"Investment that Kills" or the unique chance for Tbilisi City Development?
“Investment that kills”, “End of the City”and other similar assessments are heard when describing the Panorama project in Tbilisi. Four multi-complex centres in three different Historical Tbilisi zones will affect urban life, historical landscape, architectural harmony and cultural heritage sites -- and the potential for Tbilisi appearing on UNESCO's World Heritage List. The project, directly connected with former Georgia Prime Minister Bidzina Ivanishvili, has official and seemingly non-official support from different governmental agencies. A “panoramic research” of legislative changes, public procurements, and non-transparent decisions made simultaneously by different governmental bodies shows all were supporting and simplifying the procedures for one specific private project -Panorama Tbilisi
The fence around the site of the Old Cekavshiri building and, far above, on Sololaki Mountain, separated the land long before the construction permissions were issued. Intense construction process has started and is continuing on Sololaki mountain, despite a long process of protest, discussions, controversies and accusations.
It all started in the spring of 2014.
On March 25, the Georgia Co-Investment Fund, (GCF) a $6 billion equity fund founded six months earlier by Ivanishvili,proudly announced a “grand project”whose value exceeds $500 million and spreads across 270,000 square meters.
“It is one of the biggest ever real estate developments in Georgia’s history, which will involve the construction of four new city areas, which will include hotels, serviced apartments, offices, exhibition centres and conference halls, health and leisure centres, sports arenas, swimming pools and all the necessary supporting transport infrastructure, including roads, ropeways, inclined elevators and extensive parking places,”announced George Bachiashvili, CEO of the Georgia Co-Investment Fund.
According to the first announcements, the “Panorama Tbilisi”project would unite four multifunctional centers (1. Sololaki Hills, 2. Sololaki Rise, (on Sololaki mountain and gardens) 3. Freedom Square, 4. Erekle II Square) in Tbilisi: The project would connect the city’s central and historic regions to the green suburbs using ropeways and inclined elevators, making travel convenient even during the busiest times of the day. “Furthermore, the passengers of the panoramic glass cabins will have an opportunity to enjoy the gorgeous historic views of the capital. The project promised the addition of 30,000 planted trees to the city.
According to the Fund, the development of the parking infrastructure would include 1,800 extra underground spaces - Freedom Square (300), Erekle II (500), Sololaki Hills (500), Sololaki Rise (500).
The building project just for “Sololaki Gardens” promised 2,000 jobs during construction and more than 1,000 permanents jobs after finishing.
One of the few known co-investors is Ivanishvili, who says he has committed $1 billion of his own money to the Georgian Co-Investment Fund (GCF) and that the initiative aims at attracting foreign direct investment and encouraging economic growth.
Other announced investors in GCF are: Dhabi Group and Ras Al Khaimah Investment Authority (RAKIA) from the United Arab Emirates; Turkey’s Çalik Holding; Milestone International Holdings from China; State Oil Fund of Azerbaijan; Kazakh KazTransOil’s subsidiary Batumi Industrial Holdings, which manages Black Sea port of Batumi; as well as billionaire and founding shareholder of mining giant ENRC Alexander Mashkevich, and the family of late Georgian tycoon Badri Patarkatsishvili.
After several political accusations of taking state land for private projects, the Fund announced that Ivanishvili is the main investor-partner for the Fund and Panorama Project: “Some lands needed for the project are Ivanishvili’s property, and they are going to become the Fund's property, at a fair price”.
The official processes by state agencies include:
March 27, 2014 - Vephkhvia Dvali asked Tbilisi city hall to see the construction plan.
April, 2, 2014 - Dvali asked for pre-construction permits for the lands needed for Panorama.
According to 2014 documents, Dvali is a Director at Finservice-XXI LTD, which is owned by Fin-Service LTD (99.5 %, Dvali is a director)) and LTD Horizont (0.45 %).
FinService itself is owned by offshore company Eizzella Enterprises, a part of Cartu Group (started and affiliated directly with Ivanishvili). This company also owns the Business Center in Sololaki district, where Ivanishvili lives and pays $194,460 per month for rent to Fin-Service.
