Sergei Sobyanin: Residents can vote against relocation any day
Question: Mr Sobyanin, is this a case of “we tried out best, you know the rest”?
Sergei Sobyanin: Why this pessimism? We do have problems with these obsolete five-storey buildings, but the voting process has shown that these buildings’ residents wholeheartedly support the relocation programme. At this point, 44 percent of flat owners in the buildings that are slated for demolition have voted. Some 90 percent have voted in favour of moving. The figures are roughly similar on the Active Citizen portal and at the government service centres. There are several dozen buildings whose residents are firmly against the programme, but the majority are for it. This is current evidence that our initiative is on the right track.
We see that these five-storey buildings are falling apart. Built back in the Soviet era, they can cross the red line any day, and become a big problem. Of course, you can wait until the problem becomes dramatic, but it’s better to act gradually and calmly, maintain a dialogue with the people and make construction and relocation plans. It’s logical that many residents have opted for relocation. They don’t want to see their buildings become unfit for living. Besides, we have accumulated a lot of experience in this area in Moscow because we have been working on it for 20 years.
Question: Which buildings and districts will be the first to go?
Sergei Sobyanin: According to our plans, the construction will begin after the programme’s approval, almost simultaneously in all districts with these five-storey buildings. This is a big programme, and implementation will take at least 15 years. But it could take 40 years if we start in some districts and make others wait. And many people might not live to the bright day when they can move to a new flat. This is why we must do it in all districts at the same time.
Question: Do you have the approved relocation deadlines?
Sergei Sobyanin: That will depend on the adoption of the programme. But there is a clear technical timeframe: it takes two or three years to design and build a new building. But we can reduce the time to 12 or 18 months if we use designs that are already underway.
Question: The city also has a reserve inventory of completed buildings.
Sergei Sobyanin: Yes, but there are problems with using these buildings, such as the location and quality of the available inventory, which are not the same as required under the law. But we will select all the available flats for the relocation programme.
Question: The programme’s opponents claim that the city is doing this to make use of new housing that doesn’t have any demand.
Sergei Sobyanin: This is absurd. We don’t have any unmarketable buildings. All the buildings we build under urban development programmes sell like hot cakes. We have no problem with selling housing. Our opponents meant the housing that developers have been unable to sell. They allege that the relocation programme is designed to support the construction industry. But we are not going to buy anything from developers, nothing at all! How can we buy flats that have been built for other purposes? This is impossible. Take commercial development projects. We can’t use any more than five or 10 flats in these buildings for relocation purposes, whereas we need at least a hundred flats to relocate residents from a block of flats. Besides, we won’t buy housing at market prices. The relocation programme would make no sense if we did.
Question: Did you expect such strong public resistance to your programme?
Sergei Sobyanin: There is public resistance to all urban programmes, including in healthcare and education. Housing is no exception. First, all large projects affect the interests of a great number of people. And second, Muscovites are active people who have a strong interest in politics, and there are very many media outlets and the core of online activists in the city. Nothing happens in Moscow without a lively discussion. This is normal for Moscow.
However, people should be aware of the three things in the relocation issue. The first is the buildings that will be torn down, their residents and the relocation conditions. The second concerns the residents who live near the relocation areas. They are worried about the construction and the problems it will create for them. And the third group of issues concerns all Muscovites and includes spending, funding sources, transport, and residential density. We must discuss and explain all of these issues to the public.
Question: It appears the city acted rashly by introducing the concept before discussing the basics.
Sergei Sobyanin: You can’t launch any project without making the concept known to the public. How else can you launch projects? Secretly? No, this is impossible. We needed to tell the public about our plans, whether we are going to start this programme or not. Indeed, we said that we needed to wait until the end of the first stage of the demolition, and now is the time for this. On the other hand, we also launched a large renovation programme. Renovation fees have been added to the rent. But we cannot renovate these dilapidated buildings. So, we had to decide what to do with them. We said that we were willing to initiate a relocation programme. It was an ambitious decision that needed to be thoroughly analysed and discussed with the public. This is what we are doing now.
