Analytical Digest #2 of ACSA

ANALYTICAL DIGEST SOURCES OF ADDITIONAL FUNDING FOR DEVELOPMENT OF AMALGAMATED COMMUNITIES (BY THE EXAMPLE OF ODESSA REGION) PERIPHERAL TERRITORIES OF THE AMALGAMATED COMMUNITIES: INTERESTS AND RIGHTS PROTECTION MECHANISMS (BY THE EXAMPLE OF THE SOUTH OF UKRAINE) CLUSTER APPROACH TO THE DEVELOPMENT OF THE AMALGAMATED TERRITORIAL COMMUNITIES Digest presents brief overviews of analytical notes and articles prepared by Association on the topical problems during implementation of local selfgovernment reform, self-organizartion development and forms of participatory democracy at the local level in Ukraine.

Analytical surveys consist of problems analysis and recommendations to local, regional and central government.

SOURCES OF ADDITIONAL FUNDING FOR DEVELOPMENT OF AMALGAMATED COMMUNITIES (BY THE EXAMPLE OF ODESSA REGION) INCOMES OF AMALGAMATED COMMUNITIES OF ODESSA REGION INCOME OF A COMMUNITY

INTERBUDGETARY TRANSFERS

№

AMALGAMATED COMMUNITIES

BUDGET OF A COMMUNITY (MLN. UAH)

(MLN. UAH)

(MLN. UAH)

1

Baltska town community

104,502

56,436

48,066

2

Biliaivska town community

47,447

28,225

19,223

3

Velykomychailivska village community

36,781

15,530

21,261

4

Chervonoarmiiska village community

8,206

3,321

4,885

5

Marazliivska village community

19,774

8,572

11,201

6

Krasnosilska village community

36,331

21,675

14,66

7

Rozkvitivska village community

14,734

2,352

11,31

8

Tuzlivska village community

Not available

Not available

Not available

To receive income, the communities need to be additionally funded, so that they could implement economic projects. Of these, the most important are the projects, which will motivate “points of economic growth”, provide business development and creation of jobs.

Additional Sources of Funding include the following: Infrastructural grants from the State budget, funding of Communities' projects at the expense of the State Fund for Regional Development (hereinafter referred to as SFDR), granting of internal and external investments for the communities' development, international technical assistance for implementing local projects (ITP).

THE MAIN ISSUES RELATED TO THE MOBILIZATION AND USE OF THESE FUNDS BY THE COMMUNITIES OF ODESSA REGION ARE AS FOLLOWS: ±

Ineffective policy of the communities' local authorities, regional Administration and Council related to the use of State assistance, attraction of investments, and participation in ITP projects

±

In 2016 there were no applications to SFDR from a half of the amalgamated territorial communities

±

It is required to approve Strategy of Regional Development of Odessa Region by 202_ and Plan of Measures aimed at delivering the Strategy in order to obtain financing of projects at the expense of SFDR. As of 1.04.2016 the Strategy of the Region was updated and approved, however, the Plan of Measures was not approved. This fact significantly influences the financing by SFDR the projects of the communities in the territory of Odessa Region

±

There are no Investment Promotion Programs in Odessa Region, as well as the amalgamated territorial communities with clear plan of actions for the foreseeable future

±

Infrastructure of the amalgamated communities of Odessa Region is not developed well (roads, water drain, internet connections etc.), having a negative impact on their investment attractiveness

±

Representatives of local authorities have no system knowledge in the field of project management and the quality of project proposals submitted by the communities to bids is low

±

Local authorities have not enough information on the projects of international technical support, being implemented in the Region.

±

Institutes of civil society, that are able to attract ITP projects into the amalgamated communities, are inert or, even more, are absent in the community

±

Existing projects, presented by the amalgamated communities to SFDR and to ITP projects, have no economic orientation. In other words, the majority of projects is aimed at the repair of public sector establishments, not at achieving economic potential of the communities, development of local economy

CONCLUSIONS AND RECOMMENDATIONS The process of territorial communities amalgamation is blocked at the level of the entire districts and isolated territorial communities. As a consequence, only the fourth of the communities of Odessa Region joined the Perspective Plan of the communities' territory formation.

