Prepared under the Democracy and Governance Analytical Services Indefinite Quantity Contract, #DFD-I-00-04-00229-00 Submitted to: USAID/Serbia Prepared by: AUGUST 2014 This publication was produced for review by the United States Agency for International Development. It was prepared by Democracy International, Inc. PERFORMANCE EVALUATION OF THE PLANNING AND LOCAL GOVERNANCE PROJECT (PLGP) FINAL REPORT ALBANIA DISCLAIMER This is an external report. The views expressed in this document are the authors' and do not necessarily reflect the views of the U.S. Agency for International Development or the U.S. Government. Submitted to: USAID/Albania Prepared by: Charles Costello, J.D., Team Leader Silvana Rusi, M.B.A. Ada Huibregtse, Ph.D. Contractor: Democracy International, Inc. 7600 Wisconsin Avenue, Suite 1010 Bethesda, MD 20814 Tel: 301-961-1660 www.democracyinternational.com MID-TERM PERFORMANCE EVALUATION OF THE PLAN￾NING AND LOCAL GOVERN￾ANCE PROJECT (PLGP) FINAL REPORT August 2014 TABLE OF CONTENTS GLOSSARY ............................................................................................................ 1 ACRONYMS AND ABBREVIATIONS................................................................ 3 USAID/ALBANIA RESULTS FRAMEWORK..................................................... 5 PLGP RESULTS FRAMEWORK.......................................................................... 5 EXECUTIVE SUMMARY...................................................................................... 6 INTRODUCTION AND METHODOLOGY....................................................... 9 PROJECT REVIEW BY KEY QUESTIONS/COMPONENTSERROR! BOOKMARK NOT DEFINED. FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS........................27 ANNEX A: SCOPE OF WORK........................................................................ A-1 ANNEX B: LIST OF INTERVIEWEES ............................................................ B-1 ANNEX C: PERFORMANCE OF COMPONENT THREE............................ C-1 ANNEX D: SURVEY QUESTIONS ................................................................. D-1 PERFORMANCE EVALUATION OF THE PLANNING AND LOCAL GOVERNANCE PROJECT – FINAL REPORT 1 GLOSSARY Local Government Unit (LGU) is the term used to describe both municipalities and communes – but not regions. A municipality typically is a city or urban center, while communes are typically, but not always, rural. Municipalities and communes are separate territorial and political jurisdictions. Own-Source Revenue is the term used to describe revenue from taxes and fees that LGUs raise locally, independent of national government revenue or fee transfers. Expenditure Assignments, Functions, or Competencies are the terms used interchangeably to de￾scribe the activities or services carried out by LGUs in the division of responsibilities between the national government and LGUs. Deconcentration is the term used to describe geographic or physical decentralization of national ministries and agencies while retaining authorities at the central level. While it is sometimes called “decentralization,” this is a misnomer. Decentralization is the term used to describe the division of authority between national and sub￾national units of government in which the subnational units take on robust service delivery func￾tions, enjoy a good measure of governance autonomy, and have significant fiscal authority. Fiscal Decentralization is the term used to describe the division of fiscal authority between national and subnational units of government in which the subnational units have significant taxing powers. Property Tax is the term used to describe levies on real property (i.e., immovable property), nor￾mally land and built structures. In Albania, rural agricultural land is subject to tax. Urban land is not taxed; only the improvements (buildings and other structures) are subject to taxation. Various forms of taxation are used, including: a flat tax per property, a tax based on the square meter area of the property’s “footprint” on the ground, and a total area-based tax taking into account all the stories of the building. An ad valorem system based on the assessed value of the property is not used. Property taxes are imposed by LGUs, but rate limits are set by the national government. Immovable Property Registry Office (IPRO) is the term used to describe the national office where titles to real property are registered with the state. In Albania, the property registry office is a cen￾tralized function of the national government, but IPRPO also has a number of regional offices. Small Business Tax is the term used to describe a gross receipts or turnover tax imposed on busi￾nesses up to a certain level of activity. Previously collected by LGUs, the national government took over the collection function was taken over in 2014, with revenue (minus an administrative fee) to be remitted to the LGUs. Intergovernmental Finance is the term used to describe fiscal (taxing and expenditures) relation￾ships between the national government and subnational units of government. Intergovernmental Transfers is the term used to describe revenue sharing between levels of gov￾ernment, typically by transfers from the central level to lower levels. They may be unconditional (i.e., “no strings attached”) or conditional, meaning their use is subject to certain conditions set by the government making the transfer. PERFORMANCE EVALUATION OF THE PLANNING AND LOCAL GOVERNANCE PROJECT – FINAL REPORT 2 Geographic Information System (GIS) is the term used to describe a software tool that is able to capture, store, analyze, and manage geographical data for physical planning and can produce de￾tailed digitized maps for multiple uses. Region is the term used to describe the 12 subnational jurisdictions that exist between the local and national level. Regions have limited authority, no taxing power, and very limited funding, so they exist more on the map than in actual functions and funding. In Albanian, the name for a region is qark. Non-revenue water is the term used to describe the amount of water produced by the water company system that does not yield any receipts (revenue) to the company. It is normally ex￾pressed in percentage terms and derives from system leakage, illegal (unregistered, unbillable) con￾nections, and unpaid bills by water company customers. Territorial Administrative Reform is the term used to describe the consolidation process in which the 373 existing LGUs are expected to shrink to a number closer to 50. PERFORMANCE EVALUATION OF THE PLANNING AND LOCAL GOVERNANCE PROJECT – FINAL REPORT 3 ACRONYMS AND ABBREVIATIONS CAP Citizen Advisory Panel COP Chief of Party DI Democracy International, Inc. DP Democratic Party DWG Decentralization Strategy Working Group ERRU Water Regulatory Authority EU European Union GIS Geographic Information System GNTP General National Territorial Plan GOA Government of Albania ICT Information and Communication Technology IMF International Monetary Fund IPA Instrument for Pre-accession Assistance IPRO Immovable Property Registry Office JAP Joint Action Plan KfW KfW (Germany) Development Bank LDP Local Development Plan LGU Local Government Unit MOF Ministry of Finance MOSLI Ministry of State for Local Issues MUDT Ministry of Urban Development and Tourism NGO Nongovernmental organization NTC National Territorial Council NTPA National Territorial Planning Agency PLGP Planning and Local Governance Project PPP Public-Private Partnerships SDC Swiss Development Cooperation SP Socialist Party PERFORMANCE EVALUATION OF THE PLANNING AND LOCAL GOVERNANCE PROJECT – FINAL REPORT 4 TA Technical Assistance USAID United States Agency for International Development SOW Statement of Work STAR Support for Territorial Administrative Reform UNDP United Nations Development Programme PERFORMANCE EVALUATION OF THE PLANNING AND LOCAL GOVERNANCE PROJECT – FINAL REPORT 5 USAID/ALBANIA RESULTS FRAMEWORK PLGP RESULTS FRAMEWORK PERFORMANCE EVALUATION OF THE PLANNING AND LOCAL GOVERNANCE PROJECT – FINAL REPORT 6 EXECUTIVE SUMMARY The $9.3 million USAID Planning and Local Governance Project (PLGP), now in its third year of a five-year life, is a sound project performing well, but PLGP now has come to a strategic decision￾making crossroads due to the game-changing impact of the upcoming territorial administrative re￾form. This report evaluates PLGP performance to date, but perhaps more importantly, analyzes the changed enabling environment and makes recommendations for how to adapt the project to achieve new goals made possible by the territorial administrative reform if it is also accompanied by fiscal decentralization reforms. PLGP works at both the national and local government levels, partnering with 15 selected Local Government Units (LGUs), 13 municipalities and two communes, as well as with the Ministry of Urban Development and Tourism (MUDT), its National Territorial Planning Agency (NTPA), the Ministry of State for Local Issues (MOSLI), and to a lesser extent, the Office of Registry of Immov￾able Property (IPRO) and the Ministry of Finance (MOF). PLGP is managed in four components that aptly describe the project's objectives: 1. Support effective decentralization policies and legislation; 2. Improve local governance; 3. Improve management of local services, especially water utility companies; and 4. Assist the Government of Albania and LGUs to plan and manage urban and regional growth. However, for purposes of the evaluation analysis the terms of reference for the evaluation team pose four key questions looking at the project in a slightly different but more integrated way. These questions rather than the project components form the framework for the report. They are: • To what extent have PLGP activities resulted in increased participation and transparency in decentralization reform processes, local governance accountability and territorial planning? • Based on perceptions of outside stakeholders, do the selected municipalities have better performance as a result of the approaches and implemented activities than they otherwise would have had in operational effectiveness, resource management and services to citi￾zens/businesses? • What were the challenges (internal and external, including the recently launched territorial administrative reform) faced by the project and lessons learned? • To what extent did PLGP activities result in decentralization process improvements (na￾tional-level impacts)? The report is organized in a way both to answer the key questions and to highlight activities in the project’s four components. Findings, Conclusions, and Recommendations then follow. As readers of the Executive Summary are most interested in the Findings and Recommendations rather than the analysis in the body of the report, the principal findings and recommendations are set forth be￾low, paraphrased slightly for brevity: PERFORMANCE EVALUATION OF THE PLANNING AND LOCAL GOVERNANCE PROJECT – FINAL REPORT 7 FINDINGS AND CONCLUSIONS • PLGP is a sound project to date, well-staffed and managed, and highly regarded by clients and counterparts; PLGP is meeting its deliverables thus far; • Territorial Administrative Reform is a “game changer” that calls for a revised PLGP decen￾tralization/improved local governance strategy and stated objective; PLGP support for suc￾cessful implementation (with fiscal decentralization) will be critical to success; • PLGP’s approach to decentralization reform has been effective, using a well-structured, par￾ticipatory approach with stakeholders to invigorate and inform a critical policy dialogue process; • Fiscal decentralization is the “Achilles heel” of the decentralization process that could cause it to fail; highest level policy dialogue is needed to convince decision-makers within the government of Albania (GOA); • The Action Plans with partner LGUs are well conceived and meeting most output targets, but performance results are still at preliminary stages; • Implementation of needed reforms to the property tax – LGUs’ greatest untapped own￾source revenue – will be a difficult, complex and lengthy process; • Citizen Advisory Panels (CAPs) are performing surprisingly well, empowering civic participa￾tion and interaction with local authorities; • Municipal Councils, though important to democratic local governance, are not seen as per￾forming their broad statutory functions well, and near-term prospects are not encouraging, leaving mayors almost alone as the main change agent in improving local governance; • Water utility companies are not providing minimum adequate service and are crippled by dysfunctional governance structures and lack of investment capital; changes needed beyond current company management improvements are outside USAID’s “manageable interests;” • PLGP showed valuable flexibility in responding quickly to the GOA on territorial reform. Getting the fiscal decentralization issue on the GOA agenda is a notable result. Support to MOSLI will be crucial to launching the reform well and will be an ongoing requirement; • MUDT, NTPA, and MOSLI, are institutionally thin and weak, and at this stage not up to the challenging tasks ahead; the need for PLGP technical assistance is ongoing; • PLGP is caught in a “time squeeze” by the reforms, forcing major strategic decisions about changes to the project but with insufficient time or funding left to execute the changes fully. In any event, prompt USAID decisions for the future course of PLGP are needed. • The enabling environment for policy reform is extremely favorable and argues in favor of new strategic engagement, but sophisticated policy conditionality is also needed. A longer project life and additional funding would be needed to achieve revised objectives. PERFORMANCE EVALUATION OF THE PLANNING AND LOCAL GOVERNANCE PROJECT – FINAL REPORT 8 RECOMMENDATIONS • Continue strong engagement with the decentralization/territorial reform process, with spe￾cial emphasis on fiscal improvements and municipal consolidation planning activities; • U.S. Embassy, USAID and other donors should make clear to the GOA that full support for decentralization/territorial reform is contingent on fiscal decentralization, especially reliable, higher levels of unconditional transfers to fund enhanced LGU functions; • To keep pace, USAID should make prompt decisions on modifications to PLGP in view of the imminent launch of major territorial administrative reforms; • Increase relative support to national institutions as requested by the GOA, but maintain right balance with LGUs – feasible only with additional time and funding for PLGP; • Revise overall strategic objective for PLGP to be “improved local governance through suc￾cessful decentralization/territorial planning/territorial reform in (three to five) model munic￾ipalities’” (“proof of concept”); • PLGP should unify “national” and “local” objectives more strategically – deeper engage￾ment with fewer municipalities alongside national-level counterparts (“proof of concept”); • Reduce current list of partner LGUs and limit range of ongoing activities in order to em￾phasize selected ‘Model Municipalities’ – fewer training courses, more on-the-job training; • Recognizing their long-term importance to effective democratic local governance and the impact of territorial reform, increase the level of engagement with restructured municipal councils in 2015, modifying the approach where needed to overcome partisan divisions; • Continue to support CAPs but focus mainly on long-term sustainability and networking; • Set clear targets for improved LGU tax collection, with special emphasis on a modernized property tax and collection system; in spite of complexities and difficulties, the importance of property tax reform should make it a key priority in the revised strategy of PLGP going forward; • Sharply reduce level of effort with water companies due to problems beyond USAID’s manageable control (except in selected “model municipalities”); • Use the Support for Territorial Administrative Reform (STAR) project as a policy dialogue forum for key issues, including local electoral law; • Use more gender-specific analysis tools in activity design; and • Monitoring mechanisms should be tied more to results rather than mainly to outputs. PERFORMANCE EVALUATION OF THE PLANNING AND LOCAL GOVERNANCE PROJECT – FINAL REPORT 9 INTRODUCTION AND METHODOL￾OGY PROJECT DESCRIPTION The Planning and Local Governance Project (PLGP) is a five-year, $9.3 million local governance and decentralization funded by the United States Agency for International Development (USAID) and implemented by Tetra Tech ARD. The project was designed in 2011, started in 2012, and is due to end in January 2017. The project team works with national-level ministries and agencies, such as the Ministry of Urban Development and Tourism (MUDT), the Ministry of State for Local Issues (MOSLI), and the National Territorial Planning Agency (NTPA), to promote decentralization re￾forms, and with 15 selected municipalities1 to improve local governance and service delivery. The project consists mainly of expert technical assistance (training, reports, studies, study tours, etc.) and a small amount ($700,000) for purchase of information and communication technology (ICT) hardware and software. It is a “knowledge” and “know-how” transfer project to increase Al￾banian human capital and professional skills at both the national and local levels. The project has four components: C1. Support Effective Decentralization Policies and Legislation – This component’s activities focus mainly on national-level policy issues surrounding decentralization. This includes a white paper on fiscal decentralization and other policy papers relating to intergovernmental transfers, local gov￾ernment unit (LGU) own-source revenues, and facilitation of a working group on decentralization policy. Conferences, workshops, and other trainings support these policy objectives. Similar activi￾ties are designed to improve data and information sharing between the central government agen￾cies and LGUs and participation of civil society groups in decisions affecting local communities. C2. Improve Local Governance – This component’s activities focus mainly on improvements in LGU internal operations, including public hearings, e-governance applications, tax administration, asset inventory and management, budgeting, financial management, and ICT systems. Most of these activities consist of technical assistance (TA), seminars, workshops, and trainings for LGU employ￾ees. Other activities include the creation of local Citizen Advisory Panels (CAPs) to interface with LGU officials and training and materials for municipal council members. C3. Improve Management of Local Services (Municipal Water Utility Companies) – This compo￾nent’s activities focus mainly on improving the performance of municipal water utility companies through formal business plans, cost recovery strategies, training for company staff and LGU over￾sight staff, training supervisory board members nationwide in their roles and responsibilities, and preparation of a handbook on European Union (EU) standards. Other activities include customer 1 More precisely, PLGP works with 15 LGUs - 13 municipalities and two communes; work with Durres is emphasizes the water company, and work with Tirana emphasizes property tax issues. The other 11 municipalities are Berat, Elbasan, Fier, Kamza, Korca, Kucova, Lushnje, Patos, Saranda, and Vlora, Vora. The two communes are Kashar and Paskuqan. PERFORMANCE EVALUATION OF THE PLANNING AND LOCAL GOVERNANCE PROJECT – FINAL REPORT 10 service plans, a “customer bill of rights,” and other actions to improve communication among LGUs, the water regulatory agency, and interested nongovernmental organizations (NGOs). C4. Assist the government of Albania (GOA)/LGUs to Plan and Manage Urban and Regional Growth – This component’s activities focus mainly on urban planning at the national level and with LGUs. This includes training assistance to LGU planning units for territorial planning and land de￾velopment. More recently, other major activities include support to the NTPA for preparing the General National Territorial Plan (GNTP) and significant technical assistance to MUDT and NTPA for planning and implementing national territorial planning law. EVALUATION PURPOSE AND METHODOLOGY The purpose of this mid-term performance evaluation is to provide USAID/Albania with rigorous, evidence-based analysis of development outcomes and performance of PLGP interventions to date. The evaluation also intends to provide the Mission with forward-looking recommendations to improve or modify current interventions. In this case, the evaluation is oriented somewhat toward the future due to the significant enabling environment changes affecting the project that were un￾foreseeable at the time the project was designed (2011) and implementation began (2012). Evalua￾tion findings and recommendations outlined in this report review the quality of “process” assis￾tance as well as substantive outcomes. METHODOLOGY The PGLP evaluation is predominantly qualitative and based on in-depth individual and group in￾terviews. The procedure for identifying the interviewees is outlined below: First, the evaluation team listed the PGLP participating municipalities from biggest to smallest in terms of population. Second, based on potential scenarios of territorial administrative reform, the team reduced the list of municipalities to those considered not likely to be absorbed after the terri￾torial reform was approved. This reduced the list from 15 to 13 municipalities: Berat, Durres, El￾basan, Fier, Kamez, Korca, Kucova, Lushnja, Patos, Saranda, Tirana, Vora and Vlora. Third, a list for each participating municipality identified the breadth (number of components in which they partici￾pated) and depth (the intensity of participation) of participation. Fourth, because there was little variability in certain variables, such as a mayor’s gender (only the mayor of Patos is a woman), whereas Tirana and Patos are the largest and the smallest municipalities, respectively, it was decid￾ed that these two municipalities would be part of the sample of the evaluated PGLP municipalities. Fifth, two scenarios detailed logistical variables that could affect the number of interviewed benefi￾ciaries and types of interventions that could be surveyed. Then, eight or 53 percent of participating municipalities or 66 percent of 12 municipalities that most likely will stand after the territorial ad￾ministrative reform takes place were selected for site visits and evaluative interviewees. That num￾ber also was roughly equivalent to the logistical feasibility of two field trips and available LOE days. Those municipalities are: Tirana, Durres, Lushnja, Patos, Vlore, Saranda, Elbasan, and Korca. The municipalities of Gjirokaster and Pogradec, which are not PGLP participating municipalities, were selected as “quasi control” cases. The municipality of Pogradec participated in the previous USAID local governance program, whereas the municipality of Gjirokastra did not. The purpose of select￾ing these two municipalities was to see whether there were any obvious differences in local gov￾ernance between the participating and nonparticipating municipalities, and if PGLP brings additional value to the participating municipalities compared to those that have received USAID local govern- PERFORMANCE EVALUATION OF THE PLANNING AND LOCAL GOVERNANCE PROJECT – FINAL REPORT 11 ance aid in the past. Due to logistical reasons, meetings in Gjirokaster did not occur, and it was ex￾cluded from the group. The interviewing tool was that of semi-structured interviews. For each component of PGLP, ques￾tions of high, medium and low interest for this evaluation were identified. The interviewing proce￾dure started with a presentation of the reasons and objectives of the evaluation, and an invitation to the interviewees to present their views about the nature and usefulness of their collaboration with PGLP. After this initial overview, the team asked the structured questions starting from those of high interest to those of low interest if time permitted. Interviewees’ statements about the use￾fulness or lack thereof, of the PGLP were followed up with questions to flesh out and support these statements with concrete examples. There was an attempt to collect quantitative data to estimate the usefulness of training provided by the PGLP through an e-survey. PGLP provided lists of participants for each training, which included information about the training they participated in, the municipality where they came from, posi￾tion, phone numbers, and e-mail addresses. In order to be able to estimate the usefulness of specif￾ic trainings in addition to trainings in general, the sample of surveyed trainees was stratified initially by training. . Trainings were divided by the PGLP components. Trainings/workshops whose partici￾pants e-mail addresses were missing in large numbers were excluded from the survey in order to decrease biased results. Among those that had the most complete lists of e-mail addresses for par￾ticipants, the following trainings were randomly selected: 1. Tirana Workshop on Administration of Local Taxes (One response) 2. 2014 Budget for the Local Government Units (One response) 3. Geographic Information System (GIS) Training for Local Government Officials 4. Land Development Instruments Training for Local Governments 5. Training on Territorial Land Management Instruments for Central Government Officials 6. Training on Relations with the Customers (Three responses out of 23 trainees that re￾ceived the survey e-mail) Each participant in these trainings for which there was an e-mail address (126: 55 or 44% male and 71 or 56% female) received a SurveyMonkey link uniquely tied to the survey and their e-mail ad￾dress. Due to mistakes in e-mail addresses provided, 32 e-mails bounced back, six of which were duplicates. One hundred trainees received a survey link. Response rate was very low (36 percent), regardless of the reminder e-mails sent out every other day, and announcements for checking their e-mail sent by PGLP. The bulk of responses came from the GIS Training for Local Development, Land Development Instruments Training for Local Governments, and Training on Territorial Land Management Instruments for Central Government Officials. Only one trainee of Tirana Workshop on Administration of Local Taxes, one trainee of 2014 Budget for the Local Government Units, and three trainees of Training on Relations with the Customer responded to the survey. Due to the very low response rate, no analysis can be statistically meaningful either for any individual train￾ing or for all training in general. Sixty-one percent of respondents are female and thirty-nine per￾cent of respondents are male. See Annex C for further visualizations of survey results. The first question of the survey regarding the content of training was: “Did you acquire new knowledge because of this training?” This question was designed to measure input/output value. PERFORMANCE EVALUATION OF THE PLANNING AND LOCAL GOVERNANCE PROJECT – FINAL REPORT 12 Fifty percent of respondents stated that they acquired “a lot of information” and 47 percent stated that they received “some new information.” Only about 17 percent of respondents state that knowledge received in PGLP trainings are not or are little applicable to their work. Eighty-three percent state that such knowledge is either very ap￾plicable or somewhat applicable to their work. Sixty-four percent of respondents state that they have used knowledge received in the PGLP train￾ing in their work, and 36 percent state that they have not used such knowledge. This question is designed to measure actual outcomes/useful results of the inputs. Participants expressed overall satisfaction about the way training was delivered. All participants were either very satisfied (64 percent) or satisfied (36 percent) with the way trainers provided knowledge and taught skills that enabled trainees to reach the objectives of the training. KEY EVALUATION QUESTIONS USAID has asked Democracy International, Inc. (DI) to focus its investigation on four key ques￾tions: 1. To what extent have PLGP activities resulted in increased participation and transparency in decentralization reform processes, local governance accountability and territorial planning? 2. Based on perceptions of outside stakeholders, do the selected municipalities have better performance as a result of the approaches and implemented activities than they otherwise would have had in operational effectiveness, resource management and services to citi￾zens/businesses? 3. What were the challenges (internal and external, including the recently launched territorial administrative reform) faced by the project and lessons learned? 