Babenko А. Е., teacher
Odessa National Economic University, Odessa

Modeling of reconfiguration of communal industry operation

Housing-and-communal industry (HCI) in Ukraine is considered to be one of the most backward. Being the least adapted to the market economy, it is in deep crisis. These findings exist in the most reform programs of HCI reforming, adopted by regional local communities in Ukraine.

Such legislative activity in the local regions, was caused by appearance of a block belonged to HCI industry in the presidential program of economic reforms in Ukraine during 2010-2014, and the adoption of the 2009 amendments to the Law of Ukraine "The national reform program and development of housing and communal industry in 2009-2014" [1].

Unquestionably correct accents in the adapted laws and programs regarding the need of "implementation of energy-saving technologies", "openness of processes in HCI", "providing the control of the services consumers," "the need of de-monopolization of the industry" and "the need to improve the quality of services" in the overwhelming majority are not new, and some of them will soon celebrate tenth anniversary.

As for city of Odessa, in the budget for 2013, the funds for overhaul repairs of housing are provided with 180 million UAH less than in 2009-2010. This despite to the fact that over the last 10 years the old and dilapidated housing includes more than 700 buildings. The vast majority of poor residents of the city, has become accustomed to live in the houses that has worked long term of operation of their project, the basements and utilities in them are filled with water, the lift works with long breaks. In such state there are more than 6500 apartment buildings in Odessa. Most of them were built after the war, in the 50-th. Designed expected life of them (from 40 to 50 years) - has long expired.

At the current rate of repair of the housing stock, its general deterioration in the coming years will be 75%. After that, most of the housing will be Non-Repaired, the rest – will become emergency. To live in these homes will be extremely dangerous. Particular danger is hidden in nine-storey panel buildings and "Khrushchev" ones, because their weld seams and fittings at running long time are being destroyed by corrosion.

In-house engineering networks are in emergency state. Maintenance of utilities, as well as the entire building, is not properly carried out and the control is virtually nonexistent.

In this situation, instead of the housing reform, they used the way to make three or four times higher tariffs. However, the increase in tariffs for the maintenance of houses and the near house territories, while saving quite non-effective governance of the city life, did not give positive effect. Furthermore, over 70% of the revenues received by "HCI" enterprises from the new rates, are using for the payment the wages to their workers.

Residents of the city, who privatized 83% of the housing, really hit into the hard dependency from the housing and communal services, having no real control over them. They have to pay several times more for the services of doubtful quality or for the virtual absence of those services at all.

To improve the efficiency of city management during the crisis, it is needed to change radically the system of governance of urban household and the structure of the expenditure part of the budget.

Can not the city's budget, 80% of which is filled in by a tax on the income from individuals, that is citizens of the city, maintain the entire housing stock of the city. The attempts to fill the budget by increasing the cost of land rent and municipal non-residential premises, or also the sale of both of them, give the opposite effect. Expensive goods and services prices of Odessa companies make them not competitive, thus in perspective Odessa will lose its status as a tourist center. Filling the Odessa market with cheaper goods, produced outside of the city and the country, will bankrupt businesses located in the city.

To compare the budgets of most cities in the world we found they have a different structure. They only support the socially disadvantaged people without destroying the people who are able to feed their families, create jobs, pay taxes to the city, that is able-bodied and active population.

Communal housing should not hang like a stone around the neck of the city community and be paid from the funds of the working and active population. The city budget will not be able to maintain the housing with high quality neither by high raising tariffs, nor by multi-million dollar grants.

The study of the experience of the housing and communal reforms in Eastern Europe and in the Baltic countries it was clearly shown that this problem can be solved in only one way: to take buildings into the property of residents.

In Odessa, there are more than 250 ACAВ (association of co-owners of apartment buildings). They were placed into conditions in which it was impossible to survive. Overhaul of most buildings, which were transferred to ACAВ, failed. Both auxiliary premises in the buildings and near buildings areas were not transferred to the balance. Intra repairs of utilities by so-called "service providers" were not served. Moreover, in any issue of paper "Odessa Herald" the representatives of municipal property management announce the sale of non-residential premises in the apartment buildings, their basements and attics. And all these facilities, according to the decision of the Constitutional Court of Ukraine № 4-rp of 02.03.2004 were owned by the residents of those homes. In the transition to self-government and renting of non-residential premises would give members of the CAAB a part of the necessary funds for the maintenance of the house. But, they are now being sold "to the urban communities."