The first amalgamated communities of Odessa Region were formed in accordance with the Perspective Plan of the communities' territory formation of Odessa Region.

According to the Method of formation of capable territorial communities, prepared by the Cabinet of Ministers of Ukraine, these communities are considered to be capable to render qualitative services and support own development.

The amalgamated communities of the Region received ancillary powers and also additional resources to their implementation (due to the budgetary decentralization), and achieved on the balance medical and educational establishments, as well as government grants to their maintenance.

However, the amalgamated communities of the Region still remain subsidized and not capable to make decisions on the development, using local income basis. In the same way as before, they exercise the majority of the delegated powers (except for the sphere of education and public health) with the use of basic donation. That is why there is a need to involve additional funds for the projects of economic development of a community, that will be able to achieve social and economic growth.

Analysis of using additional sources for the development of the amalgamated territorial communities showed the low capability of such communities of the Region to use the resources. This problem is caused by the insufficient awareness of the Council of the amalgamated territorial communities on the possibilities to involve additional sources of financing, the absence of dynamic actions towards the implementation of projects using the funds of SFDR, the projects submitted to SFDR by the communities of the Region do not promote the activation of local economy, officials of the amalgamated territorial communities have no project management skills, inefficient policy of Odessa Regional State Administration related to the attractions of investments and ITP projects into the amalgamated territorial communities.

Having analyzed the problems of attraction of financial resources for the development of the amalgamated territorial communities in order to increase resource potential of the communities, we can give the recommendations as follows:

THE CABINET OF MINISTERS OF UKRAINE IS PROPOSED TO: The Ministry of Finances of Ukraine: foresee the financing project management start seminars for the amalgamated communities.

The Ministry of Regional Development: support, using the funds of SFDR, first of all, those projects of the amalgamated territorial communities, which promote the development of local economy, formation of “points of economic growth”; in order to attract ITP projects, carry out project management training for the representatives of local authorities of the amalgamated territorial communities.

REGIONAL STATE ADMINISTRATION IS PROPOSED TO: ± ±

± ± ±

Approve the Plan of Measures to implement the Strategy of regional Development with inclusion of ITP projects therein Start work towards the attraction of investments into the amalgamated territorial communities, find out perspective investment proposals of the amalgamated communities and download them onto the Web investment portal of the Region Launch a Program to attract investment into the amalgamated territorial communities Notify the amalgamated communities of the Region of available ITP projects, aimed at the local development Update regularly information on Web site of Regional State Administration related to ITP projects in the Region, opportunities for the communities to take part in the investment forums

THE AMALGAMATED COMMUNITIES ARE PROPOSED TO: ±

Prepare project applications for financing from SFDR in accordance with the requirements of the Cabinet of Ministers of Ukraine, proving the effect, the project will have on the economy of the community

±

Start attraction of the international financial support projects into the communities, provide for a position of Project Manager in the Executive Body of Village Council

PERIPHERAL TERRITORIES OF THE AMALGAMATED COMMUNITIES: INTERESTS AND RIGHTS PROTECTION MECHANISMS (BY THE EXAMPLE OF THE SOUTH OF UKRAINE) In the amalgamated territorial communities there are conflict situations between the remote populations and center. The conflicts arise because of interests of remote villages in case of financing road construction, water drainage, water supply system projects etc.

Local deputies and headmen shall protect rights of peripheral communities in the Council of the amalgamated territorial communities. Also inhabitants shall immediately take part in the process of decisions making by means of establishing population self-organization entity and other forms of participation of community – public hearings, general meetings (conferences), local initiatives etc.

The analytical note describes problems of representation of the interests of peripheral communities in the amalgamated territorial communities through the institute of headmen, local deputies, and forms of immediate participation.

Analysis of 10 amalgamated territorial communities of the South of Ukraine concerning the availability of protection mechanisms and implementation of interests of peripheral communities showed the peculiar features and problems as follows.

1.