4. To what extent did PLGP activities result in decentralization process improvements (na￾tional-level impacts)? Yes, I have used them No, I have not used them Series1 23 13 0 5 10 15 20 25 Number of respondents Have you used knowledge received in this training in your work? PERFORMANCE EVALUATION OF THE PLANNING AND LOCAL GOVERNANCE PROJECT – FINAL REPORT 13 EVALUATION REPORT ORGANIZATION The traditional evaluation report looks at the stated components of a project, reviewing and ana￾lyzing them in order, combining the components to get a good overall picture of the project, then making findings and recommendations. The organization of this report does not follow that tem￾plate. Instead, consistent with the Statement of Work, the report is organized to address the four key questions in order, with the project’s four components woven in to provide the analysis and arguments for the findings and recommendations. The treatment of particular aspects of the vari￾ous components is marked in the text wherever relevant. Question 1 regarding increased participation and transparency cuts across all four components. Question 2 regarding the performance of municipalities deals almost exclusively with Components 2 and 3. Question 3 regarding challenges and lessons learned cuts across all four components. Question 4 refers to process improvements with national level impact related to the decentraliza￾tion process, which is mainly Component 1. However, given the unforeseen territorial reform pro￾cess now underway, we treat Question 4 as being as much related to the territorial reform process and urban planning as to the decentralization process. The two processes are closely interrelated but at this stage cannot be considered as a single integrated process even if that should be the case. Thus, Question 4 cuts across all four components. Questions hereafter are referenced as “Q” followed by number (1-4), and components are referenced as “C” followed by number (1-4). Again, for reference purposes for the reader, the four project components are listed below as they are titled for management and implementation: C1: Support Effective Decentralization Policies and Legislation; C2: Improve Local Governance; C3: Improve Management of Local Services, Especially Water Utility Companies; and C4: Assist the Government of Albania and Local Government Units to Plan and Manage Urban and Regional Growth. PERFORMANCE EVALUATION OF THE PLANNING AND LOCAL GOVERNANCE PROJECT – FINAL REPORT 14 PROJECT REVIEW BY KEY QUES￾TIONS/COMPONENTS QUESTION 1: To what extent have PLGP activities resulted in increased participation and transparency in decentralization reform processes, local governance accountability, and territorial planning? It must be noted at the outset that the performance measure has to do with “increased participa￾tion and transparency.” It is a process metric. It does not refer to decentralization reform, LGU ac￾countability, and territorial planning outcomes or results per se, but rather as to whether participa￾tion and transparency in those areas have increased as a result of project activities. DECENTRALIZATION REFORM PROCESSES The project laid out a detailed approach to “support effective decentralization policies and legisla￾tion” (C1). This involved first producing a high-quality experts’ report on fiscal decentralization2 to provide a solid foundation for debating the intergovernmental fiscal issues that are critical to any successful decentralization. Numerous central and municipal government officials in Tirana and LGU and CAP representatives around the country cited the report as an important document that framed the issues well and set the terms of the debate going forward. The report cited other countries’ experiences with these same issues to show valuable points of comparison and lessons learned, an example itself of good practice. PLGP followed up the report with a national conference on fiscal decentralization that brought to￾gether more than 100 interested stakeholders from both the national and municipal government as well as civil society. Before the conference, project staff visited several municipalities around the country to seek input on the conference. After the conference, PLGP sponsored regional roundtable meetings to stimulate continued local-level participation in national-level discussions about fiscal changes. In the team’s interviews, more than 25 respondents in six municipalities visited cited the PLGP dialogue methodology as valuable in increasing communication and information sharing between the national government and LGUs. The process was exemplary in widening the scope of participation as well as the transparency of discussion on key fiscal decentralization issues. As one interviewee stated, “PLGP got this key issue back on the table in the decentralization discussions.” Unfortunately, the process did not culminate in hoped-for decision-making supportive of decentralization by 2013. The government then in of￾fice was preoccupied with other issues, especially upcoming national elections, and was reluctant to engage in serious policy dialogue on the subject. Momentum was lost as a result, but the new gov￾ernment that came into office in September 2013 has shown renewed interest in fiscal decentrali￾zation, and PLGP staff has restarted technical discussions with counterpart Ministry of Finance staff who USAID considers responsive to these issues. The fiscal decentralization dialogue takes on added importance in view of the Rama government’s strong push for radical territorial administra- 2 “White Paper on Fiscal Decentralization in Albania” (Draft), Tetra Tech ARD, October 2012. PERFORMANCE EVALUATION OF THE PLANNING AND LOCAL GOVERNANCE PROJECT – FINAL REPORT 15 tive reform yet this year, discussed in more detail later in the report. In fact, the new government’s stated policy commitment to decentralization led PLGP to help initiate a new, inclusive, participa￾tory dialogue process with central and local governments, formalized in the Decentralization Strat￾egy Working Group (DWG) to advance decentralization reforms (C1). PLGP organized a new na￾tional conference in March at which issues and priorities were discussed and an action plan to pre￾pare a draft decentralization strategy by this July was approved. The national conference was pre￾ceded by a roundtable of mayors bringing together the 15 partner LGUs and an additional three LGUs assisted by the Swiss development cooperation. Following the conference, PLGP supported MOSLI in organizing meetings with line ministries to get their input for the strategy. PLGP also sup￾ports a technical secretariat to coordinate all of these efforts, including with interested donors. The examples cited above are solid evidence of a structured, well-organized support to a policy dialogue process that, if concluded successfully, will yield concrete results in decentralization poli￾cies and legislation. PLGP thus is playing a key role in helping the GOA achieve its policy reform objectives in decentralization, with both process assistance and substantive technical inputs at all stages. Having focused earlier on the narrower goal of fiscal decentralization, PLGP is now able to address not only that issue but also the complete national decentralization strategy and reform ef￾fort in a process with greater participation and transparency. The overall process now also includes territorial administrative reform (C4), discussed further in Q4. This represents a major advance for USAID’s democratic governance objectives nationally. One area of work, however, did not fare well. Information sharing inside government and between levels of government and with civil society is notoriously constrained in Albania. Through regional meetings and workshops, PLGP has tried to improve the consultative process and formalize it as part of the national policy dialogue process on decentralization issues. This was meant to culminate in creation of the Consultative Council as a recognized forum for consultations. The new GOA has stated its intention to create such a council, but no action has been taken yet. LOCAL GOVERNANCE ACCOUNTABILITY PLGP followed selection criteria working down a list of the 35 LGUs with the largest populations, having first agreed to a geographic division of labor in LGU work between the Swiss Development Cooperation (in the north) and USAID (in the south). PLGP followed best practice processes in visits to and discussions with potential partners, eventually signing formal MOUs with selected LGUs outlining mutual commitments (C2). The MOUs contained provisions relating to increased participation and transparency in LGU activities, such as public hearings and posting information on LGU websites. PLGP was instrumental in introducing another innovative citizen participation mechanism – the CAP (C2)—in 14 partner LGUs (one in a non-partner LGU). Following an inclusive process, PLGP helped set up what might be called “blue ribbon commissions” or “good governance committees” of local civic leaders interested in playing an active role in local government affairs. Ranging in size from about 25 to 50 members, the CAPs, once organized and active, enter into an MOU with the mayor’s office that formalizes their relationship and pledges mutual collaboration on local govern￾ance. PLGP staff gives them continuing follow-up civic engagement technical assistance on how to function effectively as civic organizations. The team met with two CAP representatives (chosen democratically for their leadership roles by the CAP members) in four LGUs visited during field site visits. They were unanimously positive and enthusiastic about how this new process of interaction with local authorities has increased trans- PERFORMANCE EVALUATION OF THE PLANNING AND LOCAL GOVERNANCE PROJECT – FINAL REPORT 16 parency and civil society participation and influence. This applies especially to a more open munici￾pal budgeting process, with active input on spending priorities and improvement projects. The mayors interviewed also expressed satisfaction with the CAPs, saying they are serving a useful advi￾sory role and creating a better, more open communication line for city officials with citizens in set￾ting priorities and reaching consensus on issues. Municipal councils in some cases are also actively involved with the CAPs, inviting them to public hearings and taking them into account in perform￾ing their legislative and oversight functions. The CAPs thus far operate on a strictly non-partisan basis, which is very important to their public credibility and their ability to work across political party lines with mayors and councils. Mayors of different parties cite CAP as being based solely on the merits of an issue. Though CAPs can be viewed at this stage as a PLGP success story, concerns for the future nevertheless remain. CAP participation is totally voluntary and unpaid, and CAPs receive no funding to carry out or commis￾sion activities, such as studies, reports, or projects, of their own. CAPs are quite new, and their sus￾tainability over time is not yet proven. It is probably not desirable to turn them into grant-making organizations, but perhaps small offices and a part-time staff member could help to make them more permanent and visible to the community. City governments could also provide this type of financial support. Replicability on a larger scale appears feasible, but PLGP could not take on that task without divert￾ing scarce resources from current clients. Networking and promotion of the model by current CAPs with minor input from PLGP staff might be enough to leverage the impact of CAPs. Some nonparticipating municipalities and citizens groups have already expressed interest. The underlying capacity and interest can be tied to the growing strength and maturity of civil society in Albania’s democratic process, which has notably received important support from USAID and other donors in the past 20 years. That enabling environment has improved remarkably. A fuller discussion of the broad range of assistance activities in support of service delivery and LGU performance (C2, C3) that focuses more on substantive results (based on subjective perceptions of outside stakeholders) rather than process can be found below (Q2). TERRITORIAL PLANNING As noted above, PLGP was designed in 2011 and began activities in 2012. At that time, USAID recognized that better territorial planning at the LGU level (C4) was needed to deal with the im￾pact of rapid development and a frenzied pace of commercial building and home construction, much of it illegal or at least unregistered. Development impact fees had also become a major source of revenue for LGUs, and the allure of that income and “rents” that often went with it proved difficult to subordinate to proper physical planning or zoning controls. PLGP activities contemplated training LGU staff in use of modern planning tools such as GIS and assistance in updating mapped local territorial development plans (LDPs). They also expected to be involved with regional development planning issues. Objectives focused on work at the local level with the selected LGUs and involvement at the national level. At the national level, PLGP has supported the GoA with drafting and implementing planning legislation and in preparing the long￾overdue General National Territorial Plan (GNTP). PLGP has supported national and local planning authorities in doing practical examples of urban space design and management that can be funded, implemented, and replicated. Support to LGUs has mainly taken the form of trainings for the part￾ner LGUs on legislation implementation, and coaching LGUs in delivering products related to plan￾ning and land management. Both will be important going forward, as the territorial administrative PERFORMANCE EVALUATION OF THE PLANNING AND LOCAL GOVERNANCE PROJECT – FINAL REPORT 17 reform will increase the size of the LGUs, and thus also make their territory land management problems much more complex to deal with. Suddenly, after the elections in late 2013, the landscape for territorial planning in the project (C4) changed dramatically, with significant implications for the project. The newly elected Socialist Party (SP) government stated its intention to carry out a radical territorial administrative reform, cutting the number of LGUs from 373 to between 35 and 453 , a reduction of more than 300, or approx￾imately 89 percent. Communes will be consolidated with urban municipalities to form much larger land areas and populations. The map of the entire country will be redrawn. For the first time in Al￾bania’s democratic history, this plan is also feasible politically, as the SP coalition commands an ab￾solute majority in parliament. The full implications of this momentous change are discussed later (Q3, Q4, C4), “merging” the decentralization issue and the territorial planning issue. Here, the discussion focuses again on whether PLGP activities, especially those related to national territorial planning alongside the terri￾torial administrative reform process, resulted in greater participation and transparency for those directly involved in the process and the public at large. The GOA has been open and public about its plans, releasing at least five different potential maps for consideration. The reform proposal and necessary legislation is being worked on intensively in parliamentary committee, although the opposition Democratic Party (DP) bloc has chosen not to participate officially. USAID and PLGP responded positively to an urgent GOA request to provide technical support for the territorial reform and the related decentralization effort, showing praise￾worthy flexibility and timeliness in its response. Final decisions are expected very soon from the prime minister’s office for submission to Parliament for approval. PLGP support is following a methodology similar to that already underway with the decentraliza￾tion process (C1). PLGP is providing significant technical assistance and expertise to the key na￾tional government institutions