Case study FADIS C-10
I INTRODUCTION
This case study provides a detailed explanation of the manner in which the procedure for the transfer of titles on urban buildable land was misused, and how the amendments to planning documents have doubled the benefit to the developer to the detriment of the public interest.
Building C-10, located within the Zone C of the Detailed Urban Plan “Topolica 1” within the municipality of Bar is a textbook example of the violation of laws and regulations in the area of spatial planning and construction of buildings, indicative also of how conflict of interest may influence decision-making in the area of urban planning.
The case study also points to the danger of concentrating decision-making powers within some public offices, in this case the Mayor of Bar. Thus, the holder of the public office becomes increasingly susceptible to corruption and is given the opportunity to use his position to the benefit of third parties, and the detriment of public interest.
II PURCHASE OF LAND
On 15 January 2007 the Municipality of Bar concluded an agreement on the transfer of titles on urban buildable land with the company “FADIS”, Bar. On behalf of “FADIS”, the agreement was signed by its director, Fahrudin Zaganjor, and on behalf of the Municipality, the Mayor Žarko Pavićević.
The agreement refers to a 550 m2 plot of buildable land, intended for the construction of a commercial building with a ground floor and two upper floors (G + 2), of the total Gross Floor Area (GFA) of 1,100 m2. The fee that “FADIS” paid to the Municipality on the occasion was around 360,000 euro.
An excerpt from the Agreement on Transfer of Titles over Urban Buildable Land
On 29 January 2007, through a special agreement on payment of fees for communal infrastructure for the construction of the intended building, FADIS paid additional 173,826 euro. This agreement stipulated that the developer was obliged to complete the construction within 18 months.
An Excerpt from the 2007 Agreement on Communal Fees
Two years after the conclusion of this agreement, FADIS had not yet completed construction that was subject to the agreement with the Municipality of Bar, until the Detailed Urban Plan (DUP) “Topolica 1” was changed, which enabled “FADIS” to build a considerably larger building.
III AMENDMENTS TO PLANNING DOCUMENTS
The amendments to DUP “Topolica 1“ were initiated on 22 January 2009 by the Mayor of Bar, Žarko Pavićević, while the Bar-based company “Basketing[1]”, owned by Nebojša Milošević, brother of former Mayor of Bijelo Polje, and now Minister of Agriculture, Tarzan Milošević, was entrusted with the drafting of the plan.
The existing 2005 DUP “Topolica 1” envisaged for the disputed lot the construction of a commercial building, G+2 floors. The draft DUP from March 2009, prepared by “Basketing”, envisaged for the lot, at the time already owned by FADIS, a much more sizeable commercial building G+4.
An excerpt from the plan – 2005
An excerpt from the draft – March 2009
It is noteworthy that the 2009 draft plan did not envisage any new residential building in zone C.
An excerpt from the draft plan March 2009
During the public discussion concerning the amendments to the DUP “Topolica 1”, there were no comments referring to C-10 building.
The comments asking for the increase in the size for C-10 arrived only after the expiry of the timeframe envisaged for the public discussion (sheduled between 10 and 25 June 2009) by Goran Pajković[2] .
An excerpt from the Report regarding the Public Discussion of the Draft Plan
Contrary to what then featured in the draft plan which was at the public discussion, the officials of the Municipality of Bar informed that a building of greater height, G+5, was envisaged for the lot in question. Following the public discussion, on 31 July, “FADIS” submitted comments to the draft plan, but their content is unknown, i.e. it is not known whether someone asked for any change of the building purpose.
Following the public discussion, “Basketing” drafted the plan which was eventually adopted in September 2009. In the final version, the C-10 building was envisaged as G+5 floors, while the purpose was changed from commercial into mixed commercial and residential. This has also lead to the corresponding increase in the building square footage, as illustrated in the table below.
Thus, instead of a 1.100 m2 commercial building, “FADIS” was enabled to build twice the size 2.400 m2 building of mixed, residential and commercial purpose.