In matters of representation through the deputies of local councils:

±

If in the village and town councils the representation of interests of populated localities is provided through the use of the majority election system of the simple majority at this level, then in city communities, which are elected on a pro rata basis, there is always a risk of deviation from the representation because of existing election system. Moreover, depending on the environment this deviation can be both towards the center of communities and towards the periphery, although the center in this sense possesses more potential

±

In the asymmetric communities with hegemony of one populated locality there is a risk, that deputies, elected from the periphery, cannot represent interests of their voters in a proper manner, because they will have no impact on the agenda and voting in the council. Thus, in such communities there is a need to introduce additional protection mechanisms of interests in the periphery

Âą

Only one Baltska amalgamated territorial community of the South of Ukraine (Baltska) developed and downloaded on the Web site the Regulation on Headman, namely, a basic document, regulating the work of headmen, their rights and obligations, powers in the amalgamated territorial community. Rights and obligations of headmen mentioned in the Regulation allow a headman efficient representation of peripheral communities of Baltska amalgamated territorial community

3.

In matters of informational support of the amalgamated territorial communities' activity: Insufficient informational support of activity of local councils of the amalgamated territorial communities complicates access of inhabitants, including peripheral communities, to the information related to the activity of councils.

Among 10 amalgamated territorial communities of the South of Ukraine only a half of them has own official Web sites. However, information content and data update on the existing sites require improvement. We can take a favorable view of functioning Web sites of Biliaivska and Baltska amalgamated territorial communities, where we can see decisions of the council, advertisements, and useful information.

4.

In matters of immediate information of inhabitants of peripheral communities in decision-making processes: The practice of consultations with the inhabitants of the amalgamated territorial communities, including peripheral communities, by means of immediate participation, is not widespread. Only in 3 of 10 amalgamated territorial communities, (Biliaivska, Baltska, Kutsurubska) we found information on the Web sites related to the public consultations concerning the local development. Only 2 Web sites (Kutsurubska, Kochubeivska) have information on availability of the Articles of Association of the amalgamated territorial communities.

RECOMMENDATIONS Verkhovna Rada of Ukraine shall: Âą

At the legislative level regulate a legal status, election procedure, and revocation of authority of headmen. The Ministry of Regional Development of Ukraine together with the representatives of local authorities of the amalgamated territorial communities, institutes of civil society, shall develop a draft Law on Headmen, or prepare required amendments to the Law on Local Government in Ukraine, where:

2.

In matters of institute of headmen functioning in the South of Ukraine: ±

Providing a legislative framework for the regulation concerning headmen election financing (except for regular election) at the expense of local budget allows some councils of the amalgamated territorial communities not to hold elections of headmen, giving reasons for such a decision, that they have no funds in the local budget. In this case the obligations of headmen are performed by previous local heads of the communities or anyone else. However, in cases, when acting headman voluntarily retires from responsibility, that happened to Kochubeivska amalgamated territorial community, the head and local council at their discretion make decisions related to the representation of interest of peripheral communities.

±

Under the conditions, when a legislator does not bound local authorities to call an election of headmen (paragraph 1 of Article 14 of the Law on Local Government), in every community a model and, correspondingly, efficiency of the representation can be different;

±

In every peripheral community there is a possibility of headmen coalition occurrence in the amalgamated territorial communities, consisting of a great number of communities, in case of electing headmen. Thus, in Baltska amalgamated territorial community, consisting of 16 communities, there is a headman in every community. Accordingly, there are 16 representatives of the peripheral communities in the executive committee according to positions, that in the future will allow them providing a certain balance, when protecting interests of central and peripheral communities;

±

In the situations with the asymmetric communities, where 2-3 communities join the central one, the influence of one or two headmen on the decisions making is complicated. In such cases, it is important to fix in the Regulation a system of local checks and balances, that will allow blocking decisions of the council, conflicting with the interests of their communities. In this connection, can mention the provision in the Regulation on Headman of Baltska amalgamated territorial community, that provides a headman with a right to adjust draft decisions related to the property of Baltska amalgamated territorial community, located in the territory of the relevant populated locality (village, town) of Baltska amalgamated territorial community;