On September 8, 2014 a joint operation of Fin-service and Fin-service XXI was registered. An offshore company appeared to own both of them.
April 7, 2014
Tbilisi City Hall’s "Territory Urbanization and Utilization Issues Regulatory Commission", the legal body that approves construction applications, on April 7 denied a construction permit for Panorama Tbilisi for not providing any of the legally required documentation.
According to Irakli Abesadze, deputy mayor and chairman of that commission, GCF should have provided the information stipulated in Regulation N4-13: On the approval of land use and city development in Tbilisi. The documents include a detailed economic feasibility study; an environmental impact assessment; statistics regarding how many square metres the construction will occupy, as well as other information such as exactly where and what the proposed construction will be.
But GCF’s official statements (sent 27.03.2014 and 2.04.2014), in which they applied for City Hall’s permission, contained 8 photographs, 6 digital images and 5 maps demarcating the land boundaries.
The Regulatory Committee deemed these documents insufficient. GCF maintains that “the relevant documentation was submitted according to the set requirements”and that it will reapply for permission.
Bachiashvili told the regulatory committee that GCF has already purchased the land it requires to build Panorama Tbilisi, including some land plots owned by Ivanishvili, via Cartu Group. A number of representatives from Cartu Bank (founded by Ivanishvili) attended the Committee hearing with representatives from GCF. According to GCF, Cartu Bank employees are also “working on the Panorama Tbilisi project”.
The Fund had provided documents - which were just several “commercial papers”- “Project is great”, several sketch photos.
On May 30, 2014 Transparency International Georgia urged GCF to provide all the necessary documentation stipulated by law in order to allow the Committee to make a thorough analysis of this construction application.
April 10, 2014 - commission denied approval of pre-construction permits. On April 16, Dvali asked again. On April 22, the commission again denied permission.
Meanwhile, legislative changes are proceeding on several different levels:
April 4 2014 - Georgian government changes rules for giving construction permits. If a construction listed in “V class”is connected with a huge amount of documents and a tight time schedule, and the project has status of “state importance”, some documents can be provided after construction permit is approved.
Concerning “linear constructions”such as ropeways, the owner can now start construction before some needed documents are provided. Panorama Project parcels are connected by ropeways and the project was listed as "V class" But in the summer of 2014 another change was made by government resolution, and “linear constructions”were no longer listed as “V class”construction.
After that change, Tbilisi City Hall had no more authority to give architectural permission: all the authority belonged to the Ministry of Economy, which is not obliged to make decisions using the “public administrative process”. It need only use “simple administrative process”which doesn't require public hearings.
At the same time, Ivanishvili agreed to finance the project. Tbilisi City mayor's office and the Vice-Prime Minister Kakha Kaladze supported the project. Transparency International asked if other investors were involved, but never received a public answer.
Important events took place in late December of 2014, which is normally a completely “non-working”time of the year in Georgia before the New Year holiday.
On December 30, Tbilisi City Council issued a new city development plan. It was almost the same as the 2009 City Plan. But Panorama Projectdevelopers specifically asked for zoning changes for areas listed as “functional status”. According to city regulations, all land plots are listed with different functional statuses stating how they can be used - transport, constructing, recreation etc. Panama Project representatives were demanding a change from “landscape-recreational (prohibiting big scale constructions) to “Recreational zone 2” (allowing the same)
Back in 1985, a special City Resolution listed 3 historical protecting zones for Tbilisi:
1. Protection Zone of Historical Construction (IST 1)
2. Regulated construction (IST 2)
3. Historical landscape protection zone (IST 3)
This regulation was reflected in several other later laws as well, which were stating this categories as a basement for other regulations, but when City Council approved the 2009 city development plan, IST 3 - the category with the strictest protection and the prohibitions for big scale constructions - disappeared. 2009 City Development plan was reproved in 2014 and it still listed only two protected zone categories, omitting the most important historical protection zone category.
