Varna: Urban Renewal and Reconstruction of Social Housing

Abstract:

The pilot project for the reconstruction of social housing in the neighbourhood Droujba, district Asparouchovo - Varna started in 1992 with the aim of preparing a model for the reconstruction of existing housing complexes which could be applied in the future reconstruction of many other housing areas in Bulgaria. The project is a result of a collaboration between France and Bulgaria which will provide transfer of knowledge to the Bulgarian experts in this field and to encourage foreign investment for the construction and management of such housing stock.

An urban development plan was prepared, which envisaged a general improvement of the neighbourhood, new housing units, parking spaces, public services and profit making facilities which have the possibility of creating revenues for the reconstruction of the old housing stock and for other infrastructure.

This plan is the basis for a detailed feasibility study and a financial programme which provides for the next stage - a call for tenders to realise the plan. A share holding association, with international participation, will be established and will implement the reconstruction project.

This case study highlights a new approach - an innovative model for the financing and organisation of the reconstruction. It will identify the working mechanisms for Bulgarian practice as are applicable to the local framework of administrative and legal conditions.

As a result of the scheme, developed for further project funding, the first steps of this ambitious project are encouraging in terms of the estimation of potential revenue for reconstruction.

Background and objectives

The collaboration between France and Bulgaria is regulated by a Protocol, signed on 4 June 1992 between the French Ministry of Housing and Public Works and the Bulgarian Ministry of Regional Development and Public Works (RDPW). Its major focus is the problem of social housing in respect of reconstruction, housing policy, construction and management. The first specific contract between France and Bulgaria in this field was signed on 25 May 1992 and identifies the town of Varna and its neighbourhood Droujba-Asparouchovo as the focus for the joint pilot project for reconstruction of social housing.

Varna is the third biggest city in Bulgaria, located at the northern part of the Black Sea shore. The area of Droujba is in the outskirts of the city in the district Asparouhovo.

The neighbourhood Droujba was constructed between 1950-1960. The buildings are symmetrical, high rise, with small windows, a monolith type of construction. There are 297 existing dwellings in 16 apartment blocks. The flats are either property of the municipality and are rented to tenants or belong to private owners. The land on which the buildings are situated, the public buildings, the roads and the open surrounding space between the buildings are municipally owned .

The existing water supply, sewage, electro- and heating systems are out-dated and in need of replacement. The heating system does not function. The buildings do not meet contemporary standards for energy saving . The external sewerage, water and energy supply need reconstruction and development and the road network also needs improvement and development.

The neighbourhood of Droujba, Varna was selected for the pilot project after consideration of the following factors:

• the necessity for the decentralisation of the administrative and management scheme in Bulgaria;
• the existence of professionally competent regional and municipal authorities open to innovative ideas; and
• the neighbourhood is representative, in national terms, of economic, social and technical problems.

In the Droujba neighbourhood, there are complicated and contradictory social problems. The majority of the inhabitants are workers from neighbouring factories (ship repairing and chemical industries). There is a high rate of unemployment. Many parents of the children from the area cannot afford to send their offspring to kindergarten. The crime rate is rising. The housing stock depreciates constantly. Most of the dwellings do not meet the contemporary needs of the residents. The financial capacity of the owners is not high. The jurisdictional relationship between the owners of the flats, the tenants of municipal flats and the municipality which owns land on which the housing blocks are situated, is very complicated. The flat owners, do not own the land on which the flats are built.

The objectives of the pilot project are the following:

• the preparation of a model, or an ”algorithm”, for the reconstruction of the housing complexes which can be applied in future reconstruction of other housing areas in Bulgaria;
• the transfer of knowledge to Bulgarian experts in this field; and
• the attraction of foreign investment for the construction and management of such housing stock.

Implementation

Project date and status

The project started in 1992 and it is still ongoing as funds become available for its realisation.

The first steps to have been completed are as follows:

• an urban development plan endorsed by the Municipality of Varna and the Ministry of RDPW has been prepared;
• architectural plans and studies for the opportunities for reconstruction of new buildings have been completed; and
• a feasibility study which estimates and explores the expected costs and benefits and the potential revenue has been prepared.

The feasibility study includes:

1. Analysis of the existing elements
   • architecture and construction;
   • transport and communication;
   • infrastructure (public services and technical networks)
2. Project development of:
   • urban development concept;
   • architectural concepts for reconstruction of the existing housing stock;
   • architectural concepts for the new dwellings and facilities;
   • transportation communication scheme.