±

To define clear criteria, according to which local council of the amalgamated territorial communities has to foresee by its decision, in what villages (towns) a headman shall be elected and on what conditions they can be elected to represent two or more populated localities

±

Define a term, during which local authority of the amalgamated territorial communities has to call first election of headmen in villages, towns (which are not administrative centers), being members of the amalgamated territorial community

±

fix a right of headman to be elected as a head of population self-organization entity (village, town committee); define reasons and procedure of early termination of the powers of headman

The Amalgamated Territorial Communities of the South of Ukraine shall ±

approve the Regulation on Headmen with clear definition of rights and obligations of headmen therein, as well as mechanism of checks and balances, allowing headman to protect interests of inhabitants of community, they represent in the local council. In particular, it is necessary to introduce a provision related to the approval by headman of draft decision related to the interests of the peripheral communities

±

provide headman with premises, where he can receive callers. If necessary, introduce a position of secretary or another employee, who will help headman to exercise his functions, into the staff schedule of the council of the amalgamated territorial communities. Provide headman with the required material and technical resources

±

develop official Web sites of the amalgamated territorial communities

±

provide on timely basis inhabitants of the amalgamated territorial communities with complete information on the activity through the official Web sites. Use Web sites for public consultations, on the model of Biliaivska and Baltska amalgamated territorial communities

±

define helpline, using which people can receive counseling, information in the field of functioning and work of the amalgamated territorial communities

±

draw up and approve the Articles of Association of territorial community, where to specify clear and realistic procedures of inhabitants' participation, including peripheral communities, in decision-making process

±

draw up and approve provisions on establishment and work of population selforganization entity

±

draw up and approve Development Program for population self-organization entity

±

draw up and approve regulations on interaction between headmen and population self-organization entity

±

hold, if necessary, but, at least, once in 3 months, general meetings of members of territorial community according to place of residence in villages, towns, which did not join the amalgamated territorial communities, where officials, deputies will report on their work, make important decisions of local significance of this populated localities

±

introduce practice of establishment and work of population self-organization entities in villages, joined the amalgamated territorial communities, and their interaction with headmen and deputies of the amalgamated territorial communities

±

communities, which hegemony of one populated locality is peculiar for, regulate at normative legal base budgetary funds distribution proportion between populated localities, which are not members of the amalgamated territorial communities, in order to avoid their exclusive use by the center

CLUSTER APPROACH TO THE DEVELOPMENT OF THE AMALGAMATED TERRITORIAL COMMUNITIES Reform of the system of local government provides, that the amalgamated territorial communities, having obtained financial, proprietary, and land resources and powers, will be able to decide local problems on their own.

However, the future self-sustainability of communities depends on positive economic dynamics of their development: increase of goods and services volume, promotion of local business activity, realization of investment and innovation projects. Therefore, the urgent issue of the state policy at this stage of the reform is motivation of economic growth of the amalgamated communities and activation of their “points of growth”.

Acceleration of social and economic development of communities, which first decided to amalgamate, is of special importance against the background of hesitation and even resistance to the amalgamation of the most territorial communities of Ukraine.

The successful development of the first integrated community should be a convincing argument in favor of reform for those communities, which have concerns and resist.

Successful development of the first amalgamated communities has to become a satisfactory argument to support the reforms for those communities, which have doubts and resist.

We consider this urgent, that perspective instrument of the economy development of the amalgamated communities is local clusters, especially, agrarian and touristic.

Cluster model of the regional economy development is widely and efficiently used in the EU, USA, Japan, Singapore and other countries. There are successful examples of clusters functioning in Ukraine, for example, the berry cluster in Snitkiv Village of Vinnitsa Region, touristic cluster in Kamianets-Podilskyi Region etc.

WHY IS THIS BENEFICIAL FOR THE GOVERNMENT TO CONTRIBUTE TO THE CLUSTERS ESTABLISHMENT IN THE AMALGAMATED COMMUNITIES? It is mentioned in the State Strategy of Regional Development, that “under condition of the financial resources limitation, which the Cabinet of Ministers of Ukraine can use for

the development of territories, the priorities of the resources distribution shall be defined and focused on those establishments and territories, which can provide the best result as soon as possible and will have long term and complex influence on the development not only this territory, but the neighboring regions as well”.