Anano Tsintsabadze, lawyer for the NGO Civil Initiative for Public Space, says it's a criminal code case, when someone omits a zone category in a new development plan. Civil new document and new map, did not do this. This case is going to be taken to court by civil society organizations.
But what seems confusing for the first hand and does not give a clear understanding of missing historical protection zone - is functional zone, which was based on that protecting zone. The Thing is that - based on historical protecting zones, in the same frames - were also stated the functional zones. So the same territory had firstly the protection zone status and later, it got also functional zone.
The Panorama Project asked the Architect Department of Tbilisi City Hall to change the functional zone category of the specific area now under Panorama’s construction. A special zoning commission meeting was held and a majority decided to change the zoning and legalize the construction.
An official audio recording (names and surnames are not identified) shows that one specific person on the commission was trying to protect that space, claiming there was a historical protection zone that the commission had no authority to change. But the commission voted to approve the change.
As the procedures demand, the commission approached Tbilisi City Council to make the proper changes in Tbilisi City Development Plan, (24.12. 2014), but the Council approved a new plan which was identical to the 2009 plan except for the changes requested by the Panorama Project.
Tbilisi City Hall noted that changes need to be made to correct existing mistakes in the map of the Plan:
To clarify the borders between different functional zones.
Landscape-Recreational zone changes into Recreation zone 3 and living zone 2;
Transport Zone 1 changes into living zone 2 and recreational zone 3.
All these changes meant the “softening" of restrictions- newly approved zones were less protected then before
After only five days (including a weekend) on December 30 City Council approved the new plan.
Independent City Council deputy Aleko Elisashvili says he informed activists about the discussion of this issue in the Council meeting. But it was already too late. The day before, when the agenda for the Council meeting was distributed among council members, the issue of changing landscape functional zones was not listed. Only one person got permission from council members to speak.
Tsira Elisashvili, Tbilisi Hamqar representative, says the only thing she was demanding was to postpone the discussion for more publicity and public involvement in decision making.
But the City Council members decided not to postpone the discussion, and approved the new City Development Plan - with the missing historical zone, and with fewer restrictions for the Sololaki landscape zone - making Panorama legal.
Anano Tsintsbadze thinks it opened the way for another threats to the landscape, for instance a Gergeti St. multi-complex apartment.
There was a question about the legality of the third part of the project, which is in the historical protection zone which still exists in the City Plan. “Protection Zone of Historical Constructions" (IST 1) zones were mapped on the 2009 and 2014 city development plans. According to secretary general of ICOMOS (International Council on Monuments and Sites) Georgia Nato Tsintsabadze, a lot of research and documents should be needed before any approvals. “Providing such kinds of documents is impossible, cause this zone excludes any kind of new construction on the territory where the construction was not historically placed. So there can be some renovation or new construction on the same places and scales, where it was historically placed.
The fourth location of Panorama project - “Tbilisi City”- is located in historical zone (IST 2) on Liberty Square. in this case, legal permission from the Ministry of Culture is presented, which was required as this is in the heart of the cultural heritage protection zone of Tbilisi. Offshore-registered Old City Development LTD is planning to build a 7-star hotel here. The owners of the land are “Old City Development”, LTD “Liberty Square 7”, TBC Bank and ITI Corporation. The latter is partially owned by LTD “Liberty Square 7”and “Leasing XXI Century” - itself owned by offshore-registered FinSec Limited.
It's the subject of an ongoing lawsuit against the developers. Residents of 1 Rustaveli Avenue, a building that abuts the new project, claims that the value of their houses will decrease after “Tbilisi City”construction. Some residents have windows that will now face the back of the new hotel. The Court process was postponed three time because Fund representatives failed to appear in court. When asked why, a public relations person for the Fund said: “the responsible person from the Fund is not in the city now."