The next phase of the project will be developed after approval of the ”feasibility studies” between the partners, and co-ordination with the financial institutions of EU. It will provide more precise and detailed estimations of the costs and a financial programme for tender documentation will be prepared.

Strategy

The start of the project and current development became possible because of French technical and financial assistance. At the end of the current stage, a more detailed financial plan and working programme will be undertaken by French experts and will provide the basis for making tenders. A joint venture will be established for mixed economic activities and for running the tenders. The tender documents will be prepared in conjunction with the detailed architectural plans to provide more precise technical data for estimation.

It is impossible to apply any foreign model for development as the local conditions require a special pattern fitting the specific peculiarities of the Bulgarian legal and administrative system. The pilot project identifies the appropriate model - a share holding association with international participation which will organise the implementation of the reconstruction project.

A Bulgarian model which can be replicated in other parts of the country will be developed and tested during the implementation of the pilot project.

Activities

The main ideas of the new urban development and architectural concept envisage the following development activities:

1. The relocation of the highway Varna-Galata in the 30 meter buffer zone on the bank of the channel so that some additional area is added to the site near to the existing market. This zone will attract trade, hotel and business functions and is called Asparouchovo Gate.
2. The development of a network of new facilities and amenities, identification of the stages for construction, and provision of good visual and pedestrian connections with the seaside.
3. New dwellings in the complex will increase the density and will make more efficient use of the terrain. The new dwellings give an opportunity for a rotating housing stock during the reconstruction. With their construction, a two sided effect is expected:
   • the construction and sale of new dwellings (through entrepreneurship); and
   • the opportunity for exchanges of dwellings and a better standard of living for some of the inhabitants.
4. The reconstruction of the existing dwellings and use of the roof space.
5. he relocation of the existing crèche and development of a modern kindergarten complex.
6. The reorganisation of the parking lots and pedestrian zones:
   • an ”agora” square is provided by construction of a new level at height 1.20 m, under which semi- underground parking places will be available; and
   • new parking areas will be provided at the peripheral zones and along the main streets to avoid intensive traffic in the residential and recreation areas.
7. Provision of the following retail services
   • the construction of a new market;
   • the modernisation of an existing market;
   • a department store will be located in the northern part of the neighbourhood; and
   • a heating plant, a crèche and retail services will be situated on the vacant plots.

Another group of activities covers the reconstruction of the existing buildings and their design proposals are based on the following principles:

1. A functional improvement of the existing dwellings through realignment of internal walls, provision of new balconies and winter gardens.
2. The replacement of the existing installations - water and electricity supply and air ventilation systems.
3. The complete replacement of the floor construction in the kitchen and bathrooms.
4. The partial replacement of window frames.
5. Additional insulation to the floors to meet European standards for noise and sound insulation.
6. The reconstruction of the roof spaces and their conversion to mansard roofs.

With regard to the improvement of energy efficiency, insulation materials will be laid in the roof space, the external walls, the basement floors and to the window frames.

Thermal spas will be used as a resource to provide heating.

There are 297 dwellings to be reconstructed and there will be a total of 330 new dwellings as a result of the project.

Architectural designs for the new and reconstructed buildings are under preparation.

Partners

The major partners involved in the pilot project are as follows:

• A joint firm (French / Bulgarian) which will implement the project and provide all technical expertise, i.e. the preliminary research, the feasibility study, and planning and design work.
• The Municipality of Varna is providing local assistance and administrative co-operation for the project development based on its scope of work and functions supporting the surveys to provide current information.
• The Ministry of RDPW, Bulgaria and the Ministry of Housing and Public Works, France formally support the activity.

Financing and resources used

The French Ministry of Housing and Public Works initially provided approximately 90,900 ECUs.

The urban development plan was funded to the extent of approximately 7,575 ECUs by the Bulgarian Ministry of RDPW and the municipality of Varna.

The surveys were made with the support of the Bulgarian local authority, some contribution was also made by the ship repairing/dockyard as most of the population living in the area of the pilot project are employed there.

There will be additional feasibility studies to determine future developments. They will be prepared by specialised French companies. This financial dossier, approved by French and Bulgarian experts and the Municipality of Varna, the Bulgarian and the French Ministries, will be submitted to those international financial institutions (e.g. funders and banks) interested in funding the next stages of design work and construction.

Funding is sought in the following fields

1. Entrepreneurship for the construction and sale of new dwellings and retail facilities.
2. Grants from international investment funds in the field of social housing.
3. Low rate credits from EU, World Bank, European Bank for Reconstruction and Development.
4. The participation of owners with their own financial contributions and labour.

