Establishment of Condominium Associations in the Earthquake Zone of Armenia (Gyumri)

Abstract

The existing state system of housing management and maintenance is unable to justify itself any more due to lack of resources, obsolete management system, deteriorated work coordination of different institutions, absence of competition and lack of the necessary motivating factors in this sphere. As the housing privatization program progresses, the need for a more efficient, flexible, market oriented system will rise drastically. Establishment of condominium associations in Armenia is considered part of the Housing Policy Reform Program that will provide residents of multi-unit buildings with high-quality management and maintenance services. In 1994, the Government of Armenia received a credit from the International Development Association of the World Bank (IDA) towards the cost of the earthquake Zone Reconstruction Project. Taking into account current reform programs, it was planned that residential buildings completed through the Project would be privatized and the owners organized into condominium associations. The main objectives of the Project were: • Modify and develop the concept of condominium associations for new construction models as opposed to existing conversion throughout other parts of Armenia; • Introduce and promote the concept in the Earthquake Zone • Design management and financial plans for the condominium associations; • Start-up a pilot project of condominium associations in the EQZ. The Project Group adapted the concept of the condominium associations for use in the Earthquake Zone of Armenia and established the first condominium association in the city of Gyumri on the basis of the newly constructed residential buildings as a pilot project. To implement the Project, the Group introduces and promoted the concept in the Earthquake Zone by means of seminars for the beneficiary households, prospective management and maintenance agents, and appropriate discussions with local government officials. The Group undertook necessary actions for legal establishment of the condominium association on thye basis of the newly constructed buildings in the city of Gyumri. A management agent for the condominium association was selected through a competitive process. The Project Group organized start-up of the Association’s activities and acted as a consultant to the Board of Directors and the Property Manager. However, full functioning of the Association was impossible because of problems beyond the control of the Project Group and the Association. The Project Group worked in active cooperation with ICMA, the appropriate departments of the Ministry of Economy, and local governments, and made recommendations that would be useful for similar projects in Armenia. Based on the experience gained, the Group reached the following conclusions: • A legal framework should be developed for homeowners’ associations. (This will hopefully be addressed in the pending Condominium Law.) • Government agencies have to actively participate in the process of transition to private housing management and maintenance. • Condominium associations should be established by developers prior to the delivery of the buildings. • Property managers and maintenance companies should be hired prior to the delivery of the buildings. • Newly established associations should be provided with initial operating capital and further subsidies for limited services. • Supervision of construction and delivery standards should be improved. • The move-in process should be better coordinated. • Governmental agencies should participate in assuring the success of new associations established under the EQZ Reconstruction Project to maximize their positive demonstration effect in their area.