2. Together with the Stellenbosch Municipality and Winelands District Council, the sponsor has agreed to a development plan for the area and has set up a Development Working Group including representatives from local government and outside consultants. The objective is to achieve local participation in the planning of developments on the Estate, and to inform affected groups and interested parties through a significant public consultation process. The sponsor believes that greater community involvement will not only generate local support for these plans but will also enable communities to benefit by tailoring their own farms or businesses to the opportunities the larger development will offer. The development plan envisages the creation of some 2,000 additional jobs over the next five years, as well as social developments that will benefit disadvantaged communities through construction and renovation of villages and schools; establishment of an innovative organic farming program for emerging black farmers; and the conservation of historical buildings.

3. The sponsor now seeks to expand the development of the Spier Estate and nearby communities with the construction of the hotel and championship golf course, which will exploit the area’s considerable tourism potential and complement the Estate’s other facilities. Spier has signed an agreement with the Ritz-Carlton Group, a subsidiary of the US-based Marriott Corporation, to invest in and manage the hotel. Ritz-Carlton currently has 34 hotels worldwide with 10 of these being resort properties but this would be its first property in Africa. The development will create some 400 new jobs in an area where unemployment currently runs at approximately 50%, and is also expected to benefit other tourism facilities in the region.

4. This is a Category B project according to IFC''s environmental and social review procedure because specific impacts may result which can be avoided or mitigated by adhering to generally recognized performance standards, guidelines, or design criteria. The key social, environmental health and safety issues that were analyzed are as follows:

• land tenure and prior land use;
• sewage and liquid effluent treatment and disposal;
• solid wastes disposal;
• sustainable water supply;
• pesticide use and handling;
• power supply;
• employee safety training and emergency response;
• fire protection measures;
• public consultation; and
• small-scale resettlement.

5. IFC has reviewed environmental, social, and health and safety information provided by Spier and its consultants, including the Environmental Scoping Report dated January 1999, and Spier Development Framework dated March 1999. The Environmental Impact Assessment (EIA) reports (required by the Government of South Africa) for this project were not yet complete at the time this Environmental Review Summary (ERS) was prepared, but the contents of the ERS have been reviewed by the EIA preparers to confirm that nothing in the ERS is contradicted by the preliminary findings of the EIA team. Key elements of the information reviewed are described below.

6. Land tenure and prior land use: The Spier Estate is an historic farm, dating from 1692. By the early 1990s, the Estate had fallen into disrepair and wine production had virtually ceased. The project sponsor purchased the Estate in 1993 and acquired adjacent parcels of land over the next four years. The sponsors have confirmed that they have full land rights to all of the property in question. Unlike many areas in Cape Province, there had never been any forced removals of persons from the Spier Estate lands, and no claims have been lodged against the owners under the South African government’s land program. In the mid-1990s, the sponsor established the Spier Development Trust (the Trust) to champion social development issues, while at the same time extensive renovations were undertaken by the various companies established by the sponsor, which so far have cost some US$20 million. Apart from rehabilitating the farm, winery and visitor center, which together provide almost 500 jobs as well as supporting the livelihood of small-scale farmers and others in the community, the sponsor has restored historic buildings and made land available for a cheetah conservation project. Through both the Trust and for-profit businesses, the sponsor has also encouraged the community to develop farms, smallholdings and a crafts village, and is in the process of rehabilitating an existing structure for a new primary school. The Spier farm is now one the largest producer of vegetables and fruits in the area, and its wine brands have won numerous awards. A recently established organic farm on Spier''s public land -- Go Organic at Spier (Pty.) Ltd. -- is now the largest black managed and owned organic farming business in the country. In all, approximately 8,000 people (the majority of whom are black or coloured) depend for their livelihood on the activities of the Estate.

7. Sewage and liquid effluent treatment and disposal: All organic kitchen wastes and sewage from the hotel, as well as from the rest of the estate facilities, will be processed using a “Dowmus” biolytic system. First developed in Australia, the Dowmus is a state-of-the-art system for processing organic and human wastes that yields (1) a solid fraction that is suitable for composting and soil enrichment and (2) a liquid fraction that is suitable for irrigation. The system is low cost and well suited to African conditions. The Spier Management Team, which is responsible for the overall direction of the entire Spier development, considered several ecologically friendly systems for the estates before selecting the Dowmus as most suitable for local conditions. Soaps and detergents used in the hotel and throughout the estates will be biodegradable.