Elisashvili worries about the UNESCO World Heritage list. Back in 2000 when Tbilisi was nominated, UNESCO asked for a proper management plan and policy for administrating the Historical district. So far there is no denial and no approval. Denial from UNESCO means they will never consider Tbilisi again. But the city still has not presented a proper plan. The nominated “site of historical zone for Tbilisi”was based on 1985 zoning, which now has been changed.
"Did anyone calculate what economical benefit can being listed as UNESCO world heritage, and can it be overwhelmed by the Panorama Project?”“This improper investment kills the city instead of developing it and attracting tourists.”
In the first four months of 2015, the project got three construction permists - despite 4,500 signing a petition and several protest meetings. The ministry of economy says the process was public because a ministry official announced plans on the Georgian Public TV show "Real Space " and “answered all the questions”.
April 20 2015 - LTD Tbilisi City gets permission for Liberty Square hotel.
May 18, 2015 - Sololaki Gardens project permission for LTD Sololaki Hilz
June 8, 2015 - Sololaki Rize”(on the mountain) permission for LTD Sololaki Raise.
There were no public hearings or meetings. When these companies filled out the pre-permission documents, the places for answers to whether the project is connected with cultural heritage, historical or environmentally important zones were left blank. .
“We strongly disagree with the position that the decisions were made behind closed doors," stated the Ministry of Economy on July 17, 2015.. "Permissions were given according to the legislative process.We also were asked in the signed petition to use the public administrative process and involve citizens -- Tiflis Hamqar, Georgia Young Lawyers Association, Green Alternative and others. We explained separately to each of them, that according to the law, we are using simple administrative process, which does not oblige us to have society involved in the administrative process. Also, we are providing all the necessary public information for those who are asking for it officially.”
The Ministry of Economy also denies that changes were made in government resolutions solely to benefit the project.
Already on February 2, Tbilisi City Hall announces public procurement and asks for the proposals for Krtsanisi-Shindisi Road project. Getting the proposals started from 19.02 until 24.02 - 5 Days.
Approximate price for procurement was estimated as 146 320 GEL.
On the very first day LTD “SaqGzaMetsniereba” proposes the same amount - 146 320 GEL, on the very last day of the procurement process, 6 minutes before the deadline another company Proeqtmshencompany” proposes 117 711 GEL - Less for 28 600 GEL.
Then the competition started between these two companies.
and it was finished after 25 minutes. In the third round of competition SaqGzaMetsniereba LTD proposed 35 000 GEL - and beat the competitor with final 69 999 GEL proposal.
September 14, 2015 - another public procurement is announced - this time for the preparation of road construction - replacement the Gas pipeline network. Getting the proposals just for 3 days long - from 18.09.2015 to 22.09.2015
Price - 711 000 GEL —AWARD LTD gets the order for 618 000 GEL.
Its Interesting that, while the Krtsanisi-Shindisi Road construction tender was held during 5 days, tender for reconstruction of Tskneti_Betania connecting road, damaged during 13-14 June, 2015 Tbilisi Flood, still is not announced. And Minister of infrastructure says, that the best geologists of the country were very busy to assess the situation on the hill. According to the Head of Geology department at Environmental Protection Agency, Merab GafrindaSvili Tbilisi has 32 ravines with high risk of landslides. Some of them are too close to mentioned territory of Sololaki mountain - Mama Daviti side-hill, Tsavkisi ravine, Ortachala. “there are a lot of tensions in these places”says Gafrindashvili.
In 11.03.2015 SaqGzaMetsniereba LTD signs an agreement with the Tbilisi City Hall ( N1.1.1/30/133 ) about the road construction preparation works. Meanwhile we find the Resettlement Action plan for the same Krtsanisi_Shindisi Road Construction Process, based on the same agreement.
Action plan is ordered by Ministry of Infrastructure - conducted by the contractor-partner LTD “Auditorical Firm Athos”, with the participation of LTD Aligator.
Action Plan mentions that the responsible for the realisation of its goals is the Tbilisi City Hall - Municipal Improvements Department. Compensations and the mitigation expenses are included in the project budget and will be disseminated by Municipal Improvements Department.