Once again, the issue of the favorable contract for the lease of state land to entrepreneurs is back in the spotlight. Contracts made on terms that favor entrepreneurs who reap hundreds of millions of euros at the expense of the state. A phenomenon that has been highlighted for decades without sweating anyone's ear and without punishing any of those responsible for the damage to state coffers.
A loud example is what is recorded in the report of the Auditor General for the party that takes place with the lease of state land in Ayia Napa, where according to the report the state loses tens of millions of euros and businessmen put corresponding amounts in their pockets.
As the Auditor General points out in his report, based on the relevant contracts, the state has lost a lot, while by 2048, when the specific agreements are in force, it will lose another 140 million euros from only one of the five cases it examined.
As mentioned, the value of the land in one of the cases examined is worth € 130 million and has been in use since the early 1980s. for the construction of hotel units in Ayia Napa “, the unit had to pay rent equal to 5% of the value of the property, ie about € 6.5 million per year, while it pays about € 1.5 million.
The land on which the other hotel units were built is smaller but does not cease to have significant value, as it is located on the sand.
Of particular importance is the report's finding that three-star hotels were charged more per square meter than four-star hotels, proving that some people are treated more favorably and make more money. The fact leaves suspicions of entanglement and favorable treatment.
In general, according to the report, all governments over time, from 1972 onwards, managed forest land on the sand as if it were “foreign”, renting it at a price below its market value.
At one point, when hoteliers sought to renew the lease until 2048, in some of the five cases examined by the Auditor General, it was not even ensured that the unpaid rents would be paid. From now until the end of the contracts, the hoteliers in question will continue to pay lower rent since the agreement requires the consent of both parties (state and hoteliers).
According to the report, the Republic of Cyprus concluded, inter alia, in 1970, 1981 and 1982, five 99-year state forest land lease agreements for the construction of an equal number of hotel units in Ayia Napa.
The report states that “the way of calculating the rent which, as it turned out, in some cases, can be methodized”, but as the Auditor General observes in his report:
– It has become clear that the way rents are calculated, as set out in these contracts, may, with the current data, create a distortion in the tourism industry, as landlords pay significantly lower rents than they would pay if they rented the land at present. .
Specifically, says the Auditor, he calculated the rent, which would be paid on the basis of a percentage of 5% on the value of the property, as defined in the Real Estate Regulations of the Republic (Disposal) of 1989, according to the market value at 22.9. 2020, which, according to the Department of Lands and Surveys (SCC), concerns land value based on their existing use and not their urban area. From this calculation and its comparison with the annual rents paid, very significant differences emerged, amounting to up to € 5,043,071, which is problematic.
It was also revealed that, in the four cases, the landlords are able to influence the amount of rents, based on the prices of accommodation and food declared to the Cyprus Tourism Organization (CTO), to the extent that the amount of rent is marginally close to the level of rent, as calculated on the basis of the general price index.
In addition, we noticed, the Auditor adds, that for the calculation of the average price of sleep and food per day per person, the Forest Department took into account the average price for the double room, according to the data submitted by the CTO. This price would vary significantly upwards if the average single room price were taken into account for the calculation. Therefore, there may be an issue of incorrect application of the provisions of the contract, to the benefit of the landlords.
They had to terminate the contracts
In his report, the Auditor General does not hesitate to state that he would expect the competent Department of Forests to consider the possibility of terminating these contracts, before renewing them for another 33 years, on the same terms, which, as it turned out, are unprofitable for the Republic.
We consider, he continues, that the direct lease of state land to specific natural or legal persons, especially for commercial purposes (such as the lease of state forest land for the construction of hotels and the recent leases of state and state forest land for the construction of photovoltaic private parks) university and livestock unit) does not in any way satisfy the principles of transparency, equal treatment and non-discrimination.
