largely removed and the project was finally accomplished within the adjusted time limit and with results agreed with the World Bank. The very last component of the project to be completed was the full roll out of the Unified Information System to all offices of both agencies, done during period October 2008 - February 2009. The establishment of a Registry Agency in 2004, separating the Property Register and the entry offices from the daily supervision of the Ministry of Justice, significantly improved implementation capacity. A detailed system for continuous monitoring of progress and performance of agency offices was put in place and kept up-to-date. Also a land market study has been performed, showing that 70 % of users are very satisfied or satisfied with the services provided by cadastre offices and entry offices. It is expected that the rate of satisfaction will increase as the staff are becoming more acquainted with the new Information System and adjacent working procedures.
Accounting and audits The Project Implementation Unit has conducted accounting according to international standards and to the full satisfaction of the World Bank. The project has furthermore been subject to annual auditing by the state auditors and independent auditing company, as the accounts have been approved with “unqualified” opinion, showing full compliance to the requirements.
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Acknowledgments The Geodesy, Cartography and Cadastre Agency and the Registry Agency extend their thanks to the staff of the World Bank for excellent assistance and co-operation throughout the project. They also extend their gratefulness to the Government of the Netherlands for the provision of the grant of 1,6 million € which particularly has facilitated improvements to laws and regulations. Finally a large number of domestic and foreign companies and individual experts should be recognized for having provided invaluable support to the successful completion of the project.
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Translation of Comments on Draft ICR
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Mr. Florian Fichtl Country Manager World Bank
Re:Cadastre and Property Registration Project (IBRD 46190 and TF 50265) - Implementation Completion Report Dear Mr. Fichtl, Regarding your letter from 17 August 2009 to the Minister of Finance – Mr. Simeon Djankov, copied to Geodesy, Cartography and Cadastre Agency, concerning the above mentioned report, I would like to express the standpoint of GCCA. Concerning submitted ratings of project implementation in Data Sheet C (Ratings Summary), we consider that there is an inconsistency in the ratings given that needs to be rectified. We fully accept the fact that the project outcomes are rated as satisfactory. This is backed up by the achieved PDO and intermediate objectives (shown in Data Sheet F), as well as achieved outputs by components (shown in Annex 2). On the other side, however, the performance of the agencies realized this really difficult and for all that successful project is rated as moderately unsatisfactory, which is in obvious contradiction with the over 100 % achievement of the objectives mentioned in the report. In our opinion, if the outcomes of an activity are positive, than the rating of its implementation could not be different. The problems in the project implementation on the side of the implementing agencies are described in para. 5.2 (b) of the report. In this case, the fact that despite all mentioned problems implementing agencies made needed efforts, so that the final result is positive, is not considered. In view of the above mentioned we think that in this case the rating of the performance of implementing agencies should be at least identical to the one of project outcomes. Also, in the received with the letter draft of the report it is not reflected our remark from 11 August 2009 concerning the fact that the cadastre was following all the time of the project systematic approach for creation of the cadastral map, whereas sporadic approach removed the systematic only in the part of property register.
Sincerely, Executive director Tsveten Boev
TO
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Ms. Anna Georgieva TASK TEAM LEADER REGISTRATION AND CADASTRE PROJECT WORLD BANK, OFFICE - SOFIA
Dear Mrs Georgieva :
Subject: Report on the implementation, completion and results of Registration and Cadastre Project (IBRD-46190 TF-50265)
I would like to express my personal and of my team gratitude of the received draft report on implementation, completion and results of Project "Registration and Cadastre” and of good collaboration that we had during the project implementation. As an Executive director of GCCA (Geodesy, Cartography and Cadastre Agency), I would like to thank for the positive and objective observations and assessment of the efforts made for the successful completion of the project, which the Bank gives to GCCA in its report. We ask for your and for the Bank’s team attention of the correction of two moments in the report in order to avoid interpretations and errors: the first is in the early pages in the table in section C.2 of the report as a column of the Borrower, consider that should all be "Borrower" (not as divided Government and Agencies) as the Borrower in accordance with the Loan agreement is Bulgaria; the second is in section 1.3 and section 2.2 of the report, which commented on the systematic and sporadic approach - should be a correction or clarification that the cadastre is followed throughout a systematic approach to establishing the cadastral maps in all the time, the sporadic approach replaced the systematic one only in the Registration Agency. Thank you again for the full cooperation of staff of the Bank in the implementation of this not simple, but successfully completed project with achieved results, objectives and sustainable development, and we remain open for future joint initiatives.