Question: But the State Duma has suspended the discussion of the draft law on relocation.
Sergei Sobyanin: Is that bad? It’s a very important issue that concerns private ownership and amendments to legislation. Of course, it must be scrutinised.
Question: What do you think about the amendments that have been prepared for the second reading of this law? Which of them do you accept, and which are unacceptable to you?
Sergei Sobyanin: There aren’t any unacceptable amendments. They were prepared jointly by the federal and Moscow governments, the State Duma and the Moscow legislature. Most of these amendments have been made to municipal laws and can be likewise made to federal laws. These amendments constitute the core of the amendments submitted to the State Duma. I see no contradiction in this. I think it’s a good method for improving the draft in time for the second reading. It has answered the majority of questions raised by the people.
Question: Can the relocation programme be expanded to include more than the 4,500 buildings on the current list?
Sergei Sobyanin: Yes it can, but it will become a different programme then. It took us 20 years to complete the first stage, which included the demolition of 1,700 five-storey buildings. Even the current programme, which provides for demolishing 4,500 buildings, is a big challenge. It will take between 10 and 15 years. So, let’s leave the rest until later. Of course, if the buildings that are not on the demolition list become dangerous for living, we’ll have to act immediately.
Question: Can you explain the public’s suspicions? What is the explanation for the harsh public criticism of the programme?
Sergei Sobyanin: We need to distinguish between the opinions of the residents who will be relocated and those who have nothing to do with the programme. They can say whatever they want, that we are deceiving the people and won’t live up to our promises. But 90 percent of these buildings’ residents support us, which is evidence that they trust us.
Question: But the large number of those who joined a protest rally at Prospekt Sakharova shows that many people don’t trust you.
Sergei Sobyanin: Do you believe that all of these protesters were people from these five-storey buildings? I somehow doubt it.
Question: The relocation programme entails the renovation of social and other infrastructure and adjusted residential density. Do you know how social infrastructure can be improved and how many schools, hospitals and outpatient clinics you need to build? Are you aware of the scale of this?
Sergei Sobyanin: We will update the figures, but otherwise we are sure that this programme will take into account everything concerned with adjusting the transport system and the infrastructure, including education and healthcare facilities. A comprehensive construction project is impossible without this. We are doing this not to resolve a current problem but to create conditions in which such problems won’t arise in the future. We want to create a new urban environment in which dilapidated buildings will give way to modern structures. Our goal is not only to build new preschools and outpatient clinics but also to create new jobs. The majority of new buildings will have space on the ground floor for retail: shops or services. We’ll revise our approach to industrial development near the new residential areas, that is, we’ll promote new jobs. We don’t want to create bedroom communities but comprehensive districts that will be comfortable for life and work.
Question: What will the new buildings be like? People are afraid that you plan to build 40-storey skyscrapers.
Sergei Sobyanin: Residential density must be up to 25,000 square metres per hectare. The current figures vary between 9,000 and 35,000 sq m. One result of our programme is a more even residential density in Moscow. We plan to build multi-level buildings of different configuration and with the number of floors varying between six and 14. There will be high-rise buildings as a dominant feature, but the residential density must not be too high for comfortable living. Also, remember that some of the new buildings will be provided to people from the torn down buildings and some will be sold to cover at least part of our expenses. This is one of the reasons we must create a quality environment if we want to sell these new flats in a highly competitive real estate market.
Question: Does the city expect to make money on this project?
Sergei Sobyanin: No, we don’t. We are trying to develop the programme so as to balance our expenses and revenues. The rest will come from the city budget. People pay taxes so we can improve the social environment and infrastructure.
Question: How much will this programme cost the city overall? Some say it will cost three trillion roubles.
Sergei Sobyanin: It’s difficult to say now, but that’s possible. But the city will not pay in full. As I said, we will cover a large part of our expenses by selling flats. And the residents of the buildings not included in the programme won’t be disadvantaged compared to those who will be relocated to new flats.
Question: Does the city have enough money to start this programme without increasing its debt?
