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THE PROJECT

The Demonstration Project for the Renovation of Multifamily Buildings is a joint initiative of the Ministry of Regional Development and Public Works and the United Nations Development Programme, which started in 2007.

BACKGROUND

The total housing sector in Bulgaria amounts to 3,746,758 dwellings (2007). 96.5% of the housing stock in the country is private property and 65% of the dwellings in the cities are in multifamily buildings. The vast majority of Bulgaria’s housing stock was industrially built in residential complexes during the 1960s–80s period. It is not in good shape, constantly degrading, mainly due to insufficient maintenance and inadequate management by the owners. The residential sector is characterized by very low thermal efficiencies and wasteful heat distribution systems (energy performance is about 2.5 times worse than current national technical standards require), thus turning into a significant contributor to Bulgaria’s high energy intensity. Bulgaria’s Energy Efficiency Action Plan states that the residential sector accounts for 23% of the overall energy consumption in Bulgaria.

MARKET POTENTIAL

1. According to estimates, there are approximately 700,000 residential units in over 80,000 buildings in Bulgaria (~53.6 million m2 floorage), which need and would greatly benefit from comprehensive retrofitting. Over two million people reside in these homes. These figures represent the total potential market for retrofitting services.
The renovation package implemented under the Demonstration Project costs approx. BGN 150 per m2 residential space. A further calculation based on this figure brings the total required investment to an estimated BGN 8 billion (EUR 4 billion).

2. The energy savings resulting from home retrofitting are estimated between 40% and 60% of the total energy use before renovation.
According to actual data gathered as part of the Demonstration Project the monthly average expenditure for energy per household is between EUR 75 and 150 (an average of EUR 100 per months and EUR 1,200 per year). Assuming there are 60% post-retrofitting energy savings, households would save the total amount of EUR 720 per year.
Assuming the required investment for the same household is EUR 5,000 the return on the investment will be over a 7 year period at a rate of 14% per annum.

3. Extrapolating those figures on a macro level, the annual theoretical savings on the investment of EUR 4 billion would amount to EUR 560 million. The execution of the future National Program for Housing Renovation is planned for a period of 15 years.

BARRIERS TO LARGE-SCALE RETROFITTING

• The lack of tradition in the joint management of common property through associations of owners;
• The professional management of residential buildings is an almost unknown practice, but renovation requires a complex technical intervention, the application of technical norms and the achievement of high standards;
• The impoverishment of the population during the transition years and thus its inability to finance the renovation of the mostly privately owned housing stock, in combination with nonexistent financial support mechanisms (e.g. low-interest loans and/or subsidies).

OBJECTIVE

The Project aims at developing a replicable scheme for renovation of multifamily buildings, consisting of 3 major components:
a) Conditional subsidies to condominiums for renovation purposes;
b) Facilitated access to loans for renovation; and
c) Technical assistance to the voluntarily associated homeowners of entire buildings for the organization of the renovation process.

The Project is expected to contribute to the achievement of a multi-dimensional development impact in terms of:
1) Preventing social exclusion by improving the targeted population’s health and living conditions through housing renovation;
2) Protecting the environment by reducing greenhouse gas emissions through energy efficiency;
3) Promoting good governance by building urban social capital through supporting the voluntary association of citizens.

The experience, lessons learned and recommendations developed by the Project will be used for the future implementation of the National Programme for the Renovation of Residential Buildings, which will be financed by the National Budget, as well as for the implementation of Action 1.2 “Housing Policy” of Operational Programme Regional Development (European Structural Funds).

PROJECT DESIGN AND IMPLEMENTATION – SHORT DESCRIPTION

The project cycle includes the following activities:
1. Selection of beneficiaries (municipalities and condominiums) on a competitive basis followed by large-scale information campaigns;
2. Voluntary association of owners, signing agreements between MRDPW/ municipalities/owners’ associations/UNDP/banks/other partners;
3. Tendering of services’ (technical and energy survey, technical supervision) and renovation works’ contractors;
4. Implementation of technical and energy surveys and renovation works;
5. Renovation of surrounding public domain, after consultation with stakeholder condominiums.

Under this Project, the following renovation activities are implemented:
• Energy efficiency measures – thermal and hydro insulation, replacement of windows and doors, treatment of the external façade panel joints, others recommended in the energy survey report;
• Refurbishment on common parts related to EE and safe habitation – repair of the main entrance door, the roof overhang over the entrance and the entrance steps, painting of the stairwell walls, others recommended in the technical survey report;
• Replacement of old internal plumbing systems – replacement of the vertical main water supply and waste drain pipes.
• Renovation of surrounding public areas.
The scheme mandates complete renovation not allowing for partial interventions and it has already unequivocally proven the incomparably higher effectiveness and efficiency of the investment costs.

Within the Project, condominium owners receive technical and financial support in terms of the following services:
• Information on: why renovation is necessary and what will the energy efficiency effects for the particular household be, what the benefits of renovating a whole building are, what the Project offers and what is expected from the participants, etc;
• Technical support for the achievement of the required minimum of technical standards;
• Legal support for the establishment of a voluntary association for the purposes of the renovation;
• Financial support: subsidy and facilitated access to loans;
• Support for the organization of the renovation process: technical and energy surveys, preparation of technical documentation, competitive selection of works contractors and supervision contractors, quality control for achieving technical standards, etc.;
• Additional incentive – partnership with the municipality for the renovation of the adjacent public domain.

PROJECT RESULTS

• Project achievements as of June 2010

1) 1063 households have benefited from the Project
2) 64 voluntary associations of condominium owners for the purposes of renovation and future maintenance established;
3) 27 multifamily buildings and their surrounding public areas fully renovated;
4) Another 27 buildings undergoing renovation – technical and energy surveys executed and design documentation prepared;
5) 8,488,575 kWh (40-60%) planned energy savings due to renovation works per annum;
6) 6,672 t planned saved С02 emissions / per annum;
7) 219 jobs per annum created.

• Capacity building and sustainability

1) Tested model of voluntary association of condominium owners for the purposes of renovation and future management of common parts of multifamily buildings;
2) Tested technical and financial support mechanism;
3) Tested technical model for renovation of whole multifamily residential building;
4) Tested model for the preparation and implementation of renovation programs on a small scale;
5) Change of attitudes, overcoming scepticism