Sincerely:
TSVETENBOEV EXECUTIVE DIRECTOR
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TО ANNA GEORGIEVA PROJECT TEAM LEADER INTERPRED/WORLD TRADE CENTER 36, DRAGAN TSANKOV BLVD. 1057 SOFIA, BULGARIA
REGARDING: The official position of the Registry Agency on the realization of
the project “Cadastre and Property Register”, financed through the Financial Agreement # BUL 4619, between the government of the Republic of Bulgaria and the World Bank (IBRD)
DEAR MADAME GEORGIEVA, With the present letter, answering your letter # 54-00-12/18.08.2009, I would like to express the official position of the Registry Agency regarding the realization and the finalization of the project “Cadastre and Property Register”, financed through Financial Agreement # BUL 4619. On March 5th, 2001 was signed official agreement between the government of the Republic of Bulgaria and the International bank for reconstruction and development (World Bank), # BUL 4619, for the financing of the project “Cadastre and Property Register”. The goal of the project was to improve the coverage, the entireness, the punctuality and the abilities for interaction between the systems of the Cadastre and Property Register, which should have bring-up the real estate markets. The implementation of the project started in March 2006 with the signing of the contract for the development of the Integrated Information System for Cadastre and Property Registration (IISCPR). The delay was due to the non-balanced planning of the project activities. Between 2006 and 2008 was realized the building and the testing of IISCPR. First pilot introduction of the system has been made in the Entry Offices of Balchik, Burgas, Shumen, Vratsa, Plovdiv, Pleven and Ruse. The most rigorous efforts were made in the last year of the project, when we concentrated and joined our forces with the World Bank, wherefrom we received full support and assistance, altogether, as well as in each specific case. The finalization of the project came in March 2009 with the significant help from Siemens Business Services GmbH and their subcontractor Crossroad Limited, which have committed unceasing professional help and advice to the project. The new-introduced Integrated Information System for Cadastre and Property Registration allows the entries to be made under the actual personal system as well under the real system stated by the Cadastre and Property Registration Law. The access to the IISCPR is strictly personalized so any record or other change to it, right the way individualizes the person who made it. This approach enhances the security of the entries and defends better the interests of the clients. The new IISCPR is structuring the entered data responding exactly to the law, which was not done by any previously implemented information system. This way the time for each entry is considerably minimized.
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The system is web-based, which gives fast and easy access to the entered and saved-in data for every customer. It also makes possible the use of a new application – the portal One Stop Shop which allows inquiries in the data base of the Property Register and the Cadastre through the internet for all customers 24/7/365, with the availability of e-payments for the services. The centralization of the data base allows the unification of the practices of all Entry Offices around the country and equal application of the law for every customer. The unified data base provides in any time, the whole information for the governmental institutions that need it. It also allows the central office to gather information for the activities of local offices in real time. The implementation of IISCPR enlarged the scoop of the services that are provided to the clients – like inquiry for any person, for the entire territory of the country, through any of our 113 Entry Offices. It also shortened the responding time for all the services provided – check-ups, certificates, entries and so on. The new system introduced new standards in the property rights registration – speed, transparency and easy access for the clients around the country. The modern design of the system allows unlimited addition of new applications, when and where needed, including the implementation of the digital documentation. It also provides the central office with possibility of immediate on-line control and support for all 113 local offices. One of the advantages of the centralized and web-based system is the possibility of remote interaction between all 113 Entry Offices. It means the employees from any office can make entries in any other office, which brings balance to the work load of the different offices. It also decreases the cost of managing of the system. The publicity and the transparency, introduced with IISCPR, decreased the risk of fraud. The Registry Agency estimates the realization of the project of Integrated Information System for Cadastre and Property Registration as real success, which is internationally recognized. The achievement of the implementation of the new IISCPR is the first step for the unification of all existing practices and transition to the real system of registration. We would like to thank all our colleagues, partners and governmental institutions that supported and assisted us through our efforts, with their invaluable help and advice.
YOURS, DANIELA MITEVA, EXECUTIVE DIRECTOR OF REGISTRY AGENCY
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TО ANNA GEORGIEVA PROJECT TEAM LEADER INTERPRED/WORLD TRADE CENTER 36, DRAGAN TSANKOV BLVD. 1057 SOFIA, BULGARIA
DEAR MADAME GEORGIEVA, Regarding the letter of the World Bank Sofia office, Registry Agency
entry number 99-00-1158/18.08.2009, which we received through the Ministry of finance, on matter of our consent for the publication of the report, we are glad to inform you, that we do not have any reserves and we fully agree with the publication of the actual report. Sincerely Yours, DANIELA MITEVA EXECUTIVE DIRECTOR OF
THE REGISTRY AGENCY
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Annex 8. Comments of Cofinanciers and Other Partners/Stakeholders No comments received.
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Annex 9. List of Supporting Documents “Netherland Grant for the Cadastre and Property Register Project in Republic of Bulgaria,” Report for the period February 13, 2002 - December 31, 2008, Republic of Bulgaria. “Land and Real Estate Market: Customer Satisfaction and Problems Related to the Activity of the Cadastre Agency and the Registry Agency (Analysis and Results from the Sociological Survey),” Research Agency Scala, Sofia, July-September 2008. “Cadastre and Property Registration Project, Bulgaria, Monitoring and Evaluation Activities,” Project Implementation Unit, March 21, 2009. “Business Plan for the Year 2007,” Geodesy, Cartography, and Cadastre Agency, October 2006. “Urban Property Market Study,” P. Munro-Faure and V. Etimov, Sofia, March - May 2000. “Borrower's Project Completion Report,” Cadastre and Property Registration Project, Loan No. 46190 - BUL, Republic of Bulgaria.