tasked, respectively, with territorial planning and territorial adminis￾trative reform: MUDT (newly created) and NTPA, and MOSLI (newly created). PLGP has helped organize and staff the working groups, provide basic institutional development assistance through technical assistance and training to the three institutions, and promote infor￾mation sharing with local actors. According to central government respondents, the process has improved participation and transparency inside the workings of government, but it is not particular￾ly visible to the public at this stage. Their greatest interest is the new map, with those options known to the public. The final decisions will be made in the prime minister’s office and later in par￾liament. QUESTION 2: Based on perceptions of outside stakeholders, do the selected municipalities have better performance as a result of the approaches and implemented activities than they oth￾erwise would have had in operational effectiveness, resource management and services to citi￾zens/businesses? It should be noted at the outset that the municipal performance measure (C2 and C3) has to do with “perceptions of outside stakeholders” rather than any actual measurement of performance. It 3 Ultimately, the number of LGUs was reduced to 61. PERFORMANCE EVALUATION OF THE PLANNING AND LOCAL GOVERNANCE PROJECT – FINAL REPORT 18 should also be noted that the term “outside stakeholders” is a relative term, meaning that it may apply to one level of government versus another, executive offices versus legislative, companies versus supervisory councils, and CAPs (civil society) versus governmental bodies, rather than only to disinterested citizens or people outside government. Q2 also asks whether PLGP “approaches and implemented activities” have led to better perfor￾mance in selected areas in selected municipalities than they otherwise would have had, i.e. without such assistance. The question as put is impossible to answer scientifically due to lack of any reliable baseline data, lack of any control group of municipalities, and lack of time and resources for survey research. (See the discussion under Methodology and Limitations in Part I). CAPACITY BUILDING WITH LGUS A review of implemented activities (as distinct here from approaches) covers a long list of activities carried out by PLGP, including training. This component’s activities focus mainly on LGU internal operations improvements and include public hearings, e-governance applications, tax administra￾tion, asset inventory and management, budgeting, financial management, and support for ICT sys￾tems. Most of these activities consist of technical assistance, seminars, workshops, and trainings for LGU employees. Other activities include the creation of local Citizen Advisory Panels to interface with LGU officials and training and materials for municipal council members. These last two are treated separately for emphasis. Respondents (mayors, LGU staff, CAP members) in all eight municipalities almost unanimously re￾ported satisfaction with training received and wanted to see it continue. There was great eagerness for more in-depth GIS training; however, its utility at this point is questionable because none of the municipalities visited had committed yet to spend the money necessary to purchase the software package and were hopeful PLGP would buy it for them. The team was not in a position to review all trainings in detail. The interviews with respondents in site visits touched on asset management, tax administration, public-private partnerships, property tax collection issues, and territorial plans, among others. In an input/output sense, the capacity building activities have been successfully implemented to date, but it is still too early in the process to be able to demonstrate outcomes in terms of improved municipal performance in these areas. Completed asset inventory in several municipalities is a measurable result associated with training and technical assistance. As the measure to be applied to performance improvements at this stage is “based on the perception of outside stakeholders,” the opinions expressed by respondents at the national level in Tirana and at the local level in LGUs visited clearly indicated positive views of the inputs. MUNICIPAL COUNCILS This report gives special attention to municipal councils as an underrepresented target group in PLGP. Municipal councils have important de jure legislative and decision-making powers in Albania’s governance institutional framework, but de facto they are often not exercised or ignored in prac￾tice. Albania has a long history of abusive centralization of power in the hands of the executive or parties controlling the executive at both the local and national levels. This has reinforced a histori￾cally dominant authoritarian political culture. In order to enable LGUs not only to be effective and efficient in management of local affairs and service delivery but also to be more democratic, the councils should be considered important balancing actors in a context where most mayors (with certain consensus-building exceptions) appear to seek to monopolize decision-making powers in PERFORMANCE EVALUATION OF THE PLANNING AND LOCAL GOVERNANCE PROJECT – FINAL REPORT 19 their own hands. The councils’ representational legitimacy with the public is weak, and the closed party list electoral system further blurs accountability to the voters. In all partner LGUs, the mayor clearly is the main PLGP counterpart and seen as the primary change agent and driver of reforms. Given that better performance of a city’s (and municipal water company’s) administrative and service delivery functions is the main objective of PLGP’s trainings and other technical assistance, this is understandable. The fact that the mayor is the only directly elected LGU official makes him or her a natural focal point for leadership and accountability. In fact, in most cities visited and in the opinion of most respondents, the municipal councils are considered either dysfunctional or almost so due to low levels of competence, polarized political party positions, or the mayor’s dominating role, e.g. Saranda and Vlora. In no other city but Saranda was the team able to schedule meetings with municipal councilors from the opposition coalitions. PLGP has tried to reach councilors, mainly through mayors or mayors’ appointed PGLP coordina￾tors, to involve them in the project. But, as reported by PLGP staff and interviewees in different municipalities, councilors have been a difficult target group to convince to participate in the project. There is little evidence that even councilors that have attended PGLP trainings have used the high￾quality manual produced by PGLP or other materials provided in trainings. Even though that is the case and, in the opinion of most central government and LGU respond￾ents, many councilors’ competence and commitment to serve is problematic, it is important to long-term sustainable and effective democratic local governance that they remain an important PGLP target group, especially following the 2015 local elections, which will take place after the mu￾nicipal consolidation due to territorial reform. A huge turnover in council membership is expected as well as a dramatic decline in the total number of sitting councilors after consolidation. This should be viewed as an opening for greater engagement with the newly elected councils. As one possibility to increase councilors’ participation, especially in cities where mayors and counci￾lors have little communication, PGLP might continue to use mayors as the main interlocutor to reach its target groups. However, in cases where mayors either have no political clout on the mu￾nicipal council or where the mayor is a polarizing actor, PGLP could identify other actors in local politics to play the interlocutor role with councilors. PGLP might approach the councilors’ leaders from all party coalitions, and while maintaining a politically neutral approach, try to convince these leaders of their own interest in engaging with PLGP and plan activities in collaboration with them. Such a direct approach with the councilors could increase the likelihood of a smoother continu￾ance of PGLP whether or not party power balances change after the local elections in 2015. QUESTION 3: What were the challenges (internal and external, including the recently launched territorial administrative reform) faced by the project and lessons learned? PLGP faced many challenges during the first two and a half years of the project. Some have been successfully dealt with, others less so. The most noteworthy challenges are discussed below. DECENTRALIZATION DIALOGUE The fiscal decentralization policy dialogue that began well in 2012 stalled as the 2013 national elec￾tions approached and the government gave priority to other major issues. The newly elected Rama government, however, in late 2013 expressed a strong commitment to a new decentralization strategy and major territorial administrative reform and the GOA requested PLGP assistance for its decentralization plans. The dialogue window reopened and PLGP got the opportunity to reincor- PERFORMANCE EVALUATION OF THE PLANNING AND LOCAL GOVERNANCE PROJECT – FINAL REPORT 20 porate fiscal decentralization into policy planning of a much more ambitious overall national decen￾tralization effort. For the first time, pro-LGU decentralization, including fiscal decentralization, and territorial administrative reform, including increased attention to territorial planning, could be ad￾dressed at the same time in an integrated fashion in a USAID-funded local governance program. This is a challenge in a very positive sense for PLGP in its final two years (or beyond). However, whether or not the GOA will make the critically necessary, favorable final decisions regarding fiscal decentralization is still quite uncertain, both in the MOF and in the prime minister’s office. LGU REVENUE WEAKNESSES This is perhaps the biggest challenge faced by the project to date and will continue to be a serious problem in the future. LGUs do not have anywhere near enough revenue (all sources) to provide quality services at the much higher level needed to even begin to approach European standards. While LGUs the team visited are already meeting more than 50 percent of budgeted expenditures from own-source revenues, which is quite remarkable, expenditure levels remain extremely low. Central government transfers have shrunk in recent years due to the economic crisis and fiscal stringency.4 Albania continues to rank low on key indicators such as LGU revenue as a percentage of GDP (2.5% in 2010, lowest in the Balkans),5 and LGU expenditures as a percentage of total public expenditure (8.8% versus an EU average of 25.7%).6 The current agreement with the International Monetary Fund (IMF) may make things worse as it endorses a hastily implemented ad valorem property tax (a virtually impossible task in the short￾term given current institutional capacities and the state of the cadaster) as a solution to the fiscal crisis facing Albanian LGUs. A property tax will not be an adequate substitute for needed minimum levels of revenue transfers. The IMF agreement establishes a very strict fiscal framework, but it does not per se set limits on intra-governmental transfers, thereby leaving some policy flexibility on the subject to the GOA. LGUs in the past year lost the authority to collect the small business tax, which had been a signifi￾cant source of income. Under the new system, the GOA is committed to rebate this revenue to LGUs where collected. However, data from national government sources shows a lower level of revenue thus far in 2014 under the new collection system. However, the GOA has pledged to make additional unconditional transfers, if necessary, to cover any shortfalls. During the construction boom, the development impact fee was another significant source of rev￾enue for LGUs. The economic slowdown and a so-called “freeze” on local issue of new permits have sharply reduced this revenue flow. In any case, these fees do not represent net new revenue streams, as they are “one time only,” and are meant to cover the additional costs and expenditures the LGU assumes as a result of the development. The PLGP tax expert estimates that the fees do not cover those costs, thus having an actual net loss effect. 4 The MOF/annual budget unconditional transfer formula equalization factors disadvantage the larger, urbanized municipalities such as those in the project, incentivizing them perhaps to increase own-source revenues out of necessity while at the same time “punishing” them for successful greater efforts to do so. 5 NALAS, “Fiscal Decentralization Indicators in South East Europe, March, 2012 (as cited in “White Paper,” op. cit., p. 38). 6 Dexia, “Subnational Public Finance in European Union,” July 2011 (as cited in “White Paper,” op. cit., p. 25). PERFORMANCE EVALUATION OF THE PLANNING AND LOCAL GOVERNANCE PROJECT – FINAL REPORT 21 The construction boom in commercial and residential construction during the past 10-15 years has created huge added value in the real property sector. LGUs are assigned property tax levy and col￾lection authority, but the Albanian property tax system in can only be described as highly problem￾atic at best. It is a huge untapped revenue source, the best long-term revenue stream for LGUs, but untangling the complex problems that limit its use will be a long, tedious process fraught with bureaucratic and political issues. Land titling of private property since the communist period is in￾complete and unreliable. Many properties are technically illegal due to having been built without permits or on land with more than one title claimant. The national property registry agency (IPRO) records are incomplete, though PLGP is providing assistance with the digitization process); and many local IPRO offices refuse to share their data with LGUs – a clear violation of existing law. As a result, LGUs cannot properly map property and match with owners. Urban land itself is not even taxed at all in spite of the fact that land values have increased dramati￾cally in urban areas. The property tax is not ad valorem, thereby not capturing for tax purposes any of the increases in land and building values. In some LGUs with the least developed systems, the tax is a simple flat rate per property; in others, the system only takes into account the “footprint” of the property on the ground, regardless of the height and stories. Few LGUs take into account all the square area of the entire property, counting all floors. Mayors and other interested stakeholders are well aware of this problem, and PLGP assistance is very much needed to make a modern property tax system a large, stable source of revenue for the consolidated LGUs that will take shape with the territorial reform. It will require a significant dedi￾cated level of project time and resources. PLGP’s fiscal decentralization report and updates also caution against unrealistic expectations for revenue yield, citing regional and European data that show much lower figures than those LGUs in the U.S. enjoy.7 C4. SPATIAL PLANNING MORPHS INTO TERRITORIAL ADMINISTRATIVE REFORM The sudden onset of territorial administrative reform, with urgent restructuring tasks in LGUs as they double or triple in land area and population, will be very challenging to them and to PLGP. Practically speaking, PLGP will have to deal with what were three or four times as many LGUs as they currently work with. The national ministries and agencies tasked with implementing the reform—MUDT, NTPA, and MOSLI—are untested and in some cases brand-new creations. They are inadequately staffed and inexperienced. The evaluation team favors having PLGP concentrate on a small number of consoli￾dated LGUs to try to demonstrate models that the decentralization/territorial reform process can be implemented successfully rather than an incremental approach with the current 15 partner LGUs. Tirana (with two current partner communes absorbed) and Durres (with only water com￾pany involvement) can be eliminated, bringing the number of partners down to 10 as a starting point. This would make selection of three to five “model LGUs,” while maintaining some level of support to the other seven, which is feasible within PLGP’s scope. 