The еxistent model of housing and communal services of the city was formed over the years and is characterized by the features associated with a specific pre-existing ownership and management of public property. In the transition to the market economic relations inevitably reveals an inconsistency of the existing structure of the housing and communal sector to the modern requirements of the city.

The еxistent control system is archaic and is focused on funding and grant schemes and planned-cost methods of management. On the one hand, the lack of independence does not stimulate small base enterprises of housing and communal services for improving the performance and finding innovative methods of management.

On the other hand, the dispersion and the awkwardness of housing and community services significantly reduce the efficiency of decision-making, having a deleterious effect on the forms of independence and initiative of enterprises and reduce the level of responsibility for the work and its results.

The share of the cost of current repairs of housing in total expenditure was 12.8% against the design needs of 30-35%. Because of limited financial resources the amount of maintenance of the housing stock of the city is annually reducing, resulting in a deterioration of its technical condition.

All the above leads to premature wear of engineering services and equipment, and in the nearest future will inevitably appear a problem of avalanche growth failures of such elements as a load-bearing structures of buildings, roofs, elevators, in-house heating systems and water supply systems, sewerage and the same of other engineering utilities.

Imperfection of management of housing and communal services leads to the fact that leadership, methodology and functional role of local government is practically limited by operational decision-making to find financing options for occurring problems. The above with apparent absoluteness confirms the conclusion that the performing of the comprehensive reform of the housing and power energy sector is a vital priority for the city.

The first step in creating a climate of social partnership should be a reform of the housing and communal services industry. It is needed to create a system of maintenance and service accommodation, which would be capable on base of self-financing and self-management and self-regulation effectively maintain the housing, perform the current and overhaul repairs and renewals and participate actively in the development of the whole sphere of municipal services with minimal subsidies from the local budget.

This will on the one hand establish the quality service by boards of management created by the residents (like a superintendent, "campaign management" ACAВ and housing cooperatives), and on the other hand it will release a part of the city budget to address it to the equally important issues of housing and communal services in the city.

Taking into consideration the high probability of a significant collapse of the emergency and dilapidated buildings in the near future, to our mind, the first step to be done is an urgent need to buy some of unfinished apartment buildings with the degree of 50% readiness. At the expense of the city budget is an urgent need to finish construction of those apartment buildings and get them to the balance of the city as a "house fund for resettlement." In these houses the city government will temporarily settle the families from Odessa, who lost their homes in a result of the unavoidable and inevitable collapses of the worn-out housing.

The second, equally important step should be the restoring of the system of departmental housing. It must be done at the expense of the city budget and in each district to be bought several apartments, which should be leased to employees performing housing and communal services in the course of their work. The availability of such departmental housing will eventually find skilled workers in the housing sector in each district of the city.

The third step would be to replace a planned housing, which project operating period has long expired and the technical condition of the housing does not provide safety living (in 2-3-4-5 storey buildings). The technical condition of such buildings and in-house networks no longer allow their safe operation.

It is also necessary to develop a comprehensive program of systematic replacement of these houses for the modern high-rise buildings that will be constructed on the site of the demolished houses in the same area. It should be noted that this program for 10 years has been successfully implemented in Moscow.

The fourth step is solving the problem of transport highways and transport interchanges in the city, and also the problem of parking. Well known fact that 25% of the city areas is occupied by parking. Without solving this problem in a few years the city will be paralyzed.

Immediately one should start developing the plans for highways and transport interchanges in the city. Attention must be paid to the construction program of ground and underground parking lots.

It should be noted that the administration of housing-and-communal industry had the opinion that it is sufficient to bring market relations in the sphere of HCI services and the market itself will regulate everything. And to make this market profitable for services and attractive to private companies, they have decided to raise the tariffs. Voluntarist approach to the formation of the new tariffs had led to a natural negative.