8. Solid wastes disposal: As part of the EIA process for all of the integrated project developments, Spier has commissioned Environmental Management Plans (EMPs) for each of the major construction efforts. These EMPs establish strict guidelines for construction contractors working on site, which are written into the contracts and include monetary and other penalties for non-compliance. Under the EMPs, construction of both the luxury hotel and conference hotel (the latter of which is currently underway) are overseen by an independent Environmental Control Officer (ECO) who visits the construction site on a regular basis and provides written monthly reports to the Spier Management Team, construction contractors, and EIA contractor on all environmental issues associated with construction. Issues including disposal of construction wastes, slope stabilization to control erosion, and provision of water and ablution facilities for construction crews are all addressed in the construction EMPs and overseen by the ECO. Once the facilities are operational, organic solids from the kitchens will be processed through the Dowmus system described above and used in the cultivation of organic vegetables. Spier is in the process of establishing a comprehensive recycling program for all Estate facilities and activities. Paper, plastics, tins, and cardboards will be separated at the source and collected by private recycling companies. Non-organic wastes that cannot be recycled will be disposed of in the municipal landfill located approximately 5kms from the project site.

9. Sustainable water supply: One of the ecological impacts of past activities in the region has been the contamination of the three rivers (the Eerste and its tributaries, the Blouklip and Bonte) that flow through the estate. This contamination has resulted largely from the discharge of partially treated sewage into the rivers. At the present time, the estate draws its water from the municipal supply system. This supply is augmented as necessary by water drawn from the Theewaterskloof dam from which piped irrigation water is fed into the Stellenbosch valley, which must be treated on site to meet potability standards. According to the Spier Management Team and the publicly distributed notices of the Winelands District Council, the latter recently decided to lay a new water main through the district, which will supply high quality potable water to all Spier’s facilities. Construction of the new main is expected to be completed by the time the conference hotel opens. Irrigation water is at present obtained from the Theewaterskloof dam, which will continue to be used in the future. Treated water from the dowmus system will also be used for irrigation purposes. It will be routinely tested to ensure that bacterial counts are within acceptable standards prior to use. All water extraction and treatment within the Estate will be carried out in accordance with national and local permitting requirements and water treatment standards.

10. Pesticide use and handling: Current plans for the hotel include construction of a Professional Golfers Association (PGA) standard 18-hole golf course. Spier has engaged the services of an international designer to ensure that the course is ecologically designed to take advantage of existing landforms and interspersed with the vineyards, indigenous Fynbos vegetation, and trees. Agrochemical use will be minimal and the course will conform to the standards set out in the “Green Handbook” of the European Golf Association Ecology Unit, and the PGA/Audubon Society’s environmental rating system for golf courses. To conserve water, the treated liquid waste effluent from the hotels will be used to irrigate the golf course. Farming and viticulture practices on the estate have historically depended heavily on the use agrochemicals. As part of its long term sustainable agriculture plan for the estate, the Spier Management Team is gradually introducing organic farming approaches in line with ISO 14000 standards. Spier is the first major wine estate to conduct an ISO 14000 audit as the point of departure for an Environmental Management System, which is required for ISO 14000 accreditation. Spier has expanded this effort by establishing a company to promote emerging black farmers. The project has been financed by the Government Land Reform Credit Facility, and Spier has leased 100 ha from the municipality to institute this program. The company functions as a development agency with a micro-credit facility mechanism. Each of the five emerging farmers owns 5% of the share capital, with Spier owning the balance. As Spier''s exposure declines as loans are paid off, Spier''s equity stake could drop to below 50%. A market for the farmers’ produce has already been established. Spier is already raising organic produce (spinach, leeks, herbs, spring onions, broccoli and lettuce) which is being sold in the local market and has received several inquiries regarding export to international markets. Spier has also played an active role in developing the wine industry’s ecologically responsible standards, as set forth in the industry’s new Integrated Wine Production framework.

11. Power supply: Power for the hotel development will be sourced from Eskom, the national supplier. According to principles outlined in the Spier Development Framework, a comprehensive energy saving program will be enacted for the Estate as a whole. The program will utilize appropriate energy saving devices, natural heating and cooling systems, and solar lighting and water heating units in many of the estate facilities. Solar powered water heating mechanisms have already by designed into the 150-room conference hotel that is currently under construction. Although power outages are not common in South Africa, it may be necessary to install a back-up generator for the hotel. If this is done, the generator will be equipped with a secondary containment structure capable of holding the entire contents of the generator/fuel tank(s) in the event of a spill or breach.

