St Julian’s developers grabbed public land, so Lands lopped off €425,000 from sale price

A court order to demolish one of St Julian’s most notorious of construction eyesores, after it abusively extended onto the public foreshore, was ignored by the previous administration which – documents seen by MaltaToday show – granted the offending developers a massive €425,000 ‘discount’ on the land’s original value.

In documents obtained by this newspaper, which inquired over the 2009 court order to demolish the abusive apartment building, MaltaToday learnt that not only were the developers allowed to retain the building that was illegally protruding onto government land; but that the Government Property Department’s (GPD) request for a €950,000 sale of the property on government land was decreased almost by half to €525,000 paid over five years.

Original €950,000 tender value slashed to €520,000

In 2003, property owners Vincent Farrugia, Ernest Grech, and companies E.G. Property Holdings and El Dara, were taken to court by the Commissioner for Lands for having abusively constructed their apartments at 83, Spinola Road, right out onto the public foreshore on Spinola Bay.

In 2006, the courts ordered Farrugia and Grech to restore the public foreshore to its former pristine condition. The decision was subsequently confirmed in 2009 by the Appeals Court: a definite sentence that meant that the developers would have to demolish the entire building.

However, instead of proceeding with the court decision, in May 2010 the Commissioner of Land decided that the area that had spilled out onto the public foreshore would be offered up for sale by public tender – a lifeline for the developers that meant they could legally buy up their abusive extension.

The estimate by the government-appointed architect, Michael Schembri, was that the abusive footprint of 165 metres squared should be sold for €950,000.

The GPD issued the tender, subject to the right of first refusal, with the sole offer having been that of Vincent Farrugia’s company Eighty Two Co. Ltd, totalling not more than a ridiculous €192,225.

The Commissioner for Lands wrote back in August 2010, arguing that the property could only be sold for nothing less than €950,000, and that unless it raises its offer Eighty Two Co. would lose its right to the tender.

Eighty Two Co. wrote back to the Commissioner of Lands, arguing though their lawyer Peter Fenech that the government price was “unreasonable”. They said that the company had been misled by the Lands Department, when it had enquired way back in 2003 as to whether there were any outstanding claims on the land since it was originally church property that was passed on to the State.

“The [€194,000] bid is fair and reasonable… the [€950,000] valuation is unrealistic and inexplicable. It is 500% higher than all other professional valuations obtained by my clients,” lawyer Peter Fenech wrote in Eighty Two Co.’s protest.

So the company proposed in December 2010 that the matter be resolved by the nomination of an ‘ad hoc committee’ composed of three architects – one nominated by Eighty Two Co., the other nominated by the GPD. The chairman of the committee would be nominated by the company from a list of three architects proposed by the GPD.

The idea was to have the committee listen to both parties and decide on a fair price to be paid for the property. The decision was subsequently green-lit by finance minister Tonio Fenech, who signed the GPD’s request.

The GPD nominated Michael Schembri as the architect who came up with the original estimate, while Eighty Two Co. nominated Edwin Mintoff and selected Anton Zammit as chairman.

By November 2011, the committee had decided to slash over €400,000 from the original price being requested.

In a letter sent to parliamentary secretary for lands Jason Azzopardi (whose portfolio fell under the finance ministry) on 29 November, 2011, the director-general of the GPD at the time, Iman Schembri, said the final price was agreed to be €550,000.

Schembri proposed two options to Azzopardi: reissue the tender for €525,000, now discounted by 4.5% for the property tax that should have been payable on the sale, or grant the site on perpetual emphyteusis at €15,700 annually.

The second option meant that the government would have received €15,700 for 15 years (€235,500), and then €314,000 on the fifteenth year of payment.

“Since the land is ex-church property, option 2 is being recommended as this option will ensure net revenue to government of the full amount over a future period of time. Farrugia has also indicate that, for cash flow purposes, he would prefer this option,” Schembri told Azzopardi.

In February 2012 however, Azzopardi was once again recommended by the GPD to choose the first option, which he duly authorised.

The GPD director Iman Schembri proceeded to offer Eighty Two Co. 30 days to come forward to sign the €525,000 contract, without any tender having been issued for the land itself as had been originally outlined.

The payment was further facilitated in April 2012, when Schembri accepted a request by Peter Fenech, as lawyer for Eighty Two Co., to pay the €525,000 over a period of five years.