Amendments and additions to laws in December 2009

“Amendments and additions to laws in December 2009,” Metrkv.ru: Vsya Nedvizhimost’ Rossii. December 2009. 28 June 2010 http://metrkv.ru/articles/index.xml?&articles_id=10336016.

Cataloguing of amendments made by the Duma in December 2009. On December 27, 2009, the deadline for the restructuring of lands held under permanent (perpetual) use was extended to January 1, 2012, and for lands on which electric, telecommunications, pipe, etc. lines are located, the deadline is now January 1, 2015.  However, the changes also include another extension: the date after which fines may be imposed upon firms that have not restructured their land holdings is now Jaunary 1, 2013, meaning enterprises that do not meet the 2012 restructuring deadline may only be fined at least a year later.  De facto, the original Edinaya Rossiya proposal (see above) was upheld.

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.

Moscow prepares to seize

Sichkar’, Olga and Khalil’ Aminov. “Moscow prepares to seize” (“Moskva gotovit izyatie”), Kommersant 197 (4252), 22 October 2009. 22 July 2010 http://www.kommersant.ru/doc-y.aspx?DocsID=1259907.

An evaluation of new legislature proposed by the Moscow Land Resources Department (Moskomzem).  If passed, the law would give Moskomzem the explicit right to seize land that had been left unused for two years (or used outside its allotted use).  Their arguments are that it would stimulate both the fulfillment of the city land plan, as well as the privatization of enterprise lands’ use-rights.  However, one lawyer argues that the law will only be able to be applied to lands under agricultural and construction uses, saying that city administration would be hard pressed to find a legitimate reason to be seizing industrial enterprise land based on non-use of the land.

News of the Week

“News of the Week,” Ekspert Volga 38 (153), 5 October 2009.  30 June 2010 http://www.expert.ru/printissues/volga/2009/38/news_week/.

The Republic of Tatarstan’s Gossovet deputies proposed an amendment to the RF Land Code that would allow seizures of land, the owners of which have not paid their land taxes or put the land to use in the last three years. The proceeds from these lands’ auctions (minus transaction costs) would be used as compensation for the previous proprietors, from whom the land was seized. “The measures put forth by the deputies, indubitably, could enliven the land market and shrink the number of ineffectively used lands.”

In Volgograd, municipality will cooperate with industrial enterprises in buying out land plots

“In Volgograd, municipality will cooperate with industrial enterprises in buying out land plots” (“V Volgograde munitsipalitet okazhet sodeystvie promyshlennym predpriyatiyam v vykupe zemel’nykh uchastkov”), Zem.ru, 28 September 2009.  26 July 2010 http://www.zem.ru/all/825/.

The state of land reform in Volgograd.  The Volgograd municipality is offering a discount price on land buy-outs, if purchased by enterprises before the end of 2009; the relative stability of land tax rates, as opposed to more in-flux lease payments, is another incentive to buy out, the article adds.  The city administration is encouraging full privatization of land since land taxes on private land help fill the city budget.  The 400 hectares of federal land, on which 15 large industrial enterprises are currently situated, currently add some 123 million rubles to the city coffers annually; if reformulated as rents from the federal government, the city will lose these monies.  Committee on land resources chairperson Irina Anisimova is pleased that 80 new enterprise land privatizations in 2008 were added to the total 290 privatized industrial land plots, though she realizes this momentum must be sustained.  Although city administration affirms its readiness to cooperate with enterprises in quickly formulating buy-out documents, disparities between Cadastral appraisal prices and market prices are sure to fuel disagreements over buy-out prices.

Land taxes increase 50 times over

“Land taxes increase 50 times over” (“Zemel’niy nalog podorozhaet v 50 raz”), Agentstvo “Kadastrovie Novosti”, 11 September 2009. Federal Cadastre Agency for Real Estate, Media Materials: 14 July 2010 http://r41.kadastr.ru/news/media/1059085/.