Sergei Sobyanin: Yes, I think so. We plan to allocate 300 billion roubles from the city budget in the next few years to launch the relocation programme and create a working capital fund, because we will be building housing in the next few years and will only start selling part of it later. We need three years to launch the programme. During this period, we’ll finance it from the city budget and also borrowed funds, if we lack our own. I’d like to remind you that we have repaid almost all of our debt in the last few years, although our debt equalled some 300 billion roubles in 2010. Today it is very modest. Hence, we could borrow funds for this programme on the loan market. But we don’t need to do this so far.
Question: Will you create incentives for young families or for several generations living together to apply for separate flats to improve their living conditions?
Sergei Sobyanin: Without a doubt. We will certainly encourage the people’s intention to pay to increase their living space by offering discounts, instalment plans and low mortgage rates. We’ll specify the parameters of these incentives when we finalise the relocation programme.
Question: What will the relocation process be? Where will the people be issued orders to view the new flats? Will the system be transparent? The ability to choose could lead to disputes, because some may want to live on a higher or lower floor or have flats looking out to the south or the north.
Sergei Sobyanin: Dialogue is what we need. We are setting up Property Department sections in all administrative areas, and special people have been designated in all district councils to monitor this programme, just as we did at the height of the previous relocation programme.
We usually issue orders to see two or three flats and we try to take people’s requests into account. But this is difficult; it’s a building, not a supermarket with a big selection. But we do our best.
Question: What about shared flats and dormitories? Are they included in the programme?
Sergei Sobyanin: The dormitories that are to be relocated are actually not dormitories but buildings where people live under social rent contracts. These buildings can be included in the programme even if they are not on the voting list. These residents can hold general meetings, and if two thirds of them vote for relocation, they can file the request. The same goes for buildings with communal apartments.
Question: What if residents of a building vote for relocation now but later change their decision?
Sergei Sobyanin: The fundamental principle of the municipal law and the draft of the federal law on relocation is that joining the programme is more difficult than leaving it. You need two thirds of the vote to join the programme at the time when the list of participants is being compiled, whereas you can withdraw from it anytime if the majority of flat owners or leaseholders vote for that. If the residents see that the city is doing something wrong, they can use a special mechanism to reverse their decision. It is one of the main guarantees. When people say they worry that voting makes their decision irreversible, we tell them that they can withdraw from the programme if something doesn’t suit them. It is a very important mechanism, which is seldom mentioned during the public debates, although it is a fundamentally important provision, in my opinion. People must remain the masters of their lives.
Question: Wouldn’t it be embarrassing to see a dilapidated five-storey building in a renovated district?
Sergei Sobyanin: We’ll have to accept it if its residents vote against relocation. The rights of owners or leaseholders are more important. But I don’t think we’ll have many such buildings. Rather, there will be a few exceptions. But the people must have the opportunity to take any decision.
Question: Have you settled the issues with the banks? Some worry that relocation will reduce the value of mortgage loan deposits.
Sergei Sobyanin: They shouldn’t. Mortgaged property was transferred in a number of cases during the first relocation programme, and nobody had any problems. We are now adding a special article to the federal law to preclude any problems. New housing costs roughly 30 percent more than the old stock, and so it is more profitable for banks to change the mortgage deposit.
Question: Regarding the Relocation Promotion Fund: could it monopolise the construction market since it will handle huge amounts of money and housing?
Sergei Sobyanin: I don’t see any problem in this. Compared to the number of people living in Moscow, this volume of housing construction is very modest. Actually, it is the smallest in Russia, with only 0.25 square metres of housing per person, while the Construction Ministry standard is one square metre, or some 3 million sq m in absolute figures. This is why housing is so expensive in Moscow, why Muscovites continue to live in their tiny flats, and why the housing per capita rate is the lowest of the world’s megacities. I don’t think it will be a bad thing to offer more housing on the market. On the contrary, I think it will be good for Muscovites and for the urban economy.
Question: What long-term impact could the relocation programme have on housing prices?
Sergei Sobyanin: Prices will not increase at the least, which would be good. But they could drop, though not dramatically. I think we will most likely see the latter.