12. Employee safety training and emergency response: South African legislation establishes detailed requirements for employee health and safety and training, and Spier adheres to these strictly. In addition, Spier is committed to expanding the training opportunities available to employees as a key part of its community development initiatives. It is for this reason that Spier has established a Culinary Institute, a training program in organic farming methods for emerging farmers, and the Spier Leadership Institute, all of which will provide training programs for Spier employees and other members of nearby communities. Under the terms of its management contract with Spier, Marriott will provide training to hotel employees to ensure that the hotel meets its overall standards for amenities and service. In conjunction with the hotel management team, Spier is developing an Emergency Response Program (ERP) that includes evacuation procedures for all types of emergencies, public address systems, and a comprehensive employee training program. Fire safety inspections of the hotel, as well as periodic fire safety drills, will be conducted in coordination with local authorities.

13. Fire protection measures: The hotel structures will be constructed to meet South African fire safety standards (SABS 40) and IFC guidelines regarding fire protection and life safety in hotels. Detailed design plans for the hotels will be reviewed by an independent fire safety expert based in South Africa to verify compliance with these standards and guidelines prior to the completion of construction.

14. Public consultation: Under South African regulations governing the conduct of an EIA, public participation is an important component of the overall EIA process. IFC also requires an extensive public consultation process for projects with potentially significant social and community impacts. The public consultation effort undertaken by the Spier Management Team prior to and throughout the EIA process has been comprehensive and wide ranging. Considerable effort was made to identify and involve a broad range of interested and affected parties from the outset of the process. The goal of this effort was to provide parties with detailed information on all aspects of the project development, thereby enabling them to become informed, raise issues of concern, and play an active role in project decision-making. A complete description of the activities undertaken in this regard can be found in the Environmental Scoping Report dated January 1999.

15. Small-scale resettlement: As part of its integrated development plan for the estate, Spier intends to build 100 low-income houses for its employees and other members of the surrounding community, who are primarily black residents. Current plans are that these houses will be built on land adjacent to an old hotel (the Drie Gewels property) located across the road from the estate. Spier Holdings (Pty) Ltd. managed and helped finance the acquisition of the 7.5 ha property and was purchased in the name of a not-for-profit company called Lynedoch Development. Spier purchased this property with the intent of converting the hotel and other structures into a primary school that would serve the local population. As the present Lynedoch primary school is located directly across the road from the old hotel, moving the school to these premises will have no impact on the distance that pupils must travel to school. Former employees of the old hotel/land owner (approximately 10 families in total) are still living on the land near the proposed new school. Although the dwellings are not owned by the residents, Spier has offered compensation to assist them in finding alternative accommodation. The residents have been consulted on these developments through six separate meetings. Spier has offered employment at the Spier Estate to the heads of these families, and to resettle their families in accordance with South African law and IFC resettlement policy (based on the World Bank’s OD 4.30). The Spier Management Team has prepared an abbreviated resettlement plan that outlines how the resettlement program will be conducted. IFC has reviewed the plan and found it to comply with applicable IFC policy/guidelines and will be monitored as part of the supervision process. Spier will be required to report on the completion of resettlement prior to disbursement of this investment. The abbreviated resettlement plan is attached to this ERS.

16. Other: The initial design of the luxury hotel placed it near the confluence of the Eerste and Blouklip rivers and within the 1:50 year floodline. The Environmental Scoping Report recommended, however, that the location of the hotel be outside of the 1:50 year floodplain. In response, the hotel site has been moved as far to the edge of the floodplain as is possible while still enabling the development to be situated in this attractive and otherwise suitable site. Spier and its engineering consultants are working closely with the Department of Water Affairs and Forestry (DWAF) to ensure that the development meets all applicable DWAF requirements, and that its location will not negatively impact on either the river systems, ground water, or riparian vegetation.

17. A large patch of Renosterveld-Fynbos vegetation occurs in the southeastern corner of the proposed development site. These vegetation types have a limited distribution range in the southwestern Cape, and are currently under threat throughout much of this region. The Spier Development Framework explicitly states the sponsors'' commitment to protecting and expanding these threatened vegetation types, and to the planned but gradual removal of alien vegetation that is encroaching on these and other indigenous vegetation communities.

18. Based on its review of available information regarding potential environmental impacts and proposed mitigation measures, IFC concludes that the proposed project is being designed and will be operated to meet all relevant Government of South Africa requirements and World Bank Group policies and environmental, health and safety guidelines.

19. IFC will monitor ongoing compliance with World Bank Group policies and guidelines during the life of the project by reviewing and evaluating the Environmental and Social Monitoring Reports (AMRs) to be submitted annually to IFC by the sponsor, and by conducting periodic site visits during project supervision.