7 “White Paper,” op. cit., pp. 45-46. PERFORMANCE EVALUATION OF THE PLANNING AND LOCAL GOVERNANCE PROJECT – FINAL REPORT 22 WATER COMPANIES The municipal-owned joint stock companies8 have a poor performance record in all but a few cit￾ies, including the partner LGUs in PLGP. They receive special attention in this report in view of the generally negative conclusions reached about that assistance package. The water companies, from the perspective of the evaluation team, have basic structural and governance problems beyond USAID’s “manageable interest,” i.e., a need for major capital investment, complete corporate re￾structuring as city and rural commune companies are merged, significant high levels of “nonrevenue water,” and supervisory councils that in most cases are dysfunctional. Water supply in almost all the LGUs is inconsistent and not continuous. Only one of the partner LGUs (Korca) supplies water 24/7 to all customers within its service delivery area, and that munici￾pality received major investment funding from donors, especially KfW, beginning more than15 years ago and completely upgraded its pipe network and equipment. Korca, known for its strong civic culture, also has ensured that the supervisory council is well qualified. Fier, Vlora, Patos, and Saranda provide water for just several hours a day and cut off service to sections of their service area on a rotating basis. Durres, the second largest city in the country, has a major water shortage problem, especially during the summer tourist season, when water cut-offs are frequent and pro￾longed. Even Tirana, the capital, has difficulty providing continuous service to outlying communes it serves. In the cases of Patos, Vlora, and Elbasan, for example, hours per day of water service are 2.87 hours, 12.6 hours, and 11.8 hours, respectively.9 In five of six municipalities visited on two team field trips, the water companies interviewed have infrastructure, e.g., underground pipes, valves, pumping stations, pressure regulators, etc. dating from the 1960s that is beyond its useful life and urgently needs replacing. Yet the strict limits on LGU borrowing make it extremely difficult to secure financing for investment projects. The leading donor in the municipal water sector is KfW, which has an active program combining capital invest￾ment with management and financial performance benchmarks. The territorial administrative reform will force mergers of municipal and commune water compa￾nies, which will need complete corporate restructuring such as stock reissuance, asset valuation and allocation, division and assumption of liabilities, and the like. New business plans will be required in all cases. Instead of 11 companies, PGLP will have to deal with more than 50 initially. At the na￾tional level, PLGP assistance to the Water Regulatory Authority (ERRU) should continue, as a ma￾jor turnover in commissioners is expected soon and ERRU will need support to orient them to the sectoral issues, challenges, and opportunities that will arise post-territorial reform. However, the most striking evidence of the degraded basic condition of the water companies visit￾ed (Korca excluded) is the high level of so-called non-revenue water, i.e. the difference between the imputed value of all water supplied by the company and the actual revenue received for that water by the company. In the cases of Vlora, Lushna, and Patos, non-revenue water is 80.9%, 70%, and 31%, respectively. This means that the companies are getting revenue from amazingly low per￾centages of what they pump, a major contributor to their large operating deficits. Leakage from worn-out pipes, the high number of illegal (unbilled) connections, and unpaid customer bills cause this situation. 8 Some companies are still in the process of transferring ownership from the central government to the LGU. 9 Data in this section taken from PLGP C3 reporting as well as interviews with seven water company directors. PERFORMANCE EVALUATION OF THE PLANNING AND LOCAL GOVERNANCE PROJECT – FINAL REPORT 23 The evaluation team gained only limited access to supervisory councils and therefore has to rely on numerous interviewee comments rather than hard evidence to support the view that the supervi￾sory councils in most cases are ill prepared and unqualified to carry out their corporate governance responsibilities effectively. The councils were said to meet infrequently in many LGUs, to rub￾berstamp mayoral or company management proposals, or actually to be ignored at times in deci￾sion-making that falls within their authority. Appointments were said to be treated as political pat￾ronage with little expectation that members will assume serious responsibilities. Staffing the coun￾cils with better-qualified technical people, a common stated objective, may lead to better oversight but this is not an entirely satisfactory approach to public utility governance, which needs to balance public and private consumer interests. Drinking water and sewerage admittedly are critical human needs, including in the partner LGUs, but PLGP does not commit to measurable water supply improvements, reduction in non-revenue water, or any capital investment goals that will impact customers (citizens) in the areas where these needs are most strongly felt. Business plans, customer relations, trainings on billing and EU stand￾ards, for example, do not meet the most basic customer, company, or LGU needs. This is not to criticize the contractor or its sub-contractor, who have done a good job of delivering agreed in￾puts. It is to argue that the inputs/outputs cited and PMP indicators used are only marginally rele￾vant to the fundamental problems facing the companies and their LGU owners and therefore give a misleading picture of the health of the companies and the worthiness of the PLGP inputs. Looking at the indicators for C3 shows that they allow “successful outcomes” for the activities without ever dealing with the fundamental problems of the companies or needs of customers. At the very least, the weak performers can be weeded out as part of the project restructuring, but water companies in “model LGUs” should get intensive, hands-on assistance, including help with access to capital needs financing, so they can be part of the overall “proof of concept” successful implementation of territorial reform. Durres is an outlier, given the relationship with the $80 mil￾lion World Bank project, and should be considered separately. On the national level, the PLGP assistance to Water Regulatory Authority (ERRU) through Component 3 should continue. In the near future, there will be turn-over of Commissioners under the current Chairman, Avni Der￾vishi. He will need PLGP support to orient these new Commissioners to the sector and the issues, challenges, and opportunities that could present themselves under the TAR. DIFFICULT TRANSITION IN YEAR 4 PLGP will need to modify its work plans if USAID decides to provide full support to territorial re￾form as a central element of the decentralization process. USAID and PLGP will have to decide to what extent to maintain current activities – number of partner LGUs and level of effort—versus concentrating on a smaller number of “model municipalities” as recommended here. In any event, the operating principle should be to try simultaneously to take full advantage of the momentous opportunity presented by territorial administrative reform and decentralization reform both ad￾vancing together. These are strategic choices. MUNICIPAL COUNCILS Municipal councils have been discussed extensively under Q2. Work to date with them was not seen by respondents as very successful except at an input/output level for number of trainees and production of a manual, or even seen as particularly important. The Councilors Manual, a useful document, and a training course for councilors do not seem to have had much effect. In some cas￾es, for example, Korca and Patos, the mayor and the council have a constructive working relation- PERFORMANCE EVALUATION OF THE PLANNING AND LOCAL GOVERNANCE PROJECT – FINAL REPORT 24 ship. The real problem throughout LGUs runs deeper, and PLGP has not addressed this directly. Overall, the councils tend to be large and unwieldy (30-80 members) and do not have professional staff support; and seats represent political patronage more than anything else. Party bosses draw up the slates, and voters have to choose from closed party lists with virtually no idea who they are voting for. Municipal consolidation should at least reduce the exaggerated number of councils and council members, but the lack of citizen identification with their representatives will likely worsen. Arguably, getting to the root of the problem is beyond PLGP’s “manageable interest,” much as we have argued in the case of the water companies; and PLGP might better try to avoid working with them as “high risk/low gain” clients. The LGU executive branch (mayor and city employees) is seen as a much more useful client. However, the indisputable fact is that (absent statutory change) LGUs are legally established using what in the United States would be called a “weak mayor-strong council” system, and fully functioning councils are essential if LGUs are to become stable, demo￾cratic governance entities in the long run in a decentralized system. Would that the team had clear recommendations for making council work a highlight of PLGP going forward, but the lesson learned should be that this task must be addressed more seriously, even if difficult. GENDER PGLP has been mindful of gender consideration during the project. One of the three Albanian mu￾nicipalities with a woman mayor is part of the project. Women’s participation in PGLP activities is, in general, on equal terms with that of men. There is high participation of women in the PGLP trainings. This, however, can be an artifact created by the large number of women occupying posi￾tions as specialists or as heads of sectors in local government administrations. The CAPs, which have been launched and supported by PGLP, are a better testimony to PGLP gender concerns. Data shows that 53 percent of CAP members across the participating municipalities are women. In every city, at least one of the CAP coordinators is a woman. However, in order to deepen gender work, PLGP can introduce mechanisms that empower wom￾en to a greater degree. One concrete way is to create “women-dominated multiplica￾tion/replication teams.” In order to share best practices, PGLP can launch such teams, which can be focused on a narrow issue, such as tax collection, water company management, territorial planning, or municipal councilors’ roles. PGLP can identify women from one or several municipalities who are competent professionals and have the respect of their colleagues; provide them training of trainers (ToT) assistance; and send out these all-women or woman-dominated teams to train their colleagues in other municipalities. Alternatively, PGLP could use an integrated approach in which one all-women or woman￾dominated replication team consists of professionals on each issue: one on tax collection, one on water company management, one on territorial planning, one on municipal councilors’ roles, etc., who share best practices in an integrated way. Between all-women and woman-dominated teams, the latter may be more empowering that the former, avoiding negative reactions from male col￾leagues. Regardless of which mode is deemed more likely to succeed, PGLP can identify the most profes￾sionally prepared specialists (men and women) across all municipalities it works with and form women-dominated teams with women team leaders. Such an approach can give women more vis￾ible, recognized leadership roles. In this way, they can be empowered to become agents of change based on their skills and expertise alone, not based on their gender. From our observation there is no lack of skilled women at the local level who can be part of such an endeavor. PERFORMANCE EVALUATION OF THE PLANNING AND LOCAL GOVERNANCE PROJECT – FINAL REPORT 25 PUBLIC-PRIVATE PARTNERSHIPS (PPPs) This approach has not been widely used yet. Parking concessions appear to be the most favored experiment. The three PPP trainings in the water sector would seem not to recognize the unap￾pealing state of most of these companies for private involvement. The German KfW private con￾cession for the water company in Elbasan was viewed as a dismal failure (the company has already defaulted on two loan payments, although current operations have improved under new manage￾ment). If the team’s recommendation to focus on a very limited number of “model municipalities” is acted on, PPPs should become a part of any improvement plan, and this would include the water company in those municipalities. LGU ASSOCIATIONS The absence of an effective local government association or mayors’ association seriously under￾mines the ability of LGUs to project their voice and advance their interests at the national level. LGUs can also not look to any self-owned association to promote best practices or provide any services or materials to member LGUs. Unfortunately, this is another intractable Albanian partisan political problem. PLGP understandably has steered clear of the competing and dysfunctional asso￾ciations. This is another case of an “unmet challenge” thus far. PLGP may have enough credibility to attempt to broker a reconciliation between the competing groups, but this does not appear to be worth the effort unless national political party leaders are willing to openly support the initiative in the best interests of consolidated municipalities after territorial