Corinthia: public land, private profits... when will this shenanigan stop?

The issue of how government is disposing of public land for high-quality residential development has risen back to the top discussion topic, with yet another mega project to be developed by the Corinthia group in St George’s Bay.

The draft contract with the developers was presented to the NAO committee of the House of Representatives for approval in its last meeting before the Christmas recess. No decision was taken as it had to be postponed after Opposition members asked for more details on the deal and these were not readily available.

Following normal procedures, if the contract is not approved by this committee (where the Opposition has a majority) the deal will have to be discussed and voted upon in a session of the House of Representatives.

This is bound to happen as Nationalist Party leader Adrian Delia has declared publicly the party’s disagreement with the deal.

Reports in the media said the Corinthia group would actually be paying the government €17 million to build up to 100,000 square metres of residential and office property in St George’s Bay while, according to real estate agents, the land carries a market price tag of at least €700 million. Government will eventually also receive payments from buyers of residences that would redeem their ground rent to render their property free and unencumbered.

The responsible minister decided that he should base his calculations on the method used by a known firm of auditors in the case of the first St George’s Bay mega-project. There is something wrong with that calculation, more so when the still unbuilt apartments in that development are being sold at three times (or more) the predicted estimate. It seems that for some accountants, unrealised increment in property value does not count. It only counts for the buyer!

Corinthia’s parent company, International Hotel Investments, said in a statement that the contract was not about the sale of land but about the permitted change of use since it was plannig “a luxury holistic six-star environment for its new Corinthia hotel”, apart from the proposed residences. This was rebutted by Dr Delia who argued that the proposed area to be developed as real estate would be double the proposed footprint of the area to be used for tourism purposes.

Incidentally, this seems to be an issue on which all the bits and pieces of the PN are in agreement.

To be fair, one must point out that in the case of the other development in the same area, the developer had to purchase the land from scratch and the agreement was made after a call for a request for proposals of sorts (also referred to with the doubtful moniker as a ‘tender’) was issued by the government.

The only parallel to the proposed Corinthia deal is what happened when Portomaso was developed, after the then-PN government accepted a pittance for the removal of the clause imposing the use of the former Hilton Hotel land solely for a hotel, in the case of the Portomaso development, which included a new Hilton.

The land prices at the time were not what they are today and nobody could envisage that there would be such a good market for the sort of high-end residences that there is today.

At least the Tumas group development was based on an unrealised vision. Not so with the developments proposed today. They are aping what has already happened. And the State should have learned a lesson from that.

While different administrations were justified to lease public land on a reduced or even nominal ground rent that elapsed after 99 years or so – in order to attract the development of high-quality hotels – this financial enticement can never be justified if the land is going to be used for high-level residences.

Firstly, because public land should not be disposed of at a rebate unless this is justified by policy, such as in the building of industrial enterprises and factories or hotels that will generate employment.

Secondly, because private developers have to pay the earth for land that could be developed for high-end residences that will be competing with the residences of the ‘subsidised’ developments.

The problem is that what initially appeared to be one exception is now being followed by the same sort of exceptional contract. The obvious question would therefore be: Will this go on and on? There are other areas of public land that could be developed for high-end residences. Is government prepared to sell them for peanuts to whoever throws in a hotel as well? When will this shenanigan stop?

I believe that in this case the government has embarked on a dangerous course. Not just dangerous but also abusive.

More so, since Malta is one of the most densely populated countries in the world and therefore land is a very precious and limited resource.

A cunning plan

The attacks against PN leader Adrian Delia have now reached a new low. I will not dare say that ‘they’ can hardly go any lower because with some people one never knows.

‘They’, of course are those who used to be PN suporters but have actually abandoned the party as well as others who still claim to be PN stalwarts – all because they cannot stomach the election of a leader not to their liking and specifications.

We have had the resurrection of the allegation that Adrian Delia was in the past involved in laundering money belonging to his clients. This has been duly rediscovered by sections of the media who went on to demand his resignation, just as the self-styled NGO Occupy Justice demanded his resignation.

This has now been followed with allegations of abuse emanating from his wife’s decision to sue him for a marital separation. This was also followed by a demand from his resignation in the same weekly newspaper and by the same Occupy Justice. Just a coincidence, of course…
It does not matter why and wherefore. It is Adrain Delia’s resignation they want, at all costs. They consider him an upstart who upset their applecart!

All this seems to be quite “a cunning plan”, as Baldrick would put it. When Baldrick once said that he didn’t think it was a cunning trick, Edmund Blackadder replied: “Well, no, it’s not a particularly cunning trick, because we’ve seen through it! But obviously they thought it was cunning when they thought it out.”