Ft128 movingaz en euneighbourhood by Action Global Communications Ltd

CIVIL SOCIETY & LOCAL AUTHORITIES > AZERBAIJAN

Moving forward with housing reform Since Azerbaijan gained independence, up to 95% of the www.enpi-info.eu multi-family housing stock has been privatized. But in people’s opinion the privatization involves only the flats, and not the multi-apartment buildings. Due to lack of funding, the most buildings are now in very poor condition, still officially managed by the State, without involvement of apartment owners. But a new housing reform is under way: in December 2013, the first Condominium was created in Baku, also thanks to the support of an EU-funded project. A journalist from the EU Neighbourhood Info Centre visited it, and sends us this report. Text by Shahin Abbasov Pictures by AFP © EU/Neighbourhood INFO CENTRE

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BAKU – “Change is on its way come soon,” says Jerzy Fiszer, team leader of the EU- N A multi- storey residential building in Baku. funded project for ‘Support to Azerbaijan in reforming the housing sector’. The housing sector - on which Mr. Fiszer’s project advises the government - is among the most challenging in Azerbaijan. Despite heavy investments into infrastructure during recent decades thanks to the country’s vast oil revenues, the communal housing sector still faces significant problems. After the mass privatization of state-owned residential dwellings in the 1990s, there was significant under-investment in the maintenance of housing stock. The government’s obligation to maintain privatized dwellings ceased, and old ZhEK (Housing and communal services) systems were not replaced by new ones. Most apartment owners have not been able to afford regular maintenance of their units. The number of new residential buildings has also significantly increased in recent years. These developments require the implementation of expedient reforms EU Neighbourhood Info Centre for the re-establishment of a communal housing infrastructure and Feature no. 128 This is a series of features on organization of services in line with market requirements.

The housing system is subsidized The new Housing Code was adopted in Azerbaijan in 2009, but, according to Jerzy Fiszer, it has not been properly implemented so far. The current system is such that people do not feel they have rights and do

EU Neighbourhood Info Centre – Feature no. 128

N Local residents discuss a preliminary design of the new facade of their residential building.

Moving forward with housing reform

not participate in the maintenance of their apartment buildings. “We work as advisors on housing reform,” says Fiszer, “and the main beneficiary is the department of the Ministry of Economy and Industry. However, we are not only advising on policy issues, we also work with local executive authorities and local communities on practical implementation of the reform.” The project is pursuing a bottom-up approach: the idea is to make people feel they are the real owners of the buildings they live in. The project manager says there are currently 155 ZhEKs in Baku, which employ more than 35,000 people. Every home owner pays 0.02 manat (about 2 cents) fee per square meter of his/her apartment to ZhEK monthly. “Of course it is a tiny amount and therefore buildings are in a poor condition, even though the government subsidizes ZhEKs,” he says. The whole housing system is subsidized by the government, which pays the wages of ZhEKs employees. “But despite a large number of employees, these housing departments remain inefficient and they lack incentives to maintain the buildings,” Fiszer says.

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“People themselves should take care about their buildings: a competitive market for housing managers should be created, to compete for contracts with house owners associations. It should result in better prices and services”

Who takes care of building?

“People are concerned with the possible increase of fees for house maintenance, therefore at present the district’s executive authority deals with the repair of multi-storey buildings, paints and cleans them, repairs lifts”

A strong reform of the whole housing system is needed. “A new policy document – The Housing strategy for 2014-2025 – is already prepared and is expected to be approved soon. It will cover existing housing stock and new constructions,” says Fiszer. It will be a serious reform which will change the whole system, moving authority to maintain the residential buildings from ZhEKs to condominiums (associations of house owners) or companies contracted by condominiums. “People themselves should take care about their buildings,” says Fiszer, adding: “a competitive market for housing managers should be created, to compete for contracts with house owners associations. It should result in better prices and services. Condominiums will also be able to take loans from banks.” But there are problems. Most homeowners are not prepared to maintain their buildings by themselves. And there are no professional housing management companies in Azerbaijan. Therefore training of housing managers is needed, and there will be huge demand for such services after the reform, because there are more than 15,000 multi-family buildings in Azerbaijan. Another problem is that housing fees should be increased with the reform and people are afraid of this and reluctant to move forward. “Therefore the reform should be implemented gradually, step-by-step.”