It is well known that the market is a relationship between the supply and demand, and the demand itself dictates the proposal. The market can only exist in a free enterprise and at equal rights of property owners. Market - is the presence of interests and demands for the service. By creating a market participant services through private agencies (offers) was not taken into account the absence of the subjects of demand that is private homeowners. To create a proposal in the absence of demand is an absurd for the market.

Market conditions can be implemented only by finding of real housing owners. Reform is possible only on the basis of accelerated creating association of co-owners of housing and by transfer to the owners the entire building and the land in their ownership and to assist them in overhaul repair of the house. The owners of housing (HBC, ACAВ), by collecting money at their accounts, and acting as a Customer for services can solve the problem regarding the amount of tariffs as well as the choice of "the Performers of Services."

Thus, the problem of raising the utility rates in Odessa can be removed from the agenda and moved to the competence of self-owners of housing. Such system has long proven itself in the housing - building cooperatives in Odessa.

The interest of the owner in the most efficient use of his home, will awaken in him a sense of ownership and change the attitude of citizens to the housing stock in a whole.

Even the partial maintaining of private housing at the expense of the city budget, generates the dependent, consumerist attitude of the people to the use of housing stocks and diverts resources from tasks of life support and development of the whole city.

The study of the experience of the housing and communal reforms in Eastern Europe and in the Baltic countries has clearly shown that the solution would be just to take homes into the property of residents. Management of housing area, keeping it in the municipal property, without identifying the sources of financing of the current and overhaul repairs complete contradict the market conditions. Further following this way is extremely dangerous for the territorial community of Odessa.

Lack of financial resources, of course, is a strong argument that affects the ability scale of reconstruction and technical re-equipment of the industry. But this argument is not very convincing in matters of necessary structural changes in the industry and the effective use of available resources and in improving the operational discipline of operators of communal services etc.

Analytical work which was constantly carried out in the last 4-5 years, and active monitoring-analytic work suggest that one of the main reasons for restraint of reforms in industry of housing and communal services - is the lack of mechanisms like separate laws and regulations, the adoption of which would provide implementation of the relevant declared principles.

In support of this conclusion Odessa City Council has adapted certain programs relating the power efficiency and stimulation of the development of local self-government boards [2-4]. More specifically the Kherson City Council has decided to approach to the decision of the declared tasks, and their profile parliamentary committee has recommended that at one of the early session, prepared by experts of social organizations and by the parliamentary commission, would be revised a draft decision of the approval of residents’ control procedures over the houses, completeness and quality of overhaul repairs of housing from the budget.

Similar procedures, which are implemented in the form of laws and regulations, require to use other directions, declared by the reform in the industry.

After analyzing the situation in the industry, one needs to make significant changes in a comprehensive program of the reform and development of housing and communal services of the industry for 2010-2014, taking into account the national program and recommendations of Ministry of regional development and construction and maintaining of housing and communal industry, including optimization and reforming of the industry. As a result, were identified three main areas of activity:

- decentralization of heating systems and optimization of the existing central heating system with the power-saving technologies;

- improvement of water supply for settlements and improvement of the water quality;

- arranging an effective system of housing management through the creation of societies of co-owners from tenement-houses.

After the solution, adapted by the Executive Committee of Odessa City Council "On bringing into order services in maintenance of houses and adjoining territories in Odessa", dated 22.07.2011, Odessa started reforming of the housing sector. Thus, payment for services related to the buildings and adjacent territories in July 2011 was 10% less than in the previous months.

Reduction of payment was due to the mobilization of household expenditures spent by the maintenance companies.

According to the solution of the Executive Committee of Odessa City Council there were identified the stages of procedures for reforming the housing system by the end of this year. Among them were:

- re-certification of housing-and-communal system operators, which will permit to divest the problems regarding productivity of the system for performing of its further reforming;

- implementation of automated accounting system “Informersurs” with using a permanent monthly monitoring of services for maintenance the houses and adjoining territories for each house separately;

- intensifying the process for creating the societies of co-owners from tenement-houses.

