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Urban Financing Partnership Facility

Implementation Guidelines

The views expressed herein are those of the consultant and do not necessarily represent those of ADB’s
members, Board of Directors, Management, or staff, and may be preliminary in nature.
Urban Financing Partnership Facility
Implementation Guidelines

I. INTRODUCTION OF UFPF

1. In December 2009, the Asian Development Bank (ADB) established the Urban Financing
Partnership Facility 1 (UFPF) to provide additional financial resources and technical support for
components of investment projects to improve sustainable urban development in Developing
Member Countries (DMCs).

2. The UFPF includes:


a. A multidonor Urban Environmental Infrastructure Trust Fund (UEIF);
b. Single donor urban trust funds (UTFs);
c. Framework agreements with partners for:
(i) Cofinancing, i.e., parallel or joint financing of lending and non-lending assistance
to ADB’s DMCs;
(ii) Knowledge sharing, i.e., secondments, networks, etc.
(iii) Risk sharing, i.e., credit enhancement, performance guarantees, etc.
d. Other forms of assistance.

3. These implementation guidelines set out the UFPF governance structure and activities
which are eligible for funding under the UFPF. They also set out further details on the use of funds
under the UEIF. For UTFs, however, guidelines on the use of funds will be agreed between ADB
and the financing partner but will substantially follow the UFPF eligibility criteria and the conditions
set out in the Board Paper. The procedures for guarantees will be governed by normal ADB
procedures and will not follow the governance structure and procedures set out below.

II. GOVERNANCE STRUCTURE OF UFPF 2

4. The Financing Partners and ADB will jointly steer the implementation of the UFPF.
Financing Partners and ADB will do this by meeting annually to review progress and discuss
administration matters, Annual Work Programs, including pipeline list of proposed projects and the
strategic direction of UFPF.

5. The Urban Infrastructure Steering Committee (UISC) will provide strategic direction for the
UFPF based on these guidelines, the outcomes of annual meetings with financing partners and
ADB's strategic priorities. The Chair of the UISC will be the designated authority for approving
allocation of UFPF resources for specific projects. Chair: Director General, Regional and
Sustainable Development Department (RSDD); Members: Director Generals of user departments
(UDs).

6. A Urban Infrastructure Working Group (UIWG) will review and make recommendations on
projects proposals for assistance from the UFPF, and make policy and procedural

1
ADB. 2009. Urban Financing Partnership Facility: Establishment of the Urban Environmental Infrastructure Fund and
Urban Trust Funds. Manila.
2
An organization chart for the governance of UFPF is attached as Appendix 1.
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recommendations to the UISC regarding UFPF operations. Chair: Director General, RSDD (or
designate) or Chair Urban Community of Practice; Members: Urban Development Specialists from
each UD.

7. The Regional Sustainable Infrastructure Division (RSID) of RSDD will manage the UFPF.
Director, RSID or his/her designate will be the Facility Manager for the UFPF and will oversee the
day to day operations, monitoring and evaluation, and reporting of the UFPF, with assistance from
a team of consultants who have technical and administrative expertise serving in a management
unit. The Facility Manager will serve as the secretariat for UFPF operations, prepare semi-annual
progress reports on the UFPF and serve as the focal point for UFPF partners for technical matters.

8. The Office of Cofinancing Operations (OCO) will facilitate contributions to the UEIF and
UTFs, and act as the official channel of communication for financial issues between ADB and
UFPF partners. OCO will also lead negotiations and discussions with such partners on procedural
agreements for contributions and framework agreements, where applicable.

III. ELIGIBILITY CRITERIA

9. General Criteria. All DMCs are eligible for UFPF resources. Project proposals for UFPF
support should:

a. be consistent with the country partnership strategy and results framework;


b. be consistent with the objectives of ADB’s Urban Initiatives under the Strategy
2020;
c. introduce innovative solutions;
d. adopt a participatory approach;
e. be catalytic;
f. have high demonstration value in the sector; and
g. have good potential for replication and scalability in the country and/or region.
h. have potential for partner cooperation.

10. Specific Criteria. Project proposals such as following project categories may qualify for
UFPF support:

1. Climate Change Mitigation and Adaptation Projects

(i) Conversion to us of renewable resources for production of energy;


(ii) Introduction of air pollution control;
(iii) Coastal protection and flood control; and
(iv) Energy efficiency.

