Bill prompts Wroclaw to pull back from munibond issue
In the fallout of the Sejm's recent passage of a controversial universal enfranchisement law, the city of Wroclaw last week postponed a municipal bond drive tied to the sale of property owned by the city.
In the works since last June, the bond drive, organized in cooperation with Bank Zachodni, aimed to raise zl. 25 million ($5.8 million) through the sale of apartments currently owned and managed by the city. Under the plan, residents of city-owned flats would have a chance to buy their apartments at a 65% discount if they paid the amount owed in bonds.
The Sejm's approval of the enfranchisement bill two weeks ago could make the bond drive in its present form either pointless or a complete flop.
"Because the law was passed by the Sejm, we held up work on the bond drive," said Irena Matkowska, manager of the municipal bond office in Wroclaw's city hall. A bond issue "of this nature might not come into play since it was designed for the purchase of apartments."
The freezing of the bond issue in Wroclaw is the first sign of how hot a political and economic potato enfranchisement remains even after its initial passage through Parliament's lower house. Even if the bill ultimately becomes law, last week's move by Wroclaw authorities also signals the difficulties inherent in compensating for the wrongs of the communist system a decade following its collapse.
The enfranchisement act creates the mechanisms whereby average Polish citizens can acquire state assets free of charge. Under the law, tenants in residential cooperatives and renters of city or treasury-owned property would have the right to take ownership of their flats at no cost.
"People who worked for the benefit of the state have a right to receive something in return," said Jerzy Hendrich, director of Commerical Property Services, a Wroclaw-based property consultancy.
For proponents of the law, universal enfranchisement will not only help remedy the injustices of the past, it will also speed up moving property owned and managed by the state into private hands. "(The bill) will mean a significant acceleration of the privatization process," said Andrzej Jaroch, deputy mayor of Wroclaw in charge of municipal real estate. "I don't have any fear about state-owned property falling into the hands of private owners."
But 10 years into the economic transformation, the privatization of public property could cause significant social and economic turmoil, according to the bill's opponents. While the law could prove a boon for citizens who are not yet property owners, other Poles who paid to acquire their apartments from the state could feel cheated when they see their neighbors becoming property owners at no cost.
"This is one of the worst laws passed by this Sejm," said Jan Wyrowinski, a Freedom Union (UW) deputy who sits on the Parliament enfranchisement commission. "This is legislative trash."
Disposal of state-owned assets would best be managed through a series of laws tailor-made to each ownership situation, rather than in a catch-all enfranchisement law, according to opponents of the bill. "The idea of regulating all issues in one bill is an idea that is ideologically driven," Wyrowinski said. According to Wyrowinski, the Sejm is now completing work on two laws that will set guidelines for ownership in residential cooperatives and state-owned flats. "These are extremely complicated issues that need to be dealt with separately," he said.
The passage of the bill sent a quiver through the real estate market last week and left property specialists predicting a pause in the sector at least until the fate of the bill becomes clear. Before the bill becomes law, it has to be accepted first by the Senate and then by the president.
"Definitely the residential housing market will be put on hold for at least two months until the (deadline passes for) the president to sign or not sign the bill," Hendrich said. "It could be even longer, basically because of the influence of this disturbance and the debate."
Over the past decade alone, the city of Wroclaw has sold off one-quarter or 20,000 of its city-owned apartments. While maintenance costs eat a zl. 48 million ($11 million) hole in the city budget every year, the property has also been a source of investment capital used to carry out much-needed infrastructure investments. In an earlier bond issue also tied to the sale of some 3,000 communal flats, Wroclaw authorities raised zl. 50 million ($11.6 million), which it earmarked for road improvements.
Even supporters of the current bill admit that its introduction could be costly and create confusion. "Introducing a revolutionary bill does cause some difficulties for local and national authorities, maybe even budgetary ones," Jaroch said. "But in my view too little is said about the positive aspects."
Like property restitution, an enfranchisement law has bedeviled a series of governments since 1993. The current Solidarity Election Action (AWS) government came to power two and a half years ago as part of a coalition with the UW on a pro-enfranchisement platform. With presidential elections three months in the offing, the passage of the bill before the summer holiday is as much about political exigencies as it is about undoing past wrongs. "For AWS this was important as far as implementing its election program," Wyrowinski said. "Enfranchisement was an important slogan for them."