reform, which seems unlikely. QUESTION 4: To what extent did PLGP activities result in decentralization process im￾provements (national-level impacts)? It should be noted that the performance measure has to do with “decentralization process im￾provements.” Again, it is a process metric. It does not refer to decentralization reform (including territorial administrative reform) outcomes or results per se, but rather to whether PLGP activities led to improvements in the national-level decentralization process, with such process improve￾ments referred to as “impacts.” Nonetheless, certain outputs of the process already can be consid￾ered as measurable results impacts that go beyond process improvements. DECENTRALIZATION POLICIES AND LEGISLATION The discussion in question1, above, about PLGP’s approach to supporting greater participation and transparency in decentralization reform processes (including territorial reform) under components 1 and 4 to a great extent also answers the question posed here about process improvements. The methodology is the same. The well-organized, well-structured process and other assistance activi￾ties have clearly led to a more productive process as a result. Looking more to outputs of the process also responds to question 4’s greater interest in measuring tangible “national-level impacts” (results) of the improvements. Many of these, however, were orig￾inally designed with the more limited planning objectives of the original C4 in mind rather than new government’s ambitious initiatives in decentralization, planning, and national territorial administrative reform. The more recent activities are based on a signed Joint Action Plan (JAP) dating from Oc￾tober 2013 responding to MUDT’s request to support the ministry and NTPA. TERRITORIAL PLANNING Assistance to NTPA for developing the framework for the General National Territorial Plan (GNTP) resulted in approval by NTC of the Scope of Work for the GNTP based on the plan pre- PERFORMANCE EVALUATION OF THE PLANNING AND LOCAL GOVERNANCE PROJECT – FINAL REPORT 26 pared by NTPA with support of PLGP. PLGP provided technical support for revisions to the na￾tional Territorial Planning Law, which has been completed and sent to parliament for approval. Re￾vision of the planning legislation has been completed. The NTPA Action Plan (for implementing the planning law) is completed and approved. The NTC regulation has also been completed and approved. NTPA internal regulations and a Code of Ethics are prepared. NTPA and MUDT job descriptions are prepared. NTPA and MUDT institutional analysis is completed. Preparation of the Restructuring Document of NTPA was completed and approved by the Prime Minister (C4). All of these are significant measurable outcomes helping to achieve project objectives. The core activities of planning assistance to LGUs (C4) take on added importance with the territo￾rial administrative reform. Partner LGUs will have much greater population and land area, and they will have to learn to deal with rural land spatial development issues and development controls. They will need to seek approval of their new general plans and prepare new LDPs. As with other elements of the project, the evaluation team is convinced that full-scale territorial planning in a smaller number of model municipalities is desirable for “proof of concept” that the reform process can be successful. The GOA will need to show what successful implementation looks like in order to maintain momentum for changes that will take a decade to become internalized across the country. To a great extent, the decentralization/territorial reforms are just now approaching final review and approval and the start of a challenging implementation phase is imminent. Policy and legislative “achievements” to date cannot really be defined as successes until they have proven effective on the ground in the real world. Even if territorial administrative reform captures the headlines, the territorial planning process (C4) is distinct and is the critical input to making the new boundary and jurisdictional system work properly. PLGP is now entering that process, and it should not let its grasp exceed its reach. That may be its most important “lesson to be learned” throughout the rest of the project. PERFORMANCE EVALUATION OF THE PLANNING AND LOCAL GOVERNANCE PROJECT – FINAL REPORT 27 FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS FINDINGS AND CONCLUSIONS 1. To date, PLGP is a sound project, well staffed and managed, and highly regarded by its clients and counterparts. PLGP is meeting its deliverables. 2. Territorial Administrative Reform is a “game changer” that calls for a revised PLGP decentrali￾zation/improved local governance strategy and stated objective; PLGP support for successful implementation (with fiscal decentralization) will be critical to success; 3. PLGP’s approach to decentralization reform has been effective, using a well-structured, partici￾patory methodology with stakeholders to invigorate and inform a critical policy dialogue pro￾cess. 4. Fiscal decentralization is the “Achilles’ heel” of the decentralization/territorial reform process and could cause it to result in failure. Although there has been good collaboration with the MOF at the technical level, high-level support is very uncertain. High-level policy dialogue is needed to ensure that pro-LGU fiscal decentralization decisions are made at the highest GOA levels. 5. The action plans with partner LGUs are well conceived—generally meeting output targets by topic: budgeting, revenue and tax collection, asset management, financial management, and in￾formation technology—but performance results are still at early stages. 6. Implementation of needed reforms to the property tax system—LGUs’ greatest untapped own-source revenue—will be a difficult, complex, and lengthy process. 7. Citizen Advisory Panels are performing surprisingly well, empowering civic participation and two-way interaction with local authorities. 8. Municipal councils, though important to democratic local governance, are not performing their broad statutory functions effectively, and near-term prospects are not encouraging, leaving mayors almost alone as the main change agent in improving local governance. 9. Water utility companies are not providing minimum adequate service, but the business plans show management progress in some areas, varying widely by city. Their most basic problems— dysfunctional corporate governance structures and lack of investment capital—require changes beyond current management improvements but are beyond PLGP’s manageable interest. 10. PLGP showed valuable flexibility in responding quickly to the GOA on territorial reform. Get￾ting the fiscal decentralization issue on the GOA agenda is a notable result. Support to NTPA, MUDT, and MOSLI has been crucial to launching the reform and will be an ongoing require￾ment. 11. At this time, MOSLI, MUDT, and (to a somewhat lesser extent) NTPA are very thin institu￾tionally and not fully up to the challenging tasks ahead. 12. Going forward, prompt strategic decisions are needed from USAID, the preeminent donor in local government assistance, as territorial reform is imminent. USAID’s comparative advantage PERFORMANCE EVALUATION OF THE PLANNING AND LOCAL GOVERNANCE PROJECT – FINAL REPORT 28 in this area is very strong, well accompanied by the Swiss project, the Swiss-chaired sectoral donor coordination group, and the pooled funds UNDP-managed STAR program. 13. USAID and PLGP are now caught in a “time squeeze,” with territorial reform rollout in Ju￾ly/September 2014, local elections in June 2015 with the attendant need for a new start with new players, and PLGP’s termination date in January 2017. PLGP Year Four is unavoidably a “transitional year,” and Year Five is too short a time frame to achieve newly revised goals by the end of the project. 14. The enabling environment for policy reform is extremely favorable and argues in favor of new strategic engagement, but sophisticated policy conditionality is also needed. A longer project life and additional funding would be needed to achieve revised objectives. RECOMMENDATIONS 1. PLGP should continue strong engagement with the promising decentralization/territorial reform process, with special emphasis on fiscal improvements and municipal consolidation planning ac￾tivities. 2. The U.S. government and other donors should make clear to the GOA that full support for decentralization/territorial reform is contingent on fiscal decentralization reforms, especially higher, more reliable fixed formula levels of unconditional transfers to fund enhanced LGU functions. 3. To keep pace, USAID should make prompt decisions on modifications to PLGP in view of the imminent launch of major territorial reforms. 4. PLGP should increase relative support to national institutions as requested by the GOA, but maintain the right balance with LGUs—feasible only with additional time and funding for the project. PLGP should also advocate with the GOA to politically and institutionally strengthen the MUDT, NTPA, and MOSLI, so they become able to perform their crucial new tasks more effectively. 5. Revise overall strategic objective for PLGP to be “successful decentralization/territorial reform in three to five model municipalities,” based on comprehensive, integrated change manage￾ment improvement plans with “report card” targets using European standards (“proof of con￾cept”). 6. PLGP should unify national and local objectives more strategically—deeper engagement with fewer municipalities alongside national-level counterparts (“proof of concept”). 7. The project should reduce current list of partner LGUs and limit range of ongoing activities in order to emphasize selected “model municipalities,” with fewer training courses and more on￾the-job training. 8. Recognizing their long-term importance to effective democratic local governance and the im￾pact of territorial reform, PLGP should increase the level of engagement with restructured mu￾nicipal councils in 2015, modifying the approach where needed to overcome partisan divisions. Legally mandated data sharing by IPRO at the LGU level should be insisted upon immediately for property tax development purposes, in spite of data limitations, while other ICT work ad￾vances. PERFORMANCE EVALUATION OF THE PLANNING AND LOCAL GOVERNANCE PROJECT – FINAL REPORT 29 9. The project should continue to support the CAPs, but should focus mainly on long-term sus￾tainability and networking. 10. PLGP should set clear targets for improved LGU tax collection, with special emphasis on a modernized property tax and collection system. In spite of inherent complexities and difficul￾ties, the importance of property tax reform should make it a priority in the revised strategy of PLGP going forward. 11. The project should sharply reduce the level of effort with water companies due to problems beyond USAID’s manageable control (except in selected “model municipalities”). 12. In the context of the USAID-funded (donor pooled fund) STAR project—not PLGP—and in an effort to improve the representational public legitimacy and level of competency of local councils in newly consolidated municipalities, USAID should support local electoral reform. 13. The project should use more gender-specific analysis tools in activity design. 14. Monitoring mechanisms should be tied more to results rather than mainly to outputs. PERFORMANCE EVALUATION OF THE PLANNING AND LOCAL GOVERNANCE PROJECT – FINAL REPORT A-1 ANNEX A: SCOPE OF WORK PERFORMANCE EVALUATION OF THE PLANNING AND LOCAL GOVERNANCE PROJECT – FINAL REPORT A-2 PERFORMANCE EVALUATION OF THE PLANNING AND LOCAL GOVERNANCE PROJECT – FINAL REPORT A-3 PERFORMANCE EVALUATION OF THE PLANNING AND LOCAL GOVERNANCE PROJECT – FINAL REPORT A-4 PERFORMANCE EVALUATION OF THE PLANNING AND LOCAL GOVERNANCE PROJECT – FINAL REPORT A-5 PERFORMANCE EVALUATION OF THE PLANNING AND LOCAL GOVERNANCE PROJECT – FINAL REPORT A-6 PERFORMANCE EVALUATION OF THE PLANNING AND LOCAL GOVERNANCE PROJECT – FINAL REPORT A-7 PERFORMANCE EVALUATION OF THE PLANNING AND LOCAL GOVERNANCE PROJECT – FINAL REPORT A-8 PERFORMANCE EVALUATION OF THE PLANNING AND LOCAL GOVERNANCE PROJECT – FINAL REPORT A-9 PERFORMANCE EVALUATION OF THE PLANNING AND LOCAL GOVERNANCE PROJECT – FINAL REPORT B-1 ANNEX B: LIST OF INTERVIEWEES June 12 Mr. Sherefedin Hoxha, Democratic Party Parliamentary Group June 12 Mrs. Jonida Gaba, Deputy Director of the National Territorial Planning Agency June 12 Mr. Avni Dervishi, Chairman of the Water Regulatory Authority of Albania (WRAA) Mrs. Etleva Demiri, Head of Technical and IT Department, (WRAA) June 13 Mr. Dritan Shutina, Executive Director of Co-Plan June 13 Mr. Bledar Dollaku, Local Coordinator, KFW June 13 Durrës - Meeting with the Water Authority Representatives Mrs. Stela Nenada, Head of Finance and Coordinator Mrs. Daniela Sherro, Hydro-technical Engineer Mrs. Pranvera Kume, Lawyer Mrs. Edlira Hysa, Accounting/Sales Mrs. Rozarta Pura, Human Resources June 14 Mr. Philip Giantris, Director of Valu-Add Management Service June 16 Ilirjan Muho, Director of Immovable Property Registration Office June 16 Eglantina Gjermeni, Minister of Urban Development and Tourism Adelina Greca, Director of the National Territorial Planning Agency Jonida Gaba, Deputy Director of the National Territorial Planning Agency June 16 Andia Pustina, Director, General Directorate of Tax and Tariffs, Tirana Municipality June 17 Vladimir Malkaj, Cluster Manager, UNDP June 17 Bled Cuci, Minister of State for Local Issues Enea Hoti, Advisor to the Minister of State for Local Issues June 18 Lushnje - CAP Coordinators: Skender Gega, Ermelinda Myzeqari Mr. Albert Divjaka, Head of Water Utility Company Mr. Fatos Tushe, Mayor of Lushnje Mrs. Teuta Korreshi, Deputy Mayor Mr. Gentian Nushi, Deputy Mayor PERFORMANCE EVALUATION OF THE PLANNING AND LOCAL GOVERNANCE PROJECT – FINAL REPORT B-2 Erion Vodo, City Council Secretary Elida Gjermeni, Deputy Chairman, City Council Ylli Myftiu, Member of the City Council Asllan Haxhiu, Chairman of the City Council June 18 Patos Mrs. Rajmonda Balilaj, Mayor of Patos Petrit Elmazaj, Executive of Water Utility Aferdita Laska, Tax Director, Minicipality of Patos Vilma Zhupaj, Deputy Mayort of Patos Vangjel Nushi, Director of Public Services, Minicipality of Patos Elda Goxhaj, Public Relations June 19 Vlore Mr. Ilir Banushi Deputy Mayor for Economic Affairs CAP Coordinators: Alketa Dhimitri, Robert Murataj MRs. Varvara Gjika, Chief of Finance, Water Utility Company June 20 Sarande Mr. Stefan Cipa, Mayor of Saranda Mr. Jorgo Mitro, Deputy Mayor Elvira Lako, Chief of Finance, Water Utility Company June 23 Elbasan Mr. Qazim Sejdini, Mayor of Elbasan Mrs. Diamanta Vito, General Director of Economic and Strategic Development, Municipality of Elbasan Mrs. Ardiana Kasa, CAP Coordinator Mr. Altin Cenolli, Director of Water Utility June 24 Korce Mr. Sotiraq Filo, Mayor of Korça Gjergji Cikopana and Ereandra Taipllari, CAP Coordinators