In the program "Main directions of social and economic development of the city of Odessa during 2005-2015" there were noted the following activities. In the branch of housing and communal services, fuel and energy complex should be performed the following:

- оverhaul of the housing stock at amount of 35.0 million UAH per a year, and only for 10 years to be spent 350.0 million UAH (taken from the budget);

- to complete the transferring of departmental housing to the city municipal ownership by 2010;

- кeconstruction of the heating system at amount of 2 mln UAH. And during 10 years – 20 mln. UAH (taken from the budget);

- сonstruction of a new thermal power station at amount of 768 mln UAH for its starting the commission during 2005-2006 (taken from investments);

- the completion of the reconstruction of the water supply system at amount of 408.8 mln.UAH during 2005-2010 (from investments of "Infoxvodokanal" LLC "Infox" branch);

- the construction of a highway from Bulkowskaya street to bypass roads worth of 42.4 mln UAH. (from investments);

- implementation of energy saving program at amount of 33.552 thousand UAH. (from the budget);

- the completion of road surface treatments (total - 430 mln. UAH, including road repairs - 400 mln. UAH, repair of sidewalks, of housing estates, and of storm water sewerage system - 30.0 mln. UAH);

- overhaul of outdoor lighting networks - 945.5 thousand UAH;

- overhaul of transformer substations - 23.7 thousand UAH;

- reconstruction of the external lighting control system - 483.6 thousand UAH;
- repair of intra housing estates outdoor lighting - 1500 thousand UAH;
- re-cultivate the existing solid waste dump-1 "Dalnytskiy career" and construct a garbage processing complex on it - 61.8 mln. UAH;

- оverhaul repair of the road to the resort "Kuyalnik" from by-street “Green”; to provide passenger transport trains from downtown via the inhabitable massiff Kotovsky to “Kuyalnik” resort.

Reform programs and development of housing and communal services of Odessa region for 2012-2014 will ensure the implementation of the goals of the government policy in the housing and communal services industry in Odessa region, will ensure the continued functioning of this sector in terms of market economy, will make accessible high quality services for Heat and water supply both for residents and enterprises, subject to timely payment, and will create favorable conditions for the accumulation of investment resources for technical re-equipment of the of housing and communal services industry and for infrastructure development. [3]. Important tasks are as follows:

- reducing the level of safety operation of main stock wearing-out in the housing sector and reducing the costs and losses in production (or in performing) of housing and communal services;

- to ensure the gradual renewal of emergency public utilities in Odessa region on base of co-financing from the government and local budgets;
- to ensure continued effective operation of housing and communal services and to improve safety operation of life support systems of settlements in Odessa region;

- reduction in three years period the volume of consumed power used in municipal electric power system and in residential buildings in Odessa region up to 20%;

- to provide equipment for 92% of apartment buildings in Odessa region for measuring consuming of cold water and equipment for 66.4% of apartment buildings for measuring the thermal heating energy.

In addition, it is necessary to create favorable conditions to attract extra-budgetary funds for development of housing and communal services industry and create effective mechanisms to its further reforming with involving the foreign investments, loans, assets from individuals and companies, to perform a comprehensive modernization and technical re-equipment of housing and communal services enterprises in order to reduce resources consuming in compliance with fulfilling the environmental regulations and the norms for fire protection.

Literature

1. Закон Украины «О общегосударственной программе реформирования и развития жилищно-коммунального хозяйства на 2009-2014 г.»

2. Решение Одесского городского совета № 2460-VI от 21.12.2012р. „Об упорядочивании предоставления услуг по содержанию домов и придомовых территорий в г. Одессе” от 22.07.2011 г.

3. Решение Одесского городского совета № 2460-VI от 21.12.2012р. „Основные направления социально-экономического развития города Одесса на 2005-2015 годы”

4. Рішення Одеської міської ради № 2460-VI від 21.12.2012р. „Про затвердження Програми соціально-економічного розвитку м. Одеси на 2013 рік”.