At the end of the day, the final version of the plan adopted at the local parliament envisaged a building of mixed use of a ground floor + additional 5 floors (G+5). Also, the final plan changed the designation of the lot number 2 where the C-10 building was envisaged into lot number 6.
An excerpt from the graphic part of the DUP “Topolica 1 – Amendments”
IV A NEW PLAN– A NEW AGREEMENT
After having more than doubled the size of the envisaged building, on 21 September 2010, the Mayor of Bar, Žarko Pavićević concluded with the owner of “FADIS” the Annex to the Agreement on fees payable for communal infrastructure.
The Agreement takes note of the change to the plan, and that a building of mixed residential and commercial use is now envisaged for the lot in question, as well as that “FADIS” is obliged to pay additional fee for communal infrastructure on the account of changed GFA as compared to the originally envisaged commercial building.
Based on the difference in GFA, on the occasion “FADIS” paid to the Municipality of Bar the additional 180,000 euro roughly, and this was the only payment on the account of the increased size of the building.
In the Annex to the Agreement, the Municipality of Bar disregarded the fact that “FADIS” was in breach of Article 7 to the Agreement for failing to complete the construction, but waited for the amendments to the plan which enabled a building twice the size to be constructed.
The land that now was envisaged for a 5-storey residential and commercial building was offered in 2007 on public auction by the Municipality of Bar as a lot envisaged for a commercial building of up to two floors.
In public auction in 2007 the disputed lot reached the price of 616 eur/m2 paid by “FADIS”, but the question raised here is what the price offered would be had the lot already at the time been envisaged for a building double the size of mixed use.
Finally, signing of the Annex to the Agreement on fee payable for communal infrastructure, was the final precondition for obtaining the building permit and commencement of construction of the C-10 building.
V BUILDING PERMITS AND A NUMBER OF STOREYS
Soon after the adoption of the plan, the secretary of the Secretariat for Spatial Development, Bar, Đuro Karanikić, issued to “FADIS” the Urban and Technical Requirements (UTU)[3] for a building of far greater height as compared to the one defined by the original Agreement with the Municipality of Bar[4]. By an omission of the Secretariat, UTU was issued for the lot number 2, not 6.
Urban and Technical Requirements issued on 06 November 2009
The issuance of the building permit followed almost a year afterwards, on 27 September 2010. The building permit, signed by the Secretary of the Secretariat for Spatial Development, Đuro Karanikić, allowed FADIS to build a residential and commercial building B+G+5 (basement + ground floor + five floors) with the GFA of above-ground floors of 2,512.20m2 and 387.50m2 of basements2[5]. The building permit continues to give the wrong number of the lot.
An excerpt from the building permit issued on 27 September 2010
Based on this building permit, in October 2010 “FADIS” started construction, having two more companies as co-investors: DOO “IMPERIAL” and DOO “YU Lovćen”. Supervision of the construction was entrusted to the Zavod za izgradnju Bara – ZIB Bar, owned by the Mayor, Žarko Pavićević. (See: Part VI Network of Influence and Conflict of Interest)
Construction site board for the C-10
The building permit issued to “FADIS” was contrary to the UTU issued, but also the very DUP “Topolica 1”. Namely, the maximum allowable size of the building defined by UTU and the plan was 2,400 m2 GFA, while the building permit allowed “FADIS” to build a building of total GFA of 2,512.20 m2.
Difference between UTU and the building permit
In late 2010, at the initiative of the tenants of a neighbouring building, the urban planning inspection visited the building site for C-10 and carried out checks. The report stated that the main design was not compliant with fire regulations, which makes the very building permit issued on such grounds null and void. On the account of this omission, on 22 December 2010, the inspection ordered the Secretariat for Urban Planning Bar to annul the building permit and issue a new, compliant one.
The 15-page report does not have a single word referring to the building permit being issued contrary to UTU by way of exceeding the allowable GFA.