At this stage, a general preliminary hypothesis is formed for the opportunities of self-financing for construction in the neighbourhood, through entrepreneurship, as one of the basic goals of the project.

An estimate was made for the costs of the construction works of each new building, the sale price, and the possible revenues. The total of the expected revenues was divided among the number of the existing dwellings needing reconstruction. An average amount which might be expected after the entrepreneurial activities and the sales was calculated. The revenues acquired will also be used for improving the infrastructure.

On the basis of the current estimates, the revenue is expected to exceed the expenditures.

The estimates of possible revenues, as a result of the Municipality’s entrepreneurial activities on its own terrain in the neighbourhood, show a favourable prognosis for the future funding of the reconstruction.

Results and impacts

Though the project is not yet complete, some intermediate results can be reported:

1. An urban development plan, which proposes effective and profit bringing measures for the use of open space among the existing buildings, has been completed and adopted.
2. The financial estimates of costs and benefits indicate a positive balance.
3. A special system has been developed for a fund-raising strategy.

After the first results of the project, the urban plan and feasibility study, it was easier to convince potential partners to collaborate in the project. There is a good relationship among the partners which demonstrates a readiness for collaboration and support of the project. The social survey among the inhabitants indicated great interest and approval of the initiative on their behalf.

The municipalities do not have the issue about reconstruction of social housing stock as a priority and there is no available budget for such initiatives which appear to be a luxury undertaking in the current Bulgarian conditions. However, a project such as this can draw the attention of the municipal administration, professionals, entrepreneurs and the inhabitants once they see that it is possible for innovative mechanisms to be introduced for financing possible reconstruction.

Barriers and conflicts

Most of the problems are connected with the difficulties for financing the reconstruction of the area. The Municipality of Varna cannot afford this activity, there are no state funds and the owners have limited financial means.

There is insufficient experience in Bulgaria in the organisation of share holding companies (with a mix of property, private owners, the municipality, and the State). There are many existing rules and regulations which appear to be an obstacle for the direct introduction of Western experience. A local approach needs to be developed to fit the reality of the Bulgarian situation. On the other hand, foreign investors are not ready to accept Bulgarian conditions for investment in real estate, and there is a lack of trust in the local situation and the framework for investment.

The existing legal framework relating to property and urban planning is out-dated and bears many contradictions from the past which makes any urban development initiative difficult.

The municipality and the State lack funds in general and the topic of the reconstruction of housing is not yet recognised as priority.

The credit system for support of housing is under-developed and the tax system lacks provision for investment in housing.

Lessons learned And transferability

The first stage of the pilot project was developed in a very detailed and comprehensive way to clarify the problems and the opportunities of the situation. The conclusion after its completion was that there are good opportunities for finding financial mechanisms and resources for the support of the construction works.

Though the case study presents only the initial stage of a pilot project, the first results are important and showed that:

• it would be possible to find channels for investment and that there is potential for sufficient revenue to cover the costs for the reconstruction works on the old housing stock;
• the method, which was experimental, could be applied in other countries in transition, where municipalities are unable to subsidise the improvement of old housing stock and where the owners also have insufficient personal financial resources to do so;
• through international funding and co-operation the feasibility study, the methodology, and management organisation enabled the project to be started;
• by the adoption of an innovative self-sustaining approach to the project, its realisation was guaranteed;
• further funding for the realisation of the different parts of the project will be sought from other sources, including local investment and revenue from sales and profit-making activities; and
• most of the international funding institutions do not have social housing renovation as a priority, but funds for environmental improvement, energy efficiency and the introduction of new technologies are easier to find.

Source of Information

EUROARCH, Feasibility study for Reconstruction of Social Housing Dwellings - neighbourhood Droujba, Asparouchovo - Varna, Pilot project , 1992

Contact:

Cities:

Varna:

The town of Varna is the third biggest city in Bulgaria having 400,000 inhabitants. It is located at the northern end of the Black Sea shore. It is both a cultural and industrial centre with several universities. The city is a tourist and resort centre because of the favourable conditions of the Black Sea coast.

Asparouchovo is a district of the city, located on the periphery of Varna, close to a channel leading to the port and the docks of Varna. It is close to the industrial zone and dockyards of Varna.

Droujba is a district of Asparouchovo with an area - 7, 55 hectares and 1,434 inhabitants principally employed in the shipping industry.

Population:

Project was added at 03.07.1998
Project was changed at 03.07.1998

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