2. Urban Environmental Transportation Services Projects

(i) Introduction of public transportation by displacing cars;


(ii) Introduction of air pollution control;
(iii) Use of cleaner fuels; and
(iv) Use of renewable resources.

3. Urban Environmental Water and Wastewater Services Projects

(i) Introduction of metering, demand management and institutional reforms for


sustainable service delivery;
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(ii) Introduction of modern and efficient methods for treatment of discharges;


(iii) Introduction of recovery and utilization of renewable resources such as e.g.
biogas;
(iv) Introduction of modern equipment for control and operation of pumping of
water and sludge

4. Urban Environmental Solid Waste Management Services Projects

(i) Close of inadequate landfills and uncontrolled disposals and construction of


new modern disposal facilities with w.g. biogas recovery; and
(ii) Introduction of institutional reforms and modern solid waste collection system.

5. District Heating and Cooling Services Projects

(i) Introduction of metering, demand management and institutional reforms for


sustainable service delivery;
(ii) Modernization of heat production and extension of services to areas with
alternative heating; and
(iii) Rehabilitation of distribution networks and substations.

6. Urban Renewal Projects

(i) Rehabilitation of housing and urban public facilities

IV. USE OF UEIF FUNDS

11. It is envisaged that the resources in the UEIF will be predominantly (approximately seventy
percent) used for grant components of investments and may also be used to improve technologies
and to back financing mechanisms or risk sharing facilities in support of the above activities.
However, some funds may be used for technical assistance (TA) projects (maximum thirty percent)
that fund consulting services and related equipment and works needed to achieve the objectives of
the UFPF, including Direct Charges up to 5 percent..

12. UEIF resources are to be used for:

1. Technical Assistance

a. The maximum contribution from the UEIF for technical assistance is $1 million
for single country projects and $3 million for regional projects.
b. Funds can finance consulting services, equipment and works for:

(i) economic and sector work linking urban environmental infrastructure


investments and programs to sustained growth and other related
areas;
(ii) developing and preparing projects, transactions and programs for
investment;
(iii) sharing project development costs for investment in combination with
other government, donor, and commercial funding;
(iv) support cooperation to facilitate transfer of technology, knowledge and
experience;
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(v) build the capacity of market actors and the supporting systems in the
context of implementing urban environmental infrastructure investments
and programs;
(vi) commercialize and replicate new urban environment infrastructure
finance instruments;
(vii) support for other non-lending measures i.e., policies, regulations,
standards learning event participation and travel, and institutional
capacity building.

2. Grant Components of Investments

a. Resources from the UEIF can only be accessed as part of a new ADB project,
an addition to an ongoing project or project comprising part of a program in
which ADB is a partner. Projects where there is a need to subsidize components
owing to environmental or social components to ensure the poverty alleviation
and/or inclusiveness of the projects are preferred. 3

b. The maximum contribution of funds available per project shall not exceed 10%
of total investment financing amount. For multi-tranche financing facilities, the
funds available will be 10% of the tranche that it will support. However, in
exceptional circumstances, and where it is justified, a higher percent of funding
may be considered. In such cases, UDs would be asked to justify the amount of
UFPF financing based on rational such as investment scope, total financing plan,
and financial sustainability of the project. The UISC would examine the proposal
closely.

c. In addition, to all activities outlined in the technical assistance section above


funds can be used to procure goods and works based on advanced
technologies to promote urban environmental infrastructure.

d. Funds are not meant to be used to cover financing gaps of ADF countries.

3. Direct Charges

a. Resources from the UEIF can be used as additional resources for project-
related and operational-related expenses provided these are direct and
identifiable 4 . Such activities include:

(i) consultant services and related expenses;


(ii) service contractors, such as translators, assistant researchers or
secretaries etc.;
(iii) conferences, forums, workshops, seminars, surveys, etc., including
related expenses;
(iv) travel by staff as resource speakers, government officials, and other
stakeholders to regional events;
(v) facilitating learning events such as study tours for government officials;

3
Care should be taken to ensure that grant components of investments or TA activities do not distort the market.
4
Expenses are direct and identifiable if they related (i) to the activity of a project which is financed by the UEIF, or (ii) to
an activity which is related directly to the operation of the UEIF when the UEIF is the only source of financing for such
activity.
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(vi) rental and associated costs for office space, in cases where
headquarters space is not available to accommodate any type of non-
ADB personnel engaged for the operation of the UEIF;
(vii) purchasing and/or renting office equipment relevant for the UEIF
operations; and
(viii) [dedicated staff resources hired for specific period of time for the UEIF
(until the institutional framework will be developed by ADB this
category is not application)]

b. Resources from the UEIF can be used as fee for external audit and financial
charges for the trust funds under UEIF in case the interest/investment income
earned from received funds is insufficient to cover these items.

