Category Archives: Residential land development and the RZhS Fund

Helping developers

“Helping developers” (“Zastroyshchiku pomogli”), Ekspert Ural 6 (408), 15 February 2010. 1 July 2010 http://www.expert.ru/printissues/ural/2010/06/news_zasrtoischiku_pomogli/.

Report on the Ekaterinburg city Duma’s decreasing the rates on yearly taxes paid by developers owning land plots occupied by multi-story buildings, from 0.1% to 0.06% of the land’s Cadastral value. This will affect 108 privately-owned land plots in the city (the largest portion of which are held by development firm “Renova-Stroygrupp”), including many in the sizable Akademicheskii region (9,000 m2) under development now. This will free up vast amounts of money for many firms: taxes incurred by Akademicheskii developers will drop from 52 to 31 million rubles, for instance; small firms will benefit, too. Some are raising their voices against the “privileges” (e.g. special buy-out prices) being afforded to large developers, mistrusting Duma deputies’ claims that the Akademicheskii region is primarily being built for accessible, low-cost housing, or alternately, that it will catalyst greater economic growth in the region.

Note: Other various articles (since February) have reported the general success of the first Akademicheskii regions to open.

Braverman’s Land Patrol

Stupin, Ilya. “Braverman’s Land Patrol” (“Zemel’nii patrul’ Bravermana”), Ekspert 41, 26 October 2009, 28-34. 28 June 2010 http://dlib.eastview.com.ezproxy.middlebury.edu/browse/doc/20828585.

An examination of the federal government’s practice of distributing seized land in auctions to developers via the Residential Construction Development assistance fund (RZhS Fund).  The new government organization, an initiative of Medvedev’s aimed at creating a renewed market for construction, has begun seizing land from agricultural institutes on grounds of underuse.  Developers in Tyumen’, Kirov, Cheboksarakh, and Kursk have already begun leasing these lands, promised the opportunity to privatize the land after 9-11 years of use.  The article criticizes the RZhS Fund institution as short-sighted, as it is so far unclear as to who will consist the buyers and renters in this new, real-estate-flooded residential building market.  Although, both RZhS Fund head Aleksandr Braverman and construction business heads credit the Fund’s creation with the streamlining of bureaucratic processes and incentivizing of developers’ building-up and eventually privatizing the plots.  Controls on where developers can set rent rates, as well as insufficient budgetary funds allocated for the RZhS count among the Fund’s problems.

Quoting from an interview with Kirov Oblast governor, Nikita Belikh, the second half of the article examines what may be the RZhS’s greatest weakness: a lack of a central region development plan and poor cooperation with the regions in which these infrastructure-less lands are being auctioned.

Land seized from Ekaterinburg developers

“Land seized from Ekaterinburg developers,” (“U ekaterinburgskikh zastroyschikov otobrali zemlyu”), Ekspert Ural 26 (382), 6 June 2009. 1 July 2010 http://www.expert.ru/printissues/ural/2009/26/news_nash_dom/.

Report on ZAO Nash Dom losing two land plots that Sverdlovskii arbitration courts ruled had been improperly divided up by the city administration.  The land, nearly 42,000 m2 now returned to the city, was transferred in spring of 2007 by decision of the Ekaterinburg mayor; the courts noted that by law, after October 1, 2005, transfer of land was only legal through an auction.  Although the Land Code does provide that lands included in contracts drawn-up before the 2005 cut-off could be transferred no later than March 1, 2007, since the actual lease agreement had been signed neither by Nash Dom nor by the city, the agreement made by both parties in 2005 did not hold up against the general prosecutor.

Nash Dom must now return the 79 million rubles to investors in the projects planned for the land’s development, as well as face the lost 130 million rubles already spent in the preparation of the land.  Representatives of the company say they will file for compensation of these monies if the lands are returned to the city.  In Ekaterinburg, there are 200 other property transactions that could be disputed by the general prosecutor in the same way; these are the seventh/eighth substantial plots seized as such.