Reporting on land tax raises as a result of new Cadastral evaluations.  Land values in Samarskaya Oblast are up 40-60%, in Rostovskaya Oblast they have increased 5 times over, and in Smolensk Oblast they are up 47.7 times.  Rosnedvizhimost’ officers say that tax rates have not yet been adjusted to new market conditions coming after a peak in the land market in late 2007/early 2008.  A managing partner of Miller Samuell Real-Group says these taxes “will simply kill any proprietor and will place a cross on the back of any business.”  In Smolenskaya Oblast, values of land plots under industrial enterprises have increased 47 times, which specialists say will harm production costs, productivity of local industry, profits, and competitiveness.

Problems for other enterprises and administrative bodies have arisen: in Moscow, City Hall is threatening terminating developers’ contracts for residential construction on some 5 million square meters of land that Rosreyester is refusing to register.  The Moscow Oblast Forestry Management has gone against federal recommendations in completing some of its recent land transactions; similar forestry land-use scandals have taken place in Petersburg and Leningradskaya Oblast, as well.

Note: Recent (in action since January 2010) changes to the land tax code are outlined at http://taxpravo.ru/analitika/statya-71574-popravki_po_regionalnyim_i_mestnyim_nalogam_v_2010_godu.

The Infrastructure Phantom

Stupin, Ilya. “Infrastrukturnii’ fantom,” Ekspert 34, 07 September 2009, 88-92. 25 June 2010 http://dlib.eastview.com.ezproxy.middlebury.edu/browse/doc/20586521.

Review of the problems facing infrastructure and highway building in Russia.   Article highlights probable missteps of the government in focusing its attention and resources on unneeded projects.  The recently created firm Rusavtodor overshadows existing motorway infrastructure construction enterprises; its legal status as an enterprise is ambiguous.  Its Land Code provides terms of lease on federal and non-real land properties, which exempt the company from receiving certain permissions and allow for the conclusion of lease agreements without usual public auctions. Questions are raised as to why this state-favored enterprise has been given “less complicated” projects and land on which to work, given the fact that its capital base is capable of tackling larger problems (92).

Russians buy up lands, look to Kashir

“Russians buy up lands, look to Kashir” (“Rossiyane skupayut zemli po Kashirskomu napravleniyu”). Finam.info, 1 July 2009.  22 July 2010 http://finam.info/news/article2028000001/default.asp.

Update on land market demand structure.  Pre-crisis levels of speculation have dropped off, especially by manufacturers, retailers, logistical operations, developers, etc., which now prefer the system of renting built-to-suit land plots.  From 2008 to 2009, a decrease (5-10 ha to 3-5 ha) in the average and median size of land plots sought by individuals has been observed, which can be explained by an increase in small-scale private projects, and the aforementioned decrease in speculation.

Moscow fiddles with its land

Stupin, Ilya. “Moscow fiddles with its land” (“Moskva khimichit s zemlëy”), Ekspert 25, 29 June 2009, 47. 28 June 2010 http://dlib.eastview.com.ezproxy.middlebury.edu/browse/doc/20287329.

Announcement of a new state land asset company, “Moszemsintez,” and reporting on initial transactions.  Moscow vice-mayor Aleksandr Ryabinin will head the company, formed in order to “manage building projects, mixing the functions of a land bank and of developers, including attracting loans for land assets and real-estate to carry out the company’s goals.”  A few dozen acres in southwest Moscow may be transferred to “Moszemsintez” from Moscow-administration-run OAO “Stroitel’no-sberegatel’naya kassa.”  The lands of jewelry factory “Krasnaya Presnya,” bought out by the city, will now be used as a residential area for resettled residents of Kamushka near Moscow City.  Developers are wary of the new organization, as its role in seizures has yet to be defined.

A single expanse

Vasilenko, Sergey. “V edinom prostranstve,” Ekspert 23, 15 June 2009, 80-81. 25 June 2010 http://dlib.eastview.com.ezproxy.middlebury.edu/browse/doc/20220270.

An interview with Vaagn Martirosyan, general director of telecommunications firm OAO Tsentr-Telekom; discusses the differences between doing business in Tverskaya Oblast and its neighbors in the Central Federal District.  Assistance from oblast administration has helped the company develop much development of telecommunications and its own business in the region.  When asked about the company’s current problems, Martirosyan mentions issues of land ownership almost exclusively: after a land plot’s transfer to a new proprietor, cable lines must be used, or otherwise, use of the land through which the cables pass must be bought.  Additionally, “Questions over land-use often hold up new construction.”