V. APPLICATION PROCESS UNDER UFPF

13. Project proposals can be initiated by agencies in DMCs, development partners, and ADB.
Before the beginning of each year, UDs will send a list of prioritized project proposals for which
they will be submitting applications to the Facility Manager for inclusion in the Annual Work
Program.

1. Technical Assistance/Grant Component of Investments

14. UDs will prepare a project proposal using the application form (Appendix 2) and draft
concept paper in standard ADB concept paper format and will submit them to the Facility Manager.
Applications will be reviewed in batches. Due dates for applications will be:

(i) 31 January (ii) 31 March (iii) 31 May


(iv) 31 July (v) 30 September (iv) 30 November

15. The Facility Manager will review the applications to ensure that they comply with the
Implementation Guidelines for the use of funds and the eligibility criteria outlined above. If the
application does not meet the criteria, the Facility Manager will discuss the issues with the UD for
revision or withdrawal. If the application complies, the Facility Manager will include it in the batch
for circulation to the UIWG. For each proposal, the Facility Manager will make a recommendation
to the UIWG, based on two ranking criteria: (i) the need to fund a viability and/or capacity gap for a
particular environmental climate-related or urban renewal project, and (ii) likelihood that the project
will be implemented in a timely fashion. The Facility Manager will also advise the UIWG on the
availability of UFPF resources to support the applications. The Facility Manager will be assisted by
a team of consultants with technical and administrative expertise.

16. The UIWG will have 7 working days for review, comment, and endorsement. The UD will
then have 5 working days to take the comments into consideration and revise (if necessary) the
application. Once completed, the Facility Manager will forward the batch to the UISC to approve
the allocation of resources from the UFPF. A flow-chart of this process is attached in Appendix 3.

17. After approval by the UISC for fund allocation, ADB-funded projects will be processed
following ADB’s standard policies, procedures, and guidelines for TA and loan approval, including
consulting services and procurement, social and environmental safeguards, financial management
and reporting, and anticorruption and governance.
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2. Direct Charges

18. UDs will prepare applications using the application form (Appendix 4) and will submit them
to the Facility Manager. The Facility Manager will review the applications to ensure that they
comply with the Implementation Guidelines for the use of funds. If the application does not comply
the Facility Manager will discuss the issues with the UD for revision or withdrawal. If the application
complies, the Facility Manager can approve the allocation of resources from the UEIF. A flow-chart
of this process is attached in Appendix 5.

VI. PROJECT IMPLEMENTATION

19. Project implementation, supervision, and monitoring will be conducted by UDs following
ADB’s standard policies, procedures, and guidelines, including consulting services and
procurement, social and environmental safeguards, financial management and reporting, and
anticorruption and governance. During implementation, RSID will assist UDs in monitoring, advice,
and capturing lessons learned.

VII. UFPF IMPLEMENTATION

20. Annual Work Program. The Facility Manager will prepare an Annual Work Program in
consultation with the UDs, UIWG, and Financing Partners. The Annual Work Program will consider
the prevailing and predicted conditions that can affect the demand side (need for additional
resources) and the supply side (contributions) of the UFPF and set realistic objectives and targets
(on contributions as well as on additional resource requirements) with specific time frames. The
UISC will meet once a year to discuss and approve the Annual Work Program, and from time to
time if needed.

