28 AUGUST 2002

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5 star land at negligible prices

The leases paid for use of prime government land by big development projects appear to defy logic, with ground rents being charged with apparently no fixed criteria in mind. They vary widely and it is impossible to justify the disparities by looking at area and location.

Tenement 64757 otherwise known as the Hilton, makes a bargain on its Lm990 a year rent. On the other hand, the Corinthia San Gorg, tenement number 77890, pays Lm44,122. Too much, too little or not enough? The Corinthia Marina, meanwhile, pays just Lm11,003 for tenement number 78171. The Radisson pays Lm30,870 for tenement 77888, while its other tenement, number 77889 costs just Lm3,297.

For a development from which the government is earning just Lm990, the Hilton project makes a cool profit. Even the leases which run into tens of thousand of pounds a year are a veritable bargain, when keeping in mind that these locations are all prime properties.

When contacted yesterday MP Dolores Cristina told The Malta Financial and Business Times, "This shows short-sightedness. Even if the contract for the Hilton, for example, is old, the agreements should contain a revision clause so that the leases could be kept up-to-date. The government should make sure that it is getting the full value of the land it leases out. There should be policies in place to govern contracts. After all, if you had to compare the lease of the Hilton to the Lm100 or so ground rent that some people paid on their plots in the eighties, you come to the inevitable conclusion that these leases are too cheap."

The picture becomes even more bizarre: some government departments actually pay rent to hire office space in these large privately-owned complexes. For example the Tax Compliance Unit and The Malta Resources Authority pay large fees for using space at Marsa. If that's true the government could have used the money to restore some of the crumbling architectural gems fast becoming ruins under its paternal care.

Not only is the government losing money by charging record low rents for its prime sites, but it is exacerbating the situation by paying exorbitant fees to private concerns to lease office space. The loss of revenue for the government is double, because private companies are paying untold thousands to rent office space in private developments, which are on government land.

It would come full circle if the government leased its own property from a developer. It would take the policy of keeping government out of direct competition with business to absurd levels. If government claims to be a prudent paterfamilias in the administration of public properties, it could get prosecuted for child abuse.

Several efforts to contact members of the labour camp for their comments proved futile.


Copyright © Network Publications Malta.
Editor: Saviour Balzan
The Business Times, Network House, Vjal ir-Rihan San Gwann SGN 07, Malta
Tel: (356) 21382741-3, 21382745-6 | Fax: (356) 21385075 | e-mail: editorial@networkpublications.com.mt