Question: Have you analysed the programme’s dependence on macroeconomic shocks and external influences? Can you protect this housing project from a possible deterioration in the overall economic situation?
Sergei Sobyanin: This is why we are creating the Relocation Promotion Fund and allocating serious resources to it, so that we can deal with these problems and work calmly, getting revenue from selling some of the housing we build and reinvesting it in the relocation programme. If we ensure this, the fund will become a self-sufficient system capable of continuing the construction regardless of whether there is money in the city budget or not.
We had problems with the previous programme because a large part of the districts slated for relocation were assigned to private investors. This worked well when market prices were high but they abandoned the project when they fell. Ultimately, they abandoned the most difficult buildings and we had to pay to complete them. To avoid repeating this, we decided that the city needed to manage everything and only sell vacant land plots without engagement to private developers. This is the only practical way to manage this programme. To be clear, we’ll have to demolish the obsolete five-storey buildings, whether we adopt the relocation programme or not. But we can do this rationally and according to the relocation programme plan, or work under much more difficult conditions like when these buildings start crumbling.
Question: When will top managers be appointed for the Relocation Promotion Fund?
Sergei Sobyanin: Not for some time yet. First we need to adopt the law and the regulations on the fund. I would like to say that the fund will be fully controlled by the city. It will almost be a government agency, a completely legal organisation. The accounts will be held at the Federal Treasury, which will keep a close eye on the fund’s expenses. The head of the fund will be appointed by the Moscow Government.
Question: Are there enough construction companies in the city for this programme? Or will you need companies from other Russian regions and foreign countries, for example China?
Sergei Sobyanin: No, it would be unreasonable to invite foreign companies. Our companies build some 20 million sq m of real property in Moscow and the Moscow Region every year. We plan to build some 3 million sq m of housing a year at the peak of the relocation programme. Our companies can easily do this. It’s another matter that we have banned the construction of residential buildings with old designs in Moscow. Under this programme, we’ll build either cast-in-place or three-ply low impact pre-fab buildings with non-standard designs. These buildings will have a more comfortable layout and will be suited for mobility impaired people.
Question: Will rent be the same or higher in the new buildings?
Sergei Sobyanin: The rent will be higher if residents move into a larger flat than they had in the five-storey buildings. But it could be lower, because there are no water or heat meters in the majority of the old five-storey buildings. The new buildings will have them and they will also be more energy efficient. Taking this into account, the rent is unlikely to increase.
Question: You said that some 3 million sq m of housing will be built at the peak of the programme, or approximately as much as we build now. Will private developers be able to stay in the market?
Sergei Sobyanin: Of course, they will. They will continue to build 3 million sq m of housing a year, and we’ll build just as much. Together, we’ll build 6 million sq m of housing, which is a fair balance. There’s nothing wrong in building as much housing as private developers do for several years. The 3 million sq m we’ll build won’t make us a monopoly.
Question: Next year is an election year, when nobody wants a social upheaval. If the public mood wavers, will this throw you back?
Sergei Sobyanin: This would mean the end for the relocation programme. If that happens, it will never be resumed, and the whole idea will take the path I mentioned above: we’ll procrastinate until the five-storey buildings become dangerous to live in before rushing to relocate people from them. It should be remembered that Moscow has the largest housing inventory that is becoming obsolete and dilapidated now. No other region has this problem as bad as Moscow.
Question: What if the residents of many houses, for example, a thousand, vote against relocation? Will this be a problem for the city?
Sergei Sobyanin: Absolutely not. It would be even better for us if we had fewer buildings in this programme. There’s no minimum threshold for this programme, which can begin with any number of buildings.
Question: How important will the first relocations be, when people see that the process has started?
Sergei Sobyanin: When our project is described as something novel, we say that we have already relocated 1,700 buildings, and did so quite successfully. Actually, the programme has been ongoing for the past 20 years. The procedures have been tried and tested, and the only difference is that this time we are offering residents the best variant so far: new quality housing with finished interiors, judicial protection and guaranteed relocation within the same district. The previous law did not offer these guarantees. But it’s a fact that the initial stage of the programme is extremely important.