Ecuador Inclusive and Resilient Housing and Urban Development Project

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The project aims to (i) improve access to affordable and climate resilient housing for the most vulnerable population, (ii) improve urban infrastructure and services in selected informal settlements; and (iii) strengthen the capacity of the Gov. of Ecuador to implement and scale up affordable housing and settlements upgrading policies and instruments. The project will address the effects of unplanned urbanization in Ecuador, particularly focusing on increasing communities’ access to improved urban infrastructure, basic public services, better habitat, and housing conditions.By improving the resilience of urban infrastructure and access to basic services in the urban areas, the project will therefore help Ecuador address one of the main causes of urban poverty and informality. By improving the quality and resilience of the urban poor’s housing, the project will improve the living conditions of the most vulnerable urban dwellers, including women, indigenous groups and the elder, and thus reducing their vulnerability to climate risks. Lastly, by strengthening housing and urban policy and institutional capacity at the local and national levels, the project will help build stronger foundations needed to address the long-term economic, social, and climate sustainability aspects of rapid urbanization in Ecuador. These objectives are aligned with key government plans, including (i) the National Plan for the Habitat and Housing (PNHV) 2021 – 2025 aimed at implementing a more comprehensive approach to urban development to boost sustainable and equitable growth while reducing the housing gap and territorial disparities; (ii) Ecuador's National Plan Creacion de Oportunidades for the 2021-2025 period, which aims to reduce poverty and inequality improve access to basic services for vulnerable groups; promoting environmental sustainability and (iii) the Sustainable Development Goal (SDG 11) country commitments, which aim to provide adequate housing and basic services and improve informal settlements by 2030. The Project will support government actions already underway, such as policies for urban upgrading, housing solutions for low-income population segments, promotion of low-carbon interventions and the access to serviced land, among others. To achieve these goals, the Project will have the following components: a) Component 1: Provision of affordable and resilient housing for vulnerable households, which focus on the financing of new housing to low-income segments of the population, building on the existing government schemes.• Subcomponent 1.1-– Upfront subsidies for the construction of new housing on urban areas: This subcomponent will finance subsidies to family units living in conditions of extreme and moderate poverty, based on their score on the social registry. Financing will be provided for the construction of sustainable and universally accessible homes. The beneficiaries may request an additional subsidy “sanitation and water incentive” to finance works or equipment for the provision of services (water, wastewater disposal, and electricity).To carry out subcomponent 1.1, the Project will leverage the knowledge gained from the IADB's programmatic project (as described in the PAD). The IADB's project has been implemented using the following approach: MIDUVI takes the lead in executing this subcomponent through the state-owned enterprise (SOE) “Creamos Infraestructura”, which is a well-established national SOE. These SOEs engage private housing developers or builders (PEVs) to construct homes under this subcomponent. A subsidiary agreement will be drafted to formalize the responsibilities of the SOE during project implementation. • Subcomponent 1.2 – Upfront partial subsidies for the acquisition of new housing on urban areas. This subcomponent will finance partial subsidies for the purchase of urban housing. This component would finance the allocation of subsidies to households living in poverty or moderate poverty. The value of each subsidy would be approximately up to 15 SBUs, or approximately US$6750 (covering up to a maximum 15% of the housing cost), and would be allocated along with a credit from the financial or cooperative sector and could also be completed with household savings (both credits and savings are not included as eligible activities of the proposed Project). The project will ensure that the housing to be financed complies with minimum construction and urban standards, such as: (i) the housing will be constructed in line with current urban, architectural and construction standards. In all instances, the housing will be delivered in a state of immediate habitability; (ii) the housing must adhere to minimum habitability conditions, encompassing functionality, security and privacy attributes; (iii) the neighborhood or sector where the housing will be located must maintain connectivity to existing urban systems, including accessibility, connection roads, the transportation network, and proximity to community facilities; (iv) the housing must carry a 10-year builder's liability that guarantees both the quality of the construction work and the protection of the beneficiary; (v) the quality of the housing is supported by the planning, normative and regulatory instruments that authorize its construction. Furthermore, the Construction License ensures that the housing is located within the areas authorized for residential use in the urban development plans and is not located in high-non mitigable risk areas; among others that may be found in the PAD and will be further detailed in the POMb) Component 2: Sustainable habitat improvement in targeted neighborhoods, which will support the execution of priority urban infrastructure and basic service provision projects in the selected areas, promoting a more inclusive, productive, and climate-resilient urban environment. More specifically, this component would improve the living conditions of households in Ecuadorian neighborhoods, through urban upgrading and transformation subprojects in a scalable, low-carbon and climate resilient way. Its aim is to upgrade key public spaces and assets in low-income areas, such as water supply and sanitation, drainage, paved access roads, green areas, and electricity, among others. Specific activities will be prioritized considering community demand and local and community planning instruments.c) Component 3: Contingent Emergency Response, which will enable a speedy response to disaster, as needed. It will have an initial zero budget allocation but would allow for rapid reallocation of project funds in the event of a natural disaster or crisis, including a disease outbreak, that has caused or is likely to imminently cause major adverse economic and/or social impacts.d) Component 4: Institutional Strengthening and Project Management, it will finance (i) studies, analytical activities, and capacity support of national and subnational governments’ capacities for the efficient and scalable implementation of habitat, land and housing policies and projects and (ii) support Project management.