Palace to pay its way?
Warsaw's chief architect, Michał Borowski, has decided to privatize the company managing the Palace of Culture and Science (PKiN), and the building could become a real money-spinner for the city.
PKiN is the property of City Hall and for eight years it has been managed by Zarząd Pałacu Kultury i Nauki, a City Hall-owned company. Half of PKiN's office space is occupied by City Hall, which does not pay a penny in rent. Other tenants, such as theaters and museums, pay a below market rate of zł.10.90 per sqm, which was imposed by City Hall a few years ago. Out of PKiN's approximately 154,000 sqm, about 110,000 sqm is leasable area. This means that 50,000 sqm is undeveloped space that does not generate any profit but still has to be maintained. The cost of maintaining one sqm in PKiN is zł.20 per month.
Zarząd PKiN has its hands tied as to the efficient management of the building. "We act on behalf of the city. We cannot sign any agreements with City Hall because the city cannot formally sign an agreement with itself," complains the president of Zarząd PKiN, Lech Isakiewicz. He says that the company needs to be privatized.
The maintenance of the palace comes to zł.35 million a year. Isakiewicz admits that the building generates just enough to afford this. "The palace earns zł.600,000 to zł.1 million for the city [annually]," says Isakiewicz, and it is sorely in need of fresh investment. The building needs new windows and exterior cleaning, as it has lost its original cream color.
The accounted value of PKiN is zł.176 million, but its real market value is much higher, with one American investor rumored to have offered $200 (zł.649) million for the monolith. However, if the building was sold, most of the present tenants would probably have to move out as any private investor would undoubtedly hike up the rents.
Recently the Chief Architect of Warsaw ordered an independent analysis of the possibility of privatizing Zarząd PKiN. This will be passed to the city's authorities and the City Council will make a final decision.
