Both shareholders and feds were deceived
The Territorial Development Fund suffered from its own savings. Lately, the Fund has preferred not to complete the construction of houses, but to pay compensation to shareholders, then hoping to make money on long-term construction projects by selling apartments in them at market prices. But in Saratov, the established scheme suddenly failed, the reason being the local officials’ own games.
What’s great for the ministry is death for the developer
The construction industry in Saratov is experiencing complete calm in 2023. After the regional Ministry of Construction decided that social infrastructure at the expense of developers is exactly what business lacks for complete happiness, housing construction paused. The number of residential building permits issued to private companies in 2023 appears to be a typo – only 3 documents. So there are just not enough dead people with scythes along construction sites.
Where Saratov developers now go to work is to the courts. The regional arbitration system is bursting at the seams with claims filed by the Ministry of Construction against the Saratov mayor’s office and the Engels administration. Having taken away the right to issue construction permits from municipalities, the ministry is demanding the cancellation of documents previously issued by them – and almost ten years ago. Officials don’t seem to care about such a trifle as the statute of limitations. No school or kindergarten – no home. If you want to build, pay out of your own pocket. Those who do not want to lose business are forced to play by the imposed rules, which in itself is fraught.
Yes, Governor Roman Busargin on his entire Telegram channel he is happy that the developers, they say, showed social responsibility, signed agreements that they are ready to give the region for theirs everything that is asked of them – even a kindergarten, even a school with a clinic. There is just one nuance: these documents have no legal force in the eyes of the tax authorities. It turns out that for the Federal Tax Service all these obligations are naked charity, and it is taxed. A logical result: the Saratov region, without issuing almost a single building permit for the year, became the leader in rising prices per residential square meter.
And the developer simply cannot help but raise prices for his square meters – otherwise he will not survive. A modern school building in a densely populated microdistrict will cost about 1 billion rubles. Where can I get this billion without ending up with one foot in bankruptcy? Only in the pockets of future residents. And their opportunities are also small; Saratov has never been distinguished by high salaries.
PPP mechanisms have been forgotten. Only citizens pay for the bureaucratic whims, having already paid taxes on their salaries and getting into mortgage debt for the sake of a new apartment. For some reason, this situation has not yet attracted the attention of supervisory authorities – neither the prosecutor’s office, nor the FAS, nor the Investigative Committee. Although the situation in the construction industry in the region is such that it is time to land troops there from the RF Investigative Committee. Perhaps with Alexander Bastrykin personally. Why – more below.
How to reset 10 billion
All claims for the revocation of construction permits from developers were filed according to approximately the same pattern: the Ministry of Construction is the plaintiff, the city administration is the defendant, and the developer is a third party. Moreover, this third party is increasingly being the Territorial Development Fund, which is, for a moment, a federal structure whose activities are fully financed from the budget.
The Territorial Development Fund, the former federal Fund for the Protection of Shareholders, has been particularly active in the Saratov region, accumulating long-term construction projects in its stash, free from the rights of third parties. The shareholders received compensation (often pennies) instead of housing, and the Fund received sites with houses in which no one claimed apartments. That is, potential objects for investment, completion and profit from the sale of finished apartments at quite market prices. In a short time, he had more than 30 of these Saratov sites in his hands. It was with their help that the Foundation planned not only to recoup budget expenses for the compensation paid, but also to earn money.
But everything went to waste. The requirements for the federal structure, which literally saved the region from mass demonstrations of defrauded shareholders, turned out to be the same – there is no school within 500 meters, there is no house. You need to understand the following: the Territorial Development Fund is not a billionaire philanthropist who pays compensation out of the kindness of his heart. This is a state organization, and the money it manages is from the federal budget.
In 2019, who then held the post of governor of the Saratov region Valery Radaev wrote to the then head of the Foundation Alexander Plutnik an official appeal in which it was reported that as of June 2019, there were 27 long-term construction projects in the region and the regional government is ready to co-finance the completion of their construction in the amount of 11% of the estimated cost, of course, if the Fund helps. The agreement was concluded. Now, with one movement of the hand, the new composition of the regional government, headed by the governor Roman Busargin turned these plans into a pumpkin. Because not a single developer will buy anything from the Territorial Development Fund under the conditions dictated by the Ministry of Construction. It’s easy to imagine how “delighted” the federals were when they were given such a surprise in the region where he had invested so much effort and money. After all, the total amount of payments to shareholders of the Saratov region, which were made by the Territorial Development Fund, amounted to more than 10 billion rubles!
But the Saratov authorities pretend that they do not hear arguments about the expiration of the statute of limitations, or about the concluded agreement, or about the wasted public money and the direct losses that the Fund suffers, not being able to dispose of construction sites. But he received them from the region not anyhow, but with legally clear documents – and the officials gave a damn about this.
