Enfranchisement leaves budget gaps
Local authorities across Poland are scrambling to plug holes in budgets after sales in municipal housing fell earlier this year due to the failed bid to introduce the universal enfranchisement law.
Sales in public housing stopped in July after the Sejm passed the controversial bill that would give average Poles the chance to gain title to their apartments free of charge. While the bill was vetoed by President Aleksander Kwasniewski in September, cities and towns across Poland are still feeling the pinch due to lower earnings from the sell-off of municipal property.
"The enfranchisement bill did have a negative impact on Gmina Centrum," said Stefania Markowicz, director of real estate in the Central Warsaw district.
About 300 people pulled out of deals to purchase apartments following the passage of the bill, said Markowicz, who estimated that the gmina lost zl. 12.5 million ($2.77 million) in revenue due to the halt in housing sales.
"That impacted us negatively," Markowicz said.
The enfranchisement bill was constructed to compensate citizens for the wrongs of the communist era by creating mechanisms whereby citizens could acquire state assets free of charge. The bill's surprise passage in July not only halted housing sales on local levels, it also became a centerpiece in the run-up to the presidential elections held in October.
Backers of the enfranchisement initiative from the Solidarity Election Action (AWS) party banked on the issue to win votes for their candidate Marian Krzaklewski. That strategy backfired after the president moved to veto the bill in early September.
While the failed initiative no longer figures on the national political arena, it continues to be a focal point for politicians on local levels trying to make budgetary ends meet.
"We see that we won't execute our plan as far as the sale of apartments," said Ryszard Berent, head of the real estate department in Bydgoszcz. "Revenue will decrease by about zl. 2 million ($444,000)."
Sales this year were expected to bring in about zl. 8 million ($1.77 million) to city coffers. Because of the lag in sales, city officials recently lowered forecasts to zl. 6 million ($1.33 million).
Bydgoszcz sells an average of 700 to 800 apartments each year, a small quantity of the 27,000 owned by the city. To entice residents to purchase their flats, the city offers discounts up to 70%-95% off the market value, Berent said. Depending on the size and standard of the apartment, with the discount the average apartment costs zl. 10,000-zl. 20,000, he said.
Even small towns are feeling the impact of the enfranchisement fallout. In Kepno, a municipality with 25,000 residents, nine transactions were postponed in July after the bill was passed by parliamentarians, according to Tomasz Szydlyk, manager of the real estate sales division in Kepno city hall. Authorities in Kepno manage about 450 municipally owned apartments.
Since July, Kepno authorities have not sold a single apartment, in contrast to the first half of the year when they signed 13 privatization deals with residents.
"In the period when people thought there was going to be the (enfranchisement) law ... those who had applied (to purchase their apartments) held back their applications," Szydlyk said. "These people have returned to the subject and they have declared that they want to buy their flats."
Buyers are returning to city hall in Szczecin as well after the summer lull. Following the enfranchisement bill's passage in the Sejm, city authorities lowered revenue forecasts by zl. 8 million ($1.77 million). After the revisions, the city expects revenue of zl. 16.7 million ($3.71 million) from apartment sales.
"Now everything is back to the level it was at before August," said Teodor Tkaczuk, manager of the privatization division in Szczecin's city hall.
However, due to heightened interest in recent months, there is a chance the city could make its original sales target of zl.24.7 million ($5.3 million), Tkaczuk said.
In Wroclaw last week, authorities relaunched a municipal bond drive tied to the sale of property owned by the city that was postponed last summer in the aftermath of the Sejm's vote on enfranchisement.
The bond drive, organized in cooperation with Bank Zachodni, aimed at raising zl. 25 million ($5.55 million) through the sale of 1,500 apartments 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.
City officials hope the re-inauguration will help them reach their revenue target of zl. 48 million ($10.66 million) on apartment sales. The city is about zl. 10 million ($2.22 million) short of that goal, according to Andrzej Jaroch, deputy mayor of Wroclaw in charge of real estate sales. In the first two days of the drive last week, residents bought up 30% of the bonds, Jaroch said.
