THE HIDDEN VALUE OF 1% OR THE URGE TO BUILD

They built houses that in fact were becoming derelict even before construction was finished

THE HIDDEN VALUE OF 1% OR THE URGE TO BUILD

An effort to eliminate something, on a national level, must certainly be prompted by extraordinary if not disastrous circumstances. That was the case with slums in Tatarstan six years ago, when a campaign aimed at getting rid of them was started. The project has been a success thanks to a magical 1%. Mars Gazizulin, deputy minister of constructions of Tatarstan, discloses the inner works of this «subterfuge».

— How bad was the problem with derelict houses when the program was adopted?

— In 1995, all housing available in Tatarstan was registered and its state assessed. Forty seven thousand families were found living on premises qualified as derelict under all applicable standards. That was an alarmingly high proportion. To give you an idea, the administration of the Astrakhan province is very proud of having resettled twelve families that had been living in similar conditions. You can see the huge difference in numbers and appreciate the challenge we were facing.

— How did Tatarstan get itself into such a mess?

— For one, Kazan is a thousand years old city. Many residential buildings had been there for centuries. Second, Kazan grew rapidly during World War II, because so many factories and their staff were relocated there from the war zone. There was a huge need for extra housing capacity that had to be made available practically overnight. No wonder they built little more than makeshift barracks with no facilities and no standard infrastructure. It was all done in an awful hurry, with whatever materials they could get their hands on, and it was supposed to shelter people only for a very short time, until things could be settled in a normal way. When the war was over, this proved to be an illusion; the barracks were here to stay. Even worse, new families were moved in. In other towns throughout Tatarstan, the situation was very similar. In Menzelinsk, where things were particularly tight, they only managed to build houses that were in fact becoming derelict even before construction was finished.

With time, the cost of maintaining and servicing all this junk became prohibitive. Yet almost no new housing was being built, there was no financing for that; and people had nowhere to go. Mentimer Shaimiev, our President, found a way out of this dead-end. Speaking at a conference of government officials, he said very bluntly: «Look, men, lets get rid of the slums, we just have to.» Why? Because by doing so we achieve several things. First, we reduce maintenance costs and put an end to useless «patching of holes» that drain the budget. Second, we give business to construction companies, one of the biggest industries of the republic, which will boost payments of taxes, create jobs and improve the public mood in general. Last but not least, we remedy to many social sores. Look, authorities had families moved into slums with a promise that very soon, they would be given normal decent lodgings. Fifteen years later, they were still waiting, and probably losing hope. We decided that free new housing had to be made available for all slums dwellers. Thus, the program we adopted had political, economic and ethical dimensions.

— Granted, you had an ominous problem at hand and a commendable desire to tackle it, but what about the money, where did you find it?

— Our republican government started to raise a special «building» tax, payable by all companies, amounting to 1% of their sales. Plus 50% of all rent payments were allocated to the programs fund. Incidentally, we stopped to collect rent from all those living in slums; since their lodgings were not up to standard, it was unfair to make them pay for it. Finally, an additional excise — 50 cents per ton — was imposed on oil. Considering that we produce 25 million tons of it per year, this made us quite a bundle.

— How much did you have in the pot, overall?

— There were good years and bad years. At present, we have, annually, one hundred million dollars, which makes it possible to finance some other projects too, like road building, extension of infrastructure networks and construction of schools, day care centers and hospitals. More recently, many private companies have been showing willingness to invest in our projects; last year, they put up close to 15 million dollars.

— It is a fact that, whenever publicly financed relocation projects single out specific houses whose registered residents are to get new lodgings for free, our industrious citizens find many different ways to get on board and benefit from the «bonanza».

--True. Naturally, we made lists of all registered residents of the houses that we rated as derelict, who therefore became eligible for our relocation program. Quite as naturally, we saw the numbers of deaths among those people fall precipitously, and the numbers of births grow beyond any reasonable proportion. All of a sudden, everybody was eager to marry, considering that a spouse can be registered where you live without any restrictions.

But this sort of con-artistry is becoming less and less popular since it is now possible to do things in a normal, honest way. Loans for housing are available, young families can even have them interest free and spread over ten years; otherwise, they are for up to ten years at 7% per annum, which is not bad at all.

— Who are your sub-contractors?

— Obviously no single company can handle so much business; we have to retain quite a few of them. We have to build something like 350 000 square meters of housing space annually. Last year, we had 6 127 new apartments ready, of which 4 000 were in Kazan.

— How long before you get rid of the slums completely?

— There are seventeen thousand families still waiting to be relocated.

— Don't you expect financial problems for your program, since the federal authorities have decreed, I believe, that this special 1% tax was against the law?

— We shouldn't have any problem. Our companies have got used to this tax, so now they pay the same amounts as voluntary contributions to the fund. They don't seem to mind, or at least nobody is complaining. Not openly.

— What are they exactly, the houses you are building? Same grim high rises as in the past?

— Certainly not! There are many different designs and types of construction, dozens of options, new choices of materials. No more standard high rises, no. You'd much rather go and see for yourself.

— Why don't other provinces follow in your steps? Since your system seems to be working, it is tempting to imagine that it could help to eliminate shortages of housing everywhere else in the country in a matter of years.

— Officials from Bashkortostan, Ud-murtia, Chuvashia, Mari El and North Ossetia came many times to see how we do it. But nothing serious has come out of it yet. Seems like they cant convince their businesses that they have to contribute to the cause. Takes a man like our President to make it work.

Don't think it was easy, though. It took some time for our businessmen to get used to the idea that they had to pay. In the early days, even those who were willing to help often did not have the money, only their products; at the time, all trade was barter. But eventually banks agreed to give us credit, especially after Ak Bars Bank had granted a first loan; others followed, almost all local banks got involved.

— How about now?

— Things are not as easy as before; there are too many restrictions. But nothing is impossible. I know that several members of the Duma are pushing through a draft program similar to ours, but on a national level. A respective new law has already been proposed. Members of Parliament were stunned when they realized how much we had achieved in this area; they know how badly the problem needs to be tackled throughout the country.

And we are certainly way ahead of the others. We have reached a stage where we have to worry about things that many in Russia don't even remember anymore, like how to get enough highly qualified manpower, where to find good carpenters, bricklayers or woodworkers. The rest of the country is only waking up, and we have already finished breakfast, so to say.

— Good for you. By the way, what is the price, per square meter, in Kazan?

— It all depends on what you are looking for. If it is a luxurious dwelling, you will pay up to 800 dollars per meter. If you are happy with mass production standards, prices are anywhere between 250 and 400 dollars. Quite affordable, and sales are brisk.

This growing availability of new housing is also a great boost for other markets. Think of it; in Kazan, four thousand families move into new apartments every year. This translates into new demand for four thousand sets of kitchen appliances, furniture, wallpapers, power tools and other materials. If demand is there, increases in production are bound to follow.

Thanks to our program, there is now a lot of potential for building in the inner city where lots are ready for development after old squalid houses have been razed to the ground. Businesses are happy to invest in the center of Kazan, to build there their offices, their shops or their residences. Again, this will be another step forward because even better standards of building will be applied. Facades will have to be something different from a simple brick wall. Did you know that in Vienna, they used to have a municipal regulation under which 5% of the cost of a new building had to be spent on the embellishment of its faSmall wonder it is such a lovely city. That's the way to go, and we are trying hard; we are already meeting the basic European standards of construction.

Ogoniok: It sounds as if sometime soon, Muscovites might start abandoning their overcrowded neighborhoods in favor of your glorious cities on the Volga river. I for one will certainly consider the option.

Dmitri AKSENOV