21. Progress Reports and Frequency. The Facility Manager will prepare Annual progress
reports of UFPF activities, outputs, and outcomes in accordance with agreed indicators that will
be reviewed from time to time. The report format and monitoring indicators will be developed in
consultation with the Financing Partners. Semi-annual reports will be compiled into Annual
Reports covering a 12-month period for the middle and the end of the calendar year. 5

22. Anticorruption. The UFPF and activities funded there under will be subject to ADB's
Anticorruption Policy and Integrity Guidelines and Principles (as amended from time to time).
ADB's Anticorruption Policy requires staff, consultants, borrowers, beneficiaries, and contractors,
executing the UFPF and activities there under to observe the highest standards of ethics and
personal integrity. Any party found in breach of ADB;s Anticorruption Policy may be subject to
disciplinary measures and/or sanctions in accordance with ADB's Integrity Principles and
Guidelines. Financing Partners and ADB will immediately inform each other in writing on any
indication of fraud and corruption of resources related to the Facility and will consulted each other
in terms of how to proceed.

23. Annual Consultation Meeting. The Facility Manager will organize an Annual Consultation
Meeting (ACM) with UFPF partners to discuss the Annual Work Program, including project pipeline,
review progress and results of UFPF, address problems and concerns, recommend how UFPF
performance can be further improved, how partnerships can be strengthened at country and
regional level, and other business as required.

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While ADB’s financial year ends in December, that of some Financing Partners ends in June. Compilation of an
additional report up to the end of June will accommodate the requirements of these Financing Partners.
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24. Annual Audits. OCO will arrange for financial statements, audited annually by external
auditors. For the purposes of the audited financial statements the end of the fiscal year is 31
December. The audited financial statements will be submitted to the Financing Partners together
with the semi-annual financial statements.

25. Fund Accounting. Controller's Department will provide accounting functions for the funds
and prepare financial statements.

26. Coordination Among MDBs. The Facility Manager will maintain a regular exchange of
information and experience with other MDBs on urban environmental infrastructure programs.

27. External Review of UFPF. The Financing Partners and ADB will discuss a possible
external review of UFPF, including frequency, during the 1st ACM.

28. Amendments. ADB may, from time to time, after consultation with the Financing Partners,
make amendments to these Guidelines provided that such amendments are consistent with the
provisions of ADB's "Urban Financing Partnership Facility: Establishment of the Urban
Environmental Infrastructure Fund and UTFs" Board paper.
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Appendix 1

Governance Structure of UFPF

Party Responsibilities
Financing Partners
Members: UFPF contributors (i) Provide strategic direction to UFPF
(ii) Meet with ADB for Annual Consultation
(iii) Review progress and administration and
Annual Work Program

Urban Infrastructure Steering Committee (UISC)


Chair: DG, RSDD (i) Provide strategic direction to UFPF
Secretariat: RSID (ii) DG, RSDD approves UFPF policy and
Members: DGs of UDs procedures
(iii) Approves allocation of funds to
applications for TAs and grant
components of investments

Urban Infrastructure Working Group (UIWG)


Chair: DG, RSDD (or Designate) or Chair (i) Review and endorse proposals for UFPF
of Urban Community of Practice support
Secretariat: RSID (ii) Recommend policy & procedures of UFPF
Members: Urban Development Specialists to UISC
nominated by Urban Division Directors as
members
Facility Manager (RSID)
Manager: Director, RSID or Designate (i) Serve as Secretariat and oversee UFPF
Assistant: A team of consultants day-to-day operations
(ii) Oversee review process for applications
(iii) Review applications for compliance with
Implementation Guidelines for use of
funds
(iv) Prepare Annual Work Program and
progress reports
(v) Serve as focal point for UFPF partners for
technical matters

OCO
Contact: Designate by Head, OCO (i) Facilitate partner contributions to UFPF
(ii) Communicate on financial issues among
the partners
(iii) Lead negotiations with partners on
financial and procedural agreements for
UFPF contributions and framework
agreement
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Appendix 2

APPLICATION TO ACCESS
URBAN FINANCING PARTNERSHIP FACILITY (UFPF) RESOURCES
For Grant Component of Loan Projects or TAs
(2 pages maximum)

Date: __________________

To: Director, RSID

Through: Director General

Director

From: <Project/Activity Proponent>

Re: Approval for Fund Allocation

Project or Activity Name: __________________________________________

Country/Region: __________________________________________

Loan Amount and sources: __________________________________________; OR


TA Amount and sources: __________________________________________

Amount requested from UFPF: __________________________________________

Year and Quarter Funds Needed: __________________________________________

A. Demonstrate the added value from receiving UFPF support to the proposed project ,
and specify how UFPF funds will be used.