Therefore, the amalgamated communities can become such supporting territories of economic development in the region, and, the government shall focus on their support, first of all. They have competitive advantages, since within their territories land and people resources are accumulated. Councils of the amalgamated communities have functions of the State Architectural and Construction Control, will be able to dispose lands outside the populated localities, enabling them to conduct their own investment policy and will provide with an opportunity to implement projects, which community wants to see in its own territory.

Communities, which decided to amalgamate, have an active position and desire to be changed, to introduce know-how and innovations. Their economic development will have multiplicative impact on the neighboring communities of the region, and positive experience will provide the latter with the successful example for inheritance.

PROBLEMS RELATED TO THE CLUSTERS ORGANIZATION AND FUNCTIONING ±

Absence of normative and legal base, aimed to regulate the work of clusters. In the current legislation there is definition for the word “cluster”. In the State Strategy of the Regional Development of Ukraine by 2020, without giving any definition to cluster, it is mentioned, that it is inefficient instrument to overcome depression of territories and find out “points of growth”

±

Absence of stable relations and interactions of local entrepreneurs between themselves, between entrepreneurs and government, and institutes of civil society

±

Inactivity of scientific and research institutes in the field of innovations development

CONCLUSIONS AND RECOMMENDATIONS Analysis of the Ukrainian and foreign experience of local production clustering showed the efficiency of such an approach to the local economy development. Clusters increase competitive ability of goods produced by local companies and stabilize their position at the market.

However, in Ukraine the legislative base related to stimulation of clusters development is not advanced, although, the cluster approach is reflected in the state and regional strategies of the regional development.

Establishment of the regional agencies focused on the regional development and Ukraine participation in Horizon 2020 EU Program can provide a positive impact on the development of innovative clusters in Ukraine.

Perspective territories for the local clusters development are the amalgamated territorial communities, which due to the accumulation of people and land resources can create new clusters and promote clusterization of local production.

TO MOTIVATE DEVELOPMENT OF CLUSTERS AT THE LEVEL OF AMALGAMATED COMMUNITIES WE PROPOSE TO: The Ministry of Regional Development and Construction: ±

render by means of SFDR support to the projects of the amalgamated communities, focused on the clusters development

±

render methodical and informational assistance to the amalgamated communities concerning the clusters mapping (determination of conditions and potential members for the clusters establishment and development)

The Ministry of Economic Development and Trade: ±

to give normative and legal definition to the word “cluster”

±

draw up and approve by the relevant Resolution new “Concept of Clusters Establishment in Ukraine

State Regional Administrations: ±

organize training seminars for the amalgamated communities devoted to the issues of local clusters development

The Amalgamated Territorial Communities: ±

at the local government body create an advisory and consultative body, which will help to find out clusters potential for establishment and development in the territory of the amalgamated community. It is reasonable to engage local entrepreneurs, representatives of non-governmental organizations, scientists)

±

Delegate the established advisory and consultative body to perform clusters mapping and find out potential clusters

±

Use an instrument of cooperation of the territorial communities for the clusters development within several communities

±

Submit projects related to the clusters establishment to SFDR

POLICY ANALYSTS OF ASSOCIATION:

Andrii Krupnyk expert on public administration and local government

Oleksndra Kalashnikova expert on community development, local government reform, participatory democracy

Mariya Dzupyn analyst, lawyer, expert on local democracy and local governance

Oleksii Kolesnikov expert on election law, local democracy, regional and global policies

samoorg.com.ua

This analytical paper has been prepared under the Think tank support initiative performed by the International Fund "Renaissance" (IRF) in collaboration with the OSF Think Tank Fund (TTF), which receives support from the Swedish International Development Cooperation Agency (SIDA) The opinions and views expressed in this research represent the position of the author and do not necessarily reect the position of the Swedish government.

Đ?SSOCIATION FOR COMMUNITY SELF-ORGANIZATION ASSISTANCE All-Ukrainian NGO that promotes the development of civil society in Ukraine through the self-organization and the creation of an effective system of public participation in the local governance.

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