ITS should pave the way to land reforms

Public space is one commodity we do not have in abundance, and can ill afford to lose

21 March 2017, 7:45am
Cartoon by Mikiel Galea
Cartoon by Mikiel Galea
The ITS land transfer at St George’s Bay – in which prime public land was transferred to a private company, ostensibly for €60 million – is not the first controversial land deal of its kind, and is unlikely to be the last.  

All successive governments since independence have dished out public land to foster economic growth and investment. MIDI, Portomaso, Fort Cambridge and Pender Place all spring to mind, along with many other smaller hotel developments on the coast. To some extent even Smart City and the American University of Malta – which are not exclusively residential in nature – also fit in this model of cheap land in return for investment.

This is a worrying prospect in the long term. Public space is one commodity we do not have in abundance, and can ill afford to lose. Yet the stark reality is that Maltese governments have little else to bargain with. This explains why both parties in their day have resorted to the same costly economic strategies. It is an economic cul-de-sac from which it is very difficult to emerge.

But this in turn only illustrates the need for governments to be fully transparent when negotiating away national assets. The ITS case may be even more controversial than usual, because the db Group was the only bidder, and had previously expressed its interest in the site (reported by this newspaper in 2015). Moreover the deal was sealed in the absence of a development brief stating what is and is not allowed on the site (as happened in most cases before); and even before approval of the Paceville masterplan, aimed at regulating development of nine sites, including the ITS patch. 

For all this, the site was finally handed out to the db Group against a direct payment of €15 million, 10 of which to be paid over seven years. An even more dangerous precedent is that the much-publicised €60 million price-tag includes €23 million which will be paid upon redemption of ground rent. In this sense, the more apartments which are approved on site, the more money the government will make. This turns the government into a partner in land speculation.  

This aspect of the deal is in fact unprecedented. The rest of the payment consists of the present value of ground rents paid over the next century.

The transfer also exposes the lack of proper checks and balances. This was a golden opportunity for the new Lands Authority to assert its role as the custodian of public land. Instead, however, the process was handled by Projects Malta, which falls under the direct responsibility of Minister Without Portfolio Konrad Mizzi. Moreover, information on the price tag was initially misleading as it made no reference to the fact that most of the money due will not be paid by the db Group but, eventually, by individual buyers of apartments.  

While to some extent one can say that the present administration is merely following the footsteps of its predecessors, the response is inappropriate for two reasons. Firstly because the Labour Party campaigned on a promise to do things differently: it promised to set the bar higher on matters of good governance, not to keep it where it was.

Secondly, Malta is no longer what it was in the 1960s, when the development boom had yet to start, and the country was desperate to attract investment. Malta has changed even since the 1990s, when our planning institutions were in their infancy. Land is now scarcer, and the people more exasperated at the prolonged continuation of a system which fails to meet their expectations: ironically, it was Labour itself which helped to raise those expectations in the first place.

It is clear that unless far-reaching reforms are effected, this dependence on public land transfer to fuel the economic motor will never be brought under control. If nothing else, the ITS deal should serve as a wake-up call for the following reforms:

1) Public land should only be handed out to private concerns after a binding development brief is drawn up, after public consultation, to set the parameters. This would enable civil society to participate in the process, ensuring that alternative public uses of land are also considered before planning parameters are set. The conditions should be more binding than was the case with MIDI and Fort Cambridge: where the parameters were changed when permits were issued.

2) It should be the Lands Authority which handles the valuation process, and not other entities such as Projects Malta. The full workings of such valuations should be conducted by public officials who are accountable, and the results should be made public.

3) The Contracts Department should be responsible for the tendering procedure and any tender should refer to already approved planning parameters, to avoid setting new parameters for new individual projects. 

4) Both Parliamentary approval and a public tender (and not a case of either one or the other, as is the case today) should apply to any transfer of land over and above an established value.