The Programa Favela-Bairro project was launched in 1995 as a partnership between Programa de Urbanização de Assentamentos Populares - PROAP-RIO and the Inter-American Development Bank.

The Inter-American Development Bank funded 60% of the project at $180 million USD with PROAP-RIO covering the other 40% at $120 million USD.

The principal goal of the project was to upgrade infrastructure and services within favelas, essentially connecting them to the greater city fabric by evolving them from favelas into actual neighborhoods.

The project included formalizing favelas by implementing and/or improving the common characteristics and identifiers of standard neighborhoods such as streets, squares, public-use areas and utilities.