Elia Pendavinji, Korça Water Utility June 25 Pogradec (Control City) PERFORMANCE EVALUATION OF THE PLANNING AND LOCAL GOVERNANCE PROJECT – FINAL REPORT B-3 Paskalino Ziko, Deputy Mayor Dritan Hamzallari, Deputy Mayor June 25 Mr. Ervin Mete, Deputy Minister of Finance June 25 Valbona Karakaçi, Program Manager HELVETAS Swiss Cooperation PERFORMANCE EVALUATION OF THE PLANNING AND LOCAL GOVERNANCE PROJECT – FINAL REPORT C-1 ANNEX C: PERFORMANCE OF COM￾PONENT THREE RELEVANCE QUALITY OF OBJECTIVES The purpose of Component 3 is to “improve local government management and oversight of selected public utilities to provide services in accordance with EU standards.” The main objec￾tive of this component supports the project’s goal “to provide technical assistance and training to the Government of Albania and to Albanian local government institutions – to help the GOA and local governments successfully implement the decentralization legislation, policies and reforms.” C3 also complies with the Development Objective (DO) 1 of the Albania Country Development Cooperation Strategy, 2011-2015 (CDSC) asking for a “strong focus on strengthening the relationship between the central and local governments in order to im￾prove planning, create the framework for development of a national territorial plan, and [to] assure more efficient and transparent delivery of key public services that touch the daily lives of all citizens, e.g., water, sewerage, energy, and education.” PROJECT APPROACH The PLGP delivered TA to 15 LGUs (12 municipalities and 3 communes) PMs selected through a well-designed procedure and signed Partnership Agreements (MoU), hereinafter referred to as PM. Consequently, the 11 water utilities (WUs) serving the PMs became part of the project. The project was designed and implemented following a demand driven approach with a very participative and a bottom up process involving all stakeholders concerned. Stakeholder partic￾ipation aimed to enhance ownership and transparency in making decisions concerning stake￾holder interests and potentially support PLGP implementation and follow up after project completion. PROJECT DESIGN PLGP support was divided in four components seeking to achieve four main results: Result I. Selected local governments effectively oversee jointly owned utilities; Result II. Supervisory Boards’ roles in selected local governments are better de￾fined and performance improves; Result III. Selected local governments adopt policies and procedures for utilities that are consistent with EU standards; and Result IV. Selected local governments, GOA regulatory agencies, civil society groups and other NGOs improve communication and interactions. In the evaluator’s opinion both results I and II converge in “improving the performance of the overseeing bodies (LG and Supervisory Councils or SCs, Water Regulatory Entity or WRE) to assure effective (rapid, accurate) decision making to the benefit of communities” . There is no expected result related to improvement of WUs water service performance. The WUs that PERFORMANCE EVALUATION OF THE PLANNING AND LOCAL GOVERNANCE PROJECT – FINAL REPORT C-2 are core for delivering services to citizens have not been included in the results to be achieved. QUALITY OF TA DESIGN The TA design followed a results driven approach aiming to link activities/outputs with ex￾pected results. For each component, activities/outputs were defined by the expected contri￾bution from implementation towards the achievement of each of the results. Assessment of the C3 design reveals inconsistencies between defined activities/outputs and results to be achieved. For example, “Result I: Selected local governments effectively oversee jointly owned utility companies” was planned to be achieved through a set of activities/outputs including: • Identify training and capacity building needs of local officials and WU managers to im￾prove service delivery and implement QSIP; • Develop WU management action plans in core partner communities; • Prepare cost recovery strategies for utilities in partner communities; • Train utility staff and local government staff overseeing utility operations in proposal writing for accessing IPA funds Only one out three activities/outputs defined target the LGUs (with a non core activity), while others clearly target Water Utilities aiming to improve their performance in service delivery through improvement of management practices (strategic development, operational manage￾ment), monitoring & reporting, and strengthening staff capacities. Implementation of the above activities can hardly be expected to enhance the capacities of “local governments to oversee jointly owned utility”. Activities/outputs under Result II are very well defined and target WUs supervisory bodies (Supervisory Councils and WRE). Result III, “selected local governments adopt policies and procedures for utilities that are con￾sistent with EU standards,” was planned to be achieved through the activities listed below: • Review the current legal framework in Albania in areas of water, wastewater and pos￾sibly solid waste; • Prepare Handbook on EU Environmental Laws, Standards, and Practices in the water, wastewater, and solid waste management fields; • Conduct EU environmental policies/procedures training in partner communities and utilities. The set of activities planned for RIII seem over ambitious and exceed the PLGP mandate and capacities, while confusing the tasks and responsibilities of institutions in charge. Reviewing and drafting laws according to EU policy is a central government responsibility. Drafting a “Handbook on EU Environmental Laws, Standards, and Practices in the water, wastewater, and solid waste management” is not a relevant approach to disseminating knowledge about EU Laws and Directives. This kind of information is normally produced by PERFORMANCE EVALUATION OF THE PLANNING AND LOCAL GOVERNANCE PROJECT – FINAL REPORT C-3 the respective Line Ministries, published on ministry websites, and subject to specialized and continuous updates. The LGU’s could simply be advised on how to obtain this information. The project planned to achieve Result IV, “selected local governments, GOA regulatory agen￾cies, civil society groups and other NGOs improve communication and interactions”, targeted customer services aiming to improve their operations and public communications. Customer Services (CS) by function aim to assure consumer satisfaction by enhancing product image and developing customer loyalty. In reality, partner WUs, except for Korca and Pogradec, and other PM’s face irregular water supply ranging from once in 48 hours supply in Patos to 3 times a day supply in Durres, Vlora and Elbasan. Therefore the WUs do not have a high quality product (regular water supply to the public) to promote, which impedes CS func￾tion. Taking into account that the critical situation with non-bill payment contributes significantly to non-revenue water, the activities/outputs for C3.3 should have been planned in a larger sup￾ply. Parallel with establishment of contemporary CSs some simple activities such as awareness raising activities should have been planned. The PLGP phased intervention to establish and strengthen CSs in the first two years and address communication plans & activities in the third or fourth year does not seem efficient and makes it difficult to respond to the critical needs of the WUs. Considering the lack of HR and capacities to manage effective awareness raising at the CSs level, PLGP could have outsourced any NGO to deliver simple and visible activities such as local TV and media communications, leaflets, door to door communication, strengthening the citizen network pressure (CSOs, school children, CAP’s and Municipal Police) against abusers in cooperation with CS. This approach would have also enhanced the CSs capacity through the learning they would gain from working together for a common goal. This component could also support WUs by facilitating lobbying efforts in cooperation with LGUs, water associations, and municipalities associations, to address policy measures by GoA against the water abusers. EFFICIENCY There is evidence that PLGP has made very good progress in delivering planned activi￾ty/outputs on schedule. Additional activities were implemented upon beneficiary request, in￾cluding three training sessions on public private partnerships. A list of activities delivered thus far, organized by component/result, is attached as Annex C.1. COMPONENT 3.1 Activities/outputs were very well planned and delivered. Main outputs included: Situational analysis for each of WUs was carried out by identification of the most sig￾nificant factors and challenges hindering WU performance. Findings and recommenda￾tions were presented at the “Water Utilities Baseline Assessment Report & Action Plan, 2012 - 2015”. Considering the PLGP mandate and resources, TA targeted four key “functional areas”: General Management; Customer Services and PR Management; Financial Management; and Technical & Environment Management. Four Business Management Plans (BPs) for Tirana, Durres, Vlora, and Korca and two “Assessment Reports” for Patos and Vora WUs were delivered. Preparation of BPs PERFORMANCE EVALUATION OF THE PLANNING AND LOCAL GOVERNANCE PROJECT – FINAL REPORT C-4 has been a laborious requiring large amounts of data and analysis (social economic, detailed supply/demand analysis, SWOT) in order to (1) identify/prioritize the factors that contribute to the WUs performance and prioritize them; (2) address measures for improvement; and (3) develop targets to achieve financial sustainability and profita￾bility at a later stage. The BP’s were presented to a large stakeholder audience composed of respective SCs, LGUs, WRE and WUs Managers and approved by SC. Implementation of BPs was ac￾companied by specific trainings, on the job training, and mentoring. BPs and associated training activities have been highly recognized by WUs as “very good quality,” “concrete management tools, directly applicable,” and “road maps” for decision-making. PLGP delivers TA in a highly efficient manner, especially considering PLGP’s limited re￾sources,” and the volume and complexity of TA supply (BPs, trainings, and presenta￾tion activities). COMPONENT 3.2 Activities/outputs were very well planned and implemented. Activities included: “Preparation of Manual for the WUs Supervisory Councils” and five trainings to partner and non-partner WUs, reaching an audience of 130 participants. An additional training on “Public Private Part￾nership in the Water Sector” was delivered with participation from members of SCs and management staff from 11 WUs and LGU officials, reaching an audience of 60 persons. Outputs delivered have been recognized by WRE as “highly beneficial,” though the same en￾thusiasm was not found amongst SCs. COMPONENT 3.3 Only one training on “European Union Policies and Directives for Solid Waste and Wastewater” has been delivered so far to two locations (Tirana and Vlora) reaching an audi￾ence of 48 participants from LGUs and WUs. COMPONENT 3.4 Activities/outputs planned were delivered on schedule and consisted of two customer service operational manuals developed for Korca and Lushnja; two training sessions (Tirana and Lush￾nja) to WU’s Customer Service staff with 60 participants; and development of a “Guideline for Water Utility Website Information.” Beneficiary satisfaction. Beneficiaries were interviewed at 5 WUs, the Albanian WRE, 3 Super￾visory Councils (SC) of Lushnja, Durresi and Saranda and councilors of two municipalities (Lushnja and Saranda) confirmed that the expert’s team under C3 have produced and deliv￾ered very high quality final outputs. The presence of the experienced and qualified Chief of Party and C3 Key Expert has been highlighted by various beneficiaries as an added value and key to the achievement of quality outputs. PERFORMANCE EVALUATION OF THE PLANNING AND LOCAL GOVERNANCE PROJECT – FINAL REPORT C-5 EFFECTIVENESS Effectiveness is assessed by the level to which project outputs have produced outcomes, which is normally measured by progress in processes and operations developed by the pro￾ject. The effectiveness of C3 Activities/Outputs is different for different components, as fol￾lowing: COMPONENT 3.1 Component 3.1 has had a high level of success as evidenced by high utilization of outputs de￾veloped by the project. Project outputs have been used extensively by WU staff and manag￾ers and have augmented WU success in implementing new tools and methods in financial management and sales management, in accordance with EU and International Standards. This has resulted in more effective planning and monitoring, decision-making, and reporting. Activities/outputs delivered by Component 3.1 (Standard Performance Report Form) have been in use and are considered very beneficial by the Water Regulatory Entity (WRE). “Es￾tablishment of Water Supply Standards” (unified rules for the whole sector) and “Perfor￾mance Monitoring System” developed by PLGP became the starting point WU’s Licensing and Tariff Negotiation processes. This has increased the transparency of processes and benefits of WUs. Beneficiaries have unanimously recognized that Business Plans developed by PLGP changed their vision and developed strategic thinking. All WUs are using BPs as a “road map” to lead their actions and achieve defined targets. Trainings delivered have been considered very useful and beneficial to work at the WUs. COMPONENT 3.2 Though beneficiaries interviewed recognized the high quality of activities/outputs delivered under this component, lack of SC commitment has not permitted implementation of project deliverables. This is due to the SC status as politically appointees and the highly politicized en￾vironment which generates a lack of willingness to play a role that benefits the community as a whole. The SCs of Korca and Lushnja were positive about PLGP’s contributions and progress￾ing well in implementing the manual, while implementation did not go well in Vlora and Saranda. The SCs of Vlora and Saranda were noticeably uninterested in the project outputs. COMPONENT 3.3 Only one training activity, “Guide to European Union Policies and Directives for Solid Waste and Wastewater” was delivered in two rounds to PMs. No progress could be expected from PMs and WUs in the short and medium term from this information-dissemination activity. COMPONENT 3.4 Progress in implementation of outputs delivered varies by WU. The progress at Korca WU is very satisfactory. The customer service staff is progressing very well in performing their tasks by using the Consumer Services Operational Manual and trainings delivered by PLGP and based on communications and/or the awareness raising plan. There was no evidence of progress at the CSs of Saranda, Vlora and Durres. The director and customer service expert interviewed at Vlora did not know about the “Vlora Communication Plan” developed under the PLGP project. PERFORMANCE EVALUATION OF THE PLANNING AND LOCAL GOVERNANCE PROJECT – FINAL REPORT C-6 The Customer Services at these WUs are perceived as collectors of customer claims and re￾sponsible for their clarification. 