(Describe how the activity supports the achievement of developing Livable and Sustainable
Cities for Asia (as set out in ADB's Strategy 2020)

B. Please see attached for details.

• Implementation Arrangement

• Design and Monitoring Framework (impact and outcomes should demonstrate how the
activity is supporting the achievement of Livable and Sustainable Cities for Asia)

• Detailed Cost Estimates

- detailed remuneration and out-of-pocket expenses for international and national


consultants. Estimate remuneration based on the estimated minimum number of
person-months and anticipated average remuneration rate at the time of contract
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negotiations. Base per diem on ADB’s standard per diem rates for consultants. Other
out-of-pocket expenses should be consistent with ADB’s usual practice.

- list of all travel costs and per diem for consultants

- list of all equipment (if any) and indicative price

- list of all expenses related to seminars, conferences, workshops, training and


fellowships

- list of items such as cost of laboratory tests, surveys, data collection, and analysis

• Detailed TOR for each consultant

Assigned by: UFPF Secretariat:


Fund Code:_______________ Application Number: _____________
Approved Amount for UFPF Allocation: __________________
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Appendix 3

UFPF Application Process


Flow Chart

Unit Responsibilities

Prioritize proposals and prepare UEIF


User Departments (UDs) application with concept paper

Review for compliance with


UFPF Facility Manager Implementation Guidelines for use of
funds and eligibility criteria and make
recommendation for approval. If
applications do not comply, Facility
Manager will discuss with UD for
revision and re-submission or
withdrawal of applications.

Urban Infrastructure Working


Group (UIWG) Review and endorse UFPF
applications

UDs Incorporate comments as needed

Facility Manager Forward applications to UISC for


approval

DG, RSDD as Chair of UFPF Review proposals endorsed by the


Steering Committee UIWG and approve UIF allocation for
proposals

Follow standard procedures for TA


and loan approval
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Appendix 4

APPLICATION TO ACCESS
URBAN FINANCING PARTNERSHIP FACILITY (UFPF) RESOURCES
For Direct Charges
(2 pages maximum)

Date: __________________

To: Director, RSID

Through: Director General

Director

From: <Project/Activity Proponent>

Re: Approval for Fund Allocation

Activity Name/Title: __________________________________________

Country/Region: __________________________________________

Amount requested from UFPF: __________________________________________

Year and Quarter Funds Needed: __________________________________________

A. Brief description of the activity (describe the activity in terms of its objectives and the issues
or problems it seeks to address. Include the following information):

• Is this activity linked or supporting a specific loan or TA? If yes, describe briefly what added
value does this activity provide to the loan or TA. If this is a stand alone activity (not linked
to specific loan or TA), describe what added value does this activity provide to ADB’s
overall urban sector operations.

• Describe how the activity supports the achievement of developing Livable and
Sustainable Cities for Asia (as set out in ADB's Strategy 2020)

B. The following are attached for more details.

• Implementation Arrangement

• Design and Monitoring Framework (impact and outcomes should demonstrate how the
activity is supporting the achievement of Livable and Sustainable Cities for Asia)

• Detailed Cost Estimates

- detailed remuneration and out-of-pocket expenses for international and national


consultants. Estimate remuneration based on the estimated minimum number of
person-months and anticipated average remuneration rate at the time of contract
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negotiations. Base per diem on ADB’s standard per diem rates for consultants. Other
out-of-pocket expenses should be consistent with ADB’s usual practice.

- list of all travel costs and per diem for consultants

- list of all equipment (if any) and indicative price

- list of all expenses related to seminars, conferences, workshops, training and


fellowships

- list of items such as cost of laboratory tests, surveys, data collection, and analysis

• Detailed TOR for each consultant

• Copy of TA or Project Concept Paper (if activity is linked to a TA or a loan)

Assigned by: UFPF Secretariat:


Fund Code :_______________ Application Number: _____________
Approved Amount for UFPF Allocation: __________________
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Appendix 5

UFPF Application Process


For Direct Charges
Flow Chart

Unit Responsibilities

Prioritize proposals and prepare UIEF


UDs application with concept paper

Review for compliance with


UFPF Facility Manager – Director Implementation Guidelines and FM
Level and up approves allocation of UFPF funds

Follow standard procedures for TA


and loan approval

12Apr2010