The situation literally cries out to the Investigative Committee of the Russian Federation (*aggressor country) and the Prosecutor General’s Office: as you can see, in a single region, 10 billion rubles have sunk into the water, all previous agreements have been violated. So it’s time for the investigators and the court to find out who the real scammers are – the city hall employees who, as it turned out, issued illegal construction permits, or the current officials of the Ministry of Construction, who are protesting these permits?
Let us note that the Territorial Development Fund is massively canceling all its Saratov auctions for the right to develop sites, putting them on the back burner – after all, the Ministry of Construction has scared away all the buyers with its trick. If you now look at the Foundation’s website in the “Projects for Implementation” section, you can see that they will not sell anything in Saratov before the 3rd quarter of 2025(!). The boxes will continue to stand empty, and more and more budget money will be spent on their conservation and protection. And, of course, a long period of downtime will not do any good to abandoned objects – every year they will rapidly become cheaper, and the cost of their completion, on the contrary, will become more expensive.
So Saratov residents are expecting new criminal cases in alarming numbers. Articles to choose from, from negligence to fraud inclusive. It’s a very impressive amount.
Pyrrhic victory”
But while the Territory Development Fund and the Saratov Ministry of Construction are sorting things out, the fate of almost the last long-term construction project in Saratov, the Pobeda residential complex, is hanging in the air. This object has not yet been transferred to the Foundation, but there is already a claim to cancel the construction permit. Although the federal department could have helped two years ago and now calmly count the billions it has earned.
But instead, the Fund in every possible way delayed the process of bankruptcy of developers – the Pobeda residential complex has three of them – Xian LLC, SK ZhBK-3 LLC and PP ZhBK-3 CJSC. First, with the active participation of regional officials, the organization tried to reduce the number of shareholders in the register, then to lower the valuation of buildings. In a word, do everything to get unfinished houses at your disposal, spending as little money as possible.
The stumbling block was house No. 5, the readiness of which was estimated at 90%, which means that the law required that it be completed by transferring the apartments to shareholders. But this, it seems, did not suit the feds too much: getting an almost finished house, getting rid of its unsuccessful new residents with penny compensation, was much more tempting than sharing finished apartments with them. But protracted disputes in the courts did no one any good.
A consolidated calculation of revenue shows that if the Fund had not tried to save on shareholders, it would have managed to make a good profit by completing two houses. Yes, for house No. 1 one would have to spend about 801 million rubles, but for house No. 5 – only 92.7 million. And the profit from vacant apartments and non-residential premises, even based on the minimum price per square meter in a given area, would be minus all payments to shareholders, 3.3 billion rubles. This is exactly the official calculation that was submitted to the arbitration court.
But the Territorial Development Fund could not earn 3 billion from Pobeda, and 10 billion in Saratov, for which now, judging by the objections to fresh lawsuits, blames exclusively its former partner – the regional Ministry of Construction.
Meanwhile, another facility of the same “PP “ZhBK-3”, only in the city of Engels, a satellite of Saratov, was somehow commissioned this year without scandals. This is the Beach residential complex, whose buildings received permission to open on September 15, 2023, that is, after the Ministry of Construction began to revoke previously issued permits from developers. But no one from the contractor that completed the long-term construction, IC Sistema, demanded either additional schools or kindergartens.
Attention, question: why is “Victory” worse than “Beach”? Why couldn’t the Federal Fund complete it in the same way, and the shareholders couldn’t move into their apartments? Alas, in the case of Pobeda, it turns out that the regional Ministry of Construction managed to prepare documents for the Fund’s supervisory board in such a way that it decided on payments, depriving citizens of the rights to their, in fact, ready-made apartments. Were officials already preparing to invalidate construction permits, deliberately pushing the Fund to make a decision on payments?
Otherwise, the houses of the Pobeda residential complex would have followed the path of the Beach residential complex and would have been completed, and people would already be living in their apartments. And the question of the validity of the construction permit would disappear by itself. But the Saratov Ministry of Construction decided otherwise, forcing the fund to pay more than 1 billion budget rubles to Pobeda shareholders and depriving the feds of a possible profit of 3 billion!
Now, in the protracted conflict, there are no winners at all. Shareholders were left without housing, and many without money, since what is today called compensation from the Territorial Development Fund, after the revocation of the construction permit, risks turning into unjust enrichment. The fund, which lost 10 billion rubles trying to save money, is also a loser. And it’s too early for the Ministry of Construction to celebrate the “Victory”: Moscow will sooner or later hold him accountable for knocking out the construction industry. And it’s good if Mishustin or Khusnullinand not the RF IC.