However, the works on C-10 continued, by construction of the ground floor, again contrary to the building permit issued which envisaged first the construction of the basement.
Acting as per the order of the Urban Planning Inspection, on 31 December 2010, the Secretariat for Spatial Development, Bar issued a new building permit. The new permit verified the state-of-affairs on the ground, namely the construction of a building without a basement, so that now it referred to a building of a ground floor + five floors, finally referring to the right number of the lot 6. However, the new building permit referred to a building of the total size of 2,512.20 m2 GFA, although UTU allowed only for 2,400 m2.
On this account, MANS launched an initiative with the urban planning inspection asking for the annulment of the building permit thus issued.
VI NETWORK OF INFLUENCE AND CONFLICT OF INTEREST
Starting from the purchase/sale of buildable lot in the C zone of the DUP “Topolica 1”, the whole process until the beginning of the construction of C-10 and afterwards was pregnant with conflicts of interest on the part of most decision-making actors.
In the first stage the Municipality of Bar, represented by the Mayor, Žarko Pavićević, sold to “FADIS” a lot covered by the above DUP with the obligation to build a commercial building G+2 within 18 months. For two years the municipality failed to monitor the implementation of the agreement with “FADIS”, and instead of terminating the agreement, the relevant DUP was changed at the initiative of Žarko Pavićević, effectuating the change in the envisaged use of the building into mixed use and doubling its size.
“Basketing” DOO, Bar, owned by Nebojša Milošević, brother of the Minister of Agriculture, Tarzan Milošević, the party colleague of Žarko Pavićević in the ruling Democratic Party of Socialists (DPS), was entrusted with the drafting the amendments to DUP “Topolica 1“. “Basketing” already had a history of relations with Žarko Pavićević concerning the process of planning documents development which was used to fit the multi-storey buildings illegally built by Pavićević and the persons associated with him into the new plans[1].
The owner of “Basketing” is directly linked with one of the investors on the C-10 building, “YU Lovćen”. Milošević, together with the owner of “YU Lovićen“, Goran Pajković, is the owner of another design bureau from Bar, called “Urbanizam i projektovanje” DOO. Goran Pajković was one of the participants to the public debate of the draft plan “Topolica 1” who asked for the increase in the building size.
After the amendments and procurement of the building permit, “FADIS” and other investors hired the company of Žarko Pavićević, Zavod za izgradnju Bara – ZIB Bar, for the tasks of expert supervision over the construction of the building C-10.
Thus, using his discretionary rights as the Mayor of Bar, Žarko Pavićević made it possible for FADIS to be in breach of the agreement with the Municipality, and initiating the amendments to the plan, he enabled this company and persons associated with it to have much bigger profit.
Network of influence proving the way of planning C-10
[1] In May 2010, MANS filed a criminal report against the Mayor of Bar, Žarko Pavićević, on the account, inter alia, of suspicions of having entered into unlawful cooperation agreements with “Basketing”, http://www.mans.co.me/arhiva/2010/05/predsjednik-opstine-bar-zarko-pavicevic-prekrsio-zakon-o-javnim-nabavkama/
[2] Later identified as one of the investors for the construction of the building C-10.
[3] Urban and Technical Requirements constitute a basis for drafting the technical documents for the construction of a building which an investor must submit with the application for a building permit. UTU criteria and requirements, such as the location and size of a building, the purpose and other are based on guidance set in the planning document, in this case the DUP “Toplica 1”
[4] Agreement of Title Transfer for Urban Buildable Land and the Agreement on Payment of Fee for Communal Infrastructure
[5] GFA of underground storeys is not included in the calculation of the final GFA for the building.
[6] http://www.mans.co.me/arhiva/2010/05/podaci-mans-a-ukazuju-da-predsjednik-opstine-bar-zarko-pavicevic-zloupotrebljava-sluzbeni-polozaj/