The first pilot condominium On 30 December 2013 the first self-organized condominium in Baku was created in Binagadi region, whose population is about 400,000 people, most of which live in 400 five- nine- and sixteen-storey residential buildings. The condominium unites 3 neighbouring nine-storey residential buildings in the area called 8th micro-region. It is a pilot project implemented by the executive authority of the Binagadi district. “The EU-funded project helped us to set-up this condominium and in its operations,” says Ramiz Geyushov, head of the administrative management department of the Binagadi district’s executive authority. Thanks to the project’s proposal, a special resource centre for homeowners’ associations was created by the district Administration. It is a small office, which serves potential initiative groups in self-organization. The centre’s director Natik Ismailov says that the centre is open five days a week including weekends, and any resident of the district can visit it and ask questions, receive advice and information on housing issues. If needed, lawyers, technical engineers and other specialists are provided by the local administration.

N Team leader Jerzy Fiszer (L) and Ramiz Geyushov, head of the administrative management department of the Binagadi district’s executive authority.

EU Neighbourhood Info Centre – Feature no. 128

“In the future we will discuss the possibility of increasing fees, and we will talk to wealthy residents about additional support. But all issues will be solved by voting process”

Moving forward with housing reform

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The resource centre also has a Facebook page where people can ask questions. “Quite a lot of people come to the centre, especially during weekends,” says Ismailov. “They are mostly concerned about the upcoming reform – how it will change the system and how much it will cost to households.” “Our project staff olso spends one day a week in the resource center giving advice,” adds Jerzy Fiszer.

Study tours in Latvia and Estonia Ramiz Geyushov from Binagadi district’s executive authority says that along with the first condominium, three more will be registered soon. “Currently we distribute leaflets among residents. People are concerned with the possible increase of fees for house maintenance,” he explains, “therefore at present the district’s executive authority deals with the repair of multi-storey buildings, paints and cleans them, repairs lifts etc.” Geyushov also says that as part of the EU-funded project, studytours for the district’s executive power employees were organized to Latvia and Estonia on housing management issues. “It was very useful,” he says, “since Latvia and Estonia are more sophisticated and successful in housing reform, and Azerbaijan can effectively use their experience.” Zakir Guliyev is the chairman of the first condominium in Azerbaijan. He was elected by the majority of homeowners’ votes. According to him, fees collected from residents still do not cover expenses, therefore the local executive power provides its support to keep up entrances and repair lifts. “In the future we will discuss the possibility of increasing fees,” he says, “and we will talk to wealthy residents about additional support. But all issues will be solved by voting process.”

N A view of the facade of the apartment building which is being restored.

Support to Azerbaijan in reforming the housing sector The specific objective of the project is to assess the current scheme in the housing and communal policy field, in order to provide a milestone for further acceleration of reforms. Among other tasks, the project will support the Ministry of Economic Development in the creation of at least one pilot condominium. It will also: 1. Consider review of the relevant Azerbaijani legislation and provide legal advice to the selected pilot/s in the preparation of required documents; 2. Prepare a strategic policy concept for the reform of housing-communal sector and provide recommendations and proposals for further implementation of reforms Find out more EU Delegation to Azerbaijan – list of projects http://eeas.europa.eu/delegations/azerbaijan/projects/list_of_projects/projects_en.htm EU Neighbourhood Info Centre country page: Azerbaijan www.enpi-info.eu/countryeast.php?country=57 EU Neighbourhood Info Centre thematic portal: Civil Society and Local Authorities www.enpi-info.eu/themeeast.php?subject=14

EU Neighbourhood Info Centre An ENPI project The EU Neighbourhood Info Centre is an EU-funded Regional Communication project highlighting the partnership between the EU and Neighbouring countries. The project is implemented by Action Global Communications.