99% of Customer claims are related to quality of water supply, excessive bill amounts (due to a flat rate system) and technical problems. Considering that low quality water supply is a major problem, and that investment is the only solution, im￾provement of CSs while lacking a high quality product was considered low priority for almost all the interviewed WU Directors. INTERIM RESULTS The nature of CB activities does not enable production of results immediately after or in a short period. Nevertheless, some progress (outcomes) can be seen. OUTCOMES I • Trained WU staff progressing in implementation of PLGP output related planning process￾es, e.g. using Business Plan targets, addressing critical factors for improving performance (confirmed by 100% of interviewed staff). • Financial Department, Sales Department, and Technical Department staff acquiring more operational management skills due to the knowledge gained from project outputs (con￾firmed by 100% of interviewed staff). INTERIM RESULT I • Quality of administrative and management operations improved due to using the man￾agement practices introduced by Project. • Quality of monitoring and reporting improved due to introduction of the new monitoring system and monthly performance forms. • Improved performance of analysis and management decisions based on performance forms. • Improved WRE supervision to each of WUs and sector as whole due to utilization of standard performance reporting instrument developed by PLGP. • Improved WRE licensing and tariff review process due to utilization of WU’s standard per￾formance reporting instrument developed by PLGP. • Improved transparency in the licensing process as the criteria and regulations are applied to WU reported performance by using the WU’s standard performance reporting instru￾ment developed by PLGP. OUTCOMES II • Improved regulatory framework for SCs operation. INTERIM RESULT II • Except for Korca SC, no evidence of progress in other SCs from using the SC regulatory framework. OUTCOMES III • N/A PERFORMANCE EVALUATION OF THE PLANNING AND LOCAL GOVERNANCE PROJECT – FINAL REPORT C-7 INTERIM RESULT III • N/A OUTCOMES IV • CS of Korca WU is using the Customer Services Operational Plan. • No progress at all by the rest of WUs. INTERIM RESULT IV • N/A SUSTAINABILITY Considering the short time period that has passed since output delivery, it is not possible to make a highly accurate assessment of project sustainability. However, considering the satisfaction and commitment of WUs that are progressing in use of the outputs delivered by the project demonstrates some sustainability in Result 1. The main threat to sustainability is staff turnover. According to the information received, replacement of high level managers is common after government rotation but it may also affect the manage￾ment staff. For example, at Durresi WU, the turnover amongst the Management staff was 60 - 70% after government rotation. Sustainability of Result II is hindered by lack of consensus within SCs. The upcoming LG aggre￾gation process is expected to be accompanied by improvements in the legal framework and rules and regulations including these SCs. From this point of view, the probability for sustaina￾bility will increase in areas addressing Result II. In the expert’s opinion, Result III cannot be sustainable. To achieve sustainability the TA should embrace EU Standards in the project. Result IV cannot be sustainable if CSs are not integrated with the WU Management package. Performance of WU and CSs are interlinked as CSs are part of WUs operations. C3 CONTRIBUTION TO SOW 1. To what extent have PLGP C3 activities resulted in increased participation and transparency in decentralization reform processes, local governance accountability, and territorial planning? • The PLGP C3 TA was based on a very bottom up and participatory approach which contributed to strengthening the stakeholder’s consultation culture. Transparency in￾creased in the areas related to C3 as a result of presentations by stakeholders which supported sharing opinions and making important decisions on medium and long term development targets for WUs, Monitoring WUs Performance based on quarterly Standard Performance Reporting Forms etc. 2. Based on perception of outside stakeholders, do the selected municipalities have better performance, as a result of the approaches and implemented activities, than they otherwise would have in operations effectiveness, resources management and services to citi￾zens/businesses? • The PLGP TA by nature addresses the WUs Administrative Management area which has little effect on WUs financial performance compared to the effect of potential in- PERFORMANCE EVALUATION OF THE PLANNING AND LOCAL GOVERNANCE PROJECT – FINAL REPORT C-8 vestments. Nevertheless some improvement has been evidenced for the improvement of WU’s financial performance but with limited impact on municipal financial perfor￾mance. 3. What were the challenges (internal and external, including territorial reform) faced by the project and lessons learned? • The core of territorial reform is PM aggregation which will affect WU aggregation. As a result, the market for WU services is expected to expand and change shape which will require potential support by PLGP TA in the Water Utility area. Considering the good reputation of C3 outputs such as BP’s and Actions Plans, PLGP could assist in updating them and continue delivery based on replication of successful outputs and new ones as required. 4. To what extent did the PLGP activities C3 result in decentralization process improvements (national level impacts)? • N/A FINDINGS • PLGP C3 Relevance can be assessed as satisfactory. While the C3 Objectives are high￾ly relevant to the achievement of the PLGP Goal and contribute to the achievement of USAID Strategic Goals and Objective #1, C3 is not adequately designed to achieve its goals. PLGP used the result oriented approach in planning but did not adequately apply this in implementation. Expected results are not well defined and activi￾ties/outputs don’t correspond to the achievement of the expected results; division into four components seems irrelevant. It would be better to divide into two priority areas: (1) strengthening overseeing bodies’ capacities – including Interaction with GoA, LGU, CSO and (2) improving management, not performance. • Overall, PLGP could improve WUs Management but not WUs Performance to pro￾vide quality water supply services to citizens as this is beyond its mandate and capaci￾ties. • In terms of efficiency and resources /outputs/time, C3 produced all outputs planned and more on schedule. Considering the existing resource limitation, efficiency can be rated as highly satisfactory. • The effectiveness of C3 TAs to date can be considered moderately satisfactory. The project developed/delivered high quality activities/output driven by demand and highly recognized by the beneficiaries of the specific sub components. The delivery approach through integrated package of activities/outputs was very efficient but in terms of the project as a whole, project delivery followed a horizontal approach. • There is a mismatch between C3 component delivery and outcomes and interim re￾sults. Higher quality delivery was evidenced in Component 3.1 as well as higher quality outputs and interim results. This cannot be said of other components. PERFORMANCE EVALUATION OF THE PLANNING AND LOCAL GOVERNANCE PROJECT – FINAL REPORT C-9 RECOMMENDATIONS • Considering the upcoming territorial reform, municipal aggregation, and WU aggrega￾tion, the PLGP strategy should focus on smaller numbers of municipalities and reshap￾ing the form of TA. In this context, the WUs’ activities should be integrated into the remaining components. • Lessons learned from previous PLGP TA should be developed and applied. • TA to WUs should be based on successful outputs produced and delivered to date and trained staff/replication as well as development of new on demand outputs; • As new conditions under WUs are favourable (market expanding), starting PPPs im￾plementation to pilot PMs would be recommended. • Improvement of project design quality by application of Results Framework Matrix linking Results with activities/outputs, outcomes, impact; • Improvement of monitoring system by adopting an output-outcome results oriented approach based on measurable indicators, or objectively verified indicators. • Consideration of the fact that implementation of investments to any/some WUs in the near future may disregard the PLGP assistance/outputs in the management area, as in￾vestors have their own management rules and procedures. From this perspective, PLGP should improve publicity of quality outputs in the WU area in “which PLGP competitive advantages are recognised” and “sell” them to potential donors (and/or investors, WB, KFw, EBRD). ANNEX C.1: LIST OF ACTIVITIES COMPONENT 3.1 • Four business plans developed for WUs of Durres, Elbasan, Korca, and Vlora; • Assessment reports drafted for two WUs: Patos and Vora; • Continuous coaching and mentoring activities on development of WUs annual plans using business plan targets; • Development of standard performance reporting forms for WUs; and • Continuous coaching and mentoring of respective WU staff on carrying out perfor￾mance analysis and drafting quarterly standard performance reporting. COMPONENT 3.2 • Update the manual for the WUs’ supervisory councils; • Two trainings on the manual for the supervisory councils for 14 PMs and communes, with 60 participants in total; • Three training courses on the manual for the WUs’ supervisory councils for 40 non￾PMs WUs, totalling 70 persons; and • Three training courses in public-private partnerships in the water sector with members of SCs, management staff of 11 WUs, and LGU officials, totalling 60 persons. PERFORMANCE EVALUATION OF THE PLANNING AND LOCAL GOVERNANCE PROJECT – FINAL REPORT C-10 COMPONENT 3.3 • Two trainings on the “Manual-Guide to European Union Policies and Directives for Solid Waste and Wastewater” with 48 participants in Tirana and Vlora. COMPONENT 3.4 • Development of Korca and Lushnja customer service operational manuals; • Development of Vlora communication plan; • Two training sessions (Lushnja and Tirana) for WUs’ customer service staff, 60 persons in total; and • Development of guidelines for water utility website information. PERFORMANCE EVALUATION OF THE PLANNING AND LOCAL GOVERNANCE PROJECT – FINAL REPORT C-11 ANNEX C.2: RESULTS FRAMEWORK MATRIX Goals/Expected Results Outputs delivered Outcomes Interim Results Expected Result I. Selected local governments effectively oversee jointly owned utility companies;  Business Plans developed for four WUs (Vlora, Elbasan, Korca, Durres)  Assessment reports drafted for two WUs, Patos and Vora  Continuous coaching and mentor￾ing activities on development of WUs Annual Plans using Business Plan targets  Development of Standard Per￾formance Reporting forms for WUs  Coaching and mentoring respec￾tive WU staff on carrying out per￾formance analysis and drafting quarterly standard performance reporting;  Trained staff progressing in planning process using Business Plan’s targets, addressing critical factors for improving the per￾formance (Confirmed by 100% of interviewed staff)  Financial Department, Sales De￾partment and Technical De￾partment staff progressing in Operational Management due to knowledge gained from the project  WU Monitoring staff progress￾ing in drafting/using Performance Monitoring System and Monthly Forms for Performance Analysis and Reporting  Improved Regulatory Body su￾pervision due standard Monitor￾ing based on SPRF  Improvement the WUs Licens￾ing and Tariff review process  Improved transparency in the  Quality of Administrative and Management improved due to utilization of the management practices introduced by the pro￾ject:  Quality of Monitoring and Re￾porting improved due introduc￾tion of new Monitoring System and Monthly Performance Forms  Improved Performance Analysis and Management decisions based on Performance Forms;  Improved WRE supervision to each of WUs and sector as a whole due to utilisation of Stand￾ard Performance Reporting in￾strument developed by PLGP  Improved WRE Licensing and tariff review process due to utili￾sation of WU’s Standard Perfor￾mance Reporting instrument de￾veloped by PLGP  Improved transparency in the Licensing process as the Criteria’s PERFORMANCE EVALUATION OF THE PLANNING AND LOCAL GOVERNANCE PROJECT – FINAL REPORT C-12 Licensing process and Regulations are applied upon the WU Reported performance by using the WU’s Standard Per￾formance Reporting instrument developed by PLGP Expected Result II. Supervisory Councils ’ roles in selected local govern￾ments are better defined and performance improves;  Update the “Manual for the WUs Supervisory Councils”  Two trainings on “Manual for the Supervisory Councils” to 14 PMs and Communes (60 participants)  Three training courses on the “Manual for the WUs Supervisory Councils“ to 40 Non PMs WUs (70 persons)  Three training courses in Public Private Partnership in the water sector with participation by mem￾bers of Supervisory Councils, management staff of 11 WUs and LGU officials (60 persons)  Improved regulatory framework for SCs operation  N/A Expected Result III Selected local governments adopt policies and proce￾dures for utilities consistent with EU standards;  Two trainings on “Manual-Guide to European Union Policies and Directives for Solid Waste and Wastewater (Tirana and Vlora) with 48 participants  Increased information amongst participants on EU Policies and Directives for Solid Waste and Wastewater  N/A PERFORMANCE EVALUATION OF THE PLANNING AND LOCAL GOVERNANCE PROJECT – FINAL REPORT C-13 Expected Result IV Selected local governments, GOA regulatory agencies, civil society groups and other NGOs improve communica￾tion and interactions;  Korca and Lushnja “Customer Service Operational Manual”  Development of Vlora Communi￾cation Plan  Two training sessions (Tirana and Lushnja) to WU’s Customer Ser￾vice staff (60 persons)  Development of Guideline for Water Utility Website information  Limited progress in implementa￾tion of PLGP CS related outputs  N/A PERFORMANCE EVALUATION OF THE PLANNING AND LOCAL GOVERNANCE PROJECT – FINAL REPORT D-1 ANNEX D: SURVEY QUESTIONS Below is the mini-survey email questionnaire sent out by the evaluation team. PERFORMANCE EVALUATION OF THE PLANNING AND LOCAL GOVERNANCE PROJECT – FINAL REPORT D-2 PERFORMANCE EVALUATION OF THE PLANNING AND LOCAL GOVERNANCE PROJECT – FINAL REPORT D-3 U.S. Agency for International Development 1300 Pennsylvania Avenue, NW Washington, DC 20523 Tel: (202) 712-0000 Fax: (202) 216-3524 www.usaid.gov 1300 Pennsylvania Avenue, NW Washington, DC 20523 Tel: (202) 712-0000 Fax: (202) 216-3524 www.usaid.gov