Stroymontazh is deprived of development rights

The Ufa authorities are trying through the court to deprive the Stroymontazh construction company of the right to develop the block of Aiskaya - Eighth March - Vladivostokskaya - Revolyutsionnaya streets. The mayor's office believes that the entrance fee paid by the developer in 2011 to the project - 2 million rubles - does not correspond to its commercial prospects.

The Ufa authorities decided to cut off the builders' path to super-profits as they approached
Photo: Evgeny Kurskov, Kommersant

Development LLC Stroymontazh, which purchased the right to develop 17.6 hectares in the area of Aiskaya - Eighth March - Vladivostokskaya - Revolyutsionnaya streets at an auction of the Ufa City Hall in 2011, may lose the right to develop this quarter. The city administration unilaterally terminated the contract with the developer, indicating that he delayed the preparation of the land surveying project and did not provide apartments to the residents being resettled in the block. Stroymontazh, which plans to develop the block with high-rise buildings and commercial real estate, managed to invalidate the decision of the mayor's office in the arbitration court of Bashkiria. The administration appealed the determination. A hearing on her complaint is scheduled for June 29.

Stroymontazh is an unknown company in the Ufa construction market. Its sole owner, according to Kartoteka.ru , is Rashit Minibaev. Stroymontazh is not mentioned as a developer in open sources. The company does not have its own website. At the City Hall auction in December 2011, the company paid 2.1 million rubles for access to the development of a block located near the administrative center of the city. Her project has already been approved by the mayor's office. It provides for the construction of 10 business-class residential buildings on 16–22 floors with a total area of 129 thousand square meters, an extension to Lyceum No. 170, a kindergarten, a hotel with 400 beds, a business center and a parking lot for 2.6 thousand cars. In 2013, the project underwent public hearings. In March last year, Stroymontazh applied to the mayor's office for a decree on the demolition of the first two houses to begin construction, but the appeal remained unanswered.

The administration decided to deprive the company of its rights to the site after some of the houses being resettled in the block were included in the federal program for the demolition and resettlement of dilapidated housing. Initially, the development agreement for the built-up area assumed that the developer would finance these expenses independently. In the changed conditions, says Kommersant’s interlocutor at the mayor’s office, the entrance fee to the project began to look too low. “In essence, for 2 million rubles the company received a free site in the city center with a market value of about 500 million rubles,” he noted.

Residents of the block spoke on the side of Stroymontazh in court, declaring that “the administration’s failure to make a decision on resettlement creates a threat to the life and health of the residents living there.” The court of first instance considered that the developer has all the conditions to register the site for lease and begin construction.

Deputy director of Stroymontazh Marat Kadyrov says that the inclusion of houses in the federal program was a mistake by the mayor's office, not the developer. According to the company, inclusion in the program allows it to save about 1.4 billion rubles on demolition. out of 2.3 billion planned for these purposes. “The administration asked us to give up the plot, promising to give us another one in return. But we are not satisfied with this prospect,” Mr. Kadyrov. A company representative estimated investments in the development of the quarter at approximately 7 billion rubles. At the same time, Stroymontazh does not have an investor. The company is counting on bank loans or the participation of other developers.

Managing partner of the Barrister judicial agency, Aidar Mullanurov, believes that the mayor’s office will not be able to review the decision of the first instance. “The violations she indicated were not significant, moreover, the city extended the terms of the contract with the company and approved its project,” the expert noted. At the same time, as Mikhail Lazarenko, an expert on land use issues, believes, “even if the court decisions stand, this does not mean at all that the developer will no longer put a spoke in the wheels.” “Bad practice has developed in Ufa, and the mayor’s office has enough leverage to slow down construction for as long as possible. They may try to exclude houses from the program, delay the issuance of demolition permits, construction permits - there are a lot of mechanisms. All this is done in the expectation that sooner or later the developer will become more accommodating.”

“Stroymontazh was surprisingly lucky to receive such a good site almost for free,” notes Art Estate Group managing partner Robert Tagirov. “Participation in the federal program allows the company to win not only money, but also time, which usually takes demolition and resettlement. Definitely, this project could turn out to be extremely interesting and profitable and bring a profit in the range of 5–6 billion rubles. The only thing is that in this area “sales of housing, not business class, but comfort class, look much more promising.”

Bulat Bashirov

Just under demolition near the city hall