It seemed like Dnipropetrovsk City Hall couldn't surprise anyone anymore. It turns out, it can...
On July 1st, a subtle yet genuine revolution in the housing and utilities sector occurred in Ukraine. Our city responded with a "month of legal nihilism."
Last week's events in the Industrial District clearly demonstrated the simple fact that those who violate current legislation are not in pretrial detention, but in City Hall. That citizens' private property is unprotected by anything or anyone. That any organized crime group, by arbitrary decision, can make illegal city council decisions and selectively overturn laws within the city.
I've been studying the work of mayors' offices and municipal authorities for almost twenty years. I've seen all sorts of things in the city. I remember organized crime groups. I remember utility scandals. I remember corporate raids. But to have all three components in one glass at once... That's a completely new cocktail—the direct fusion of power with gang-like methods.
What the laws say
An apartment building is the private property of its residents. Apartment owners co-own the entire building, from the basement to the rooftops, from the entryways to the smallest pipe in the building's plumbing. The Constitution states that private property rights are our priority. Therefore, no local authority, except by court order, can dispose of our building; it doesn't belong to the housing office, the district council, the city housing department, or any other official combined.
Residents of the building previously received housing and utility services from utility companies. Since July 1, 2016, residents have gained the right to choose their own service providers. By creating a legal entity (a homeowners' association) or not (simply by holding a general meeting of apartment and other unit owners), residents can decide whether to maintain the building themselves, sign a contract with a management company, or hire an individual to manage the building. And only for those truly lazy city residents who can't even hold a single meeting, the law provides an exception: if the building hasn't selected a contractor for maintenance, the city council is obligated to hold a tender among management companies and appoint the winner to maintain the "lazy" building.
Such a competition is scheduled to take place in Dnipropetrovsk within the next few months. The law "On the Specifics of Exercising Ownership Rights in Apartment Buildings" clearly states that no city administration, no matter how clever or revolutionary, has the right to change building maintenance service providers appointed before July 1, 2015. Clearly and unambiguously: no!
What are city officials doing?
At the June City Council session, Gritsai, head of the city housing department, unexpectedly took the podium and asked the deputies to vote on a draft resolution he had prepared to change the balance holder and service provider for housing in the Industrialny and Zhovtnevyi districts from the existing district housing maintenance and repair companies to the new housing maintenance companies "Zhilservis-6" and "Zhilservis-15." The draft resolution had not even been made public in a timely manner (as required by law and the City Council's regulations), but the obedient majority of deputies voted for it. (In passing, it should be noted that a criminal case has been opened and entered into the unified registry based on the adoption of this resolution, and the district residents, on the advice of the regional prosecutor's office, are overturning the decision in court as illegal.)
The Industrial District was luckier: by the time of the session, the new "ZhilServis-6" had already been in existence for almost a week, and it currently has a full 18 employees. However, "ZhilServis-15" was only registered in the registry a month after the session. A rhetorical question: how did these phantoms intend to provide home and grounds maintenance services to residents? Apparently, they have no intention of providing any services. They, and the initiators of this illegal operation, have entirely different goals and interests.
Banditry and the police
On July 19-21, a group of athletic-looking individuals, wearing camouflage vests from the ZhilServis-6 municipal utility company over their traditional criminal attire, broke into locks, and, after intimidating employees of the ZhilServis-6 municipal utility company, began to seize the office space of another municipal utility company—the Industrial District ZhilServis-6 municipal utility company—by force. The invaders introduced themselves as "janitors" and "plumbers," although their faces and tattoos suggested a different profession.
The seized premises of the municipal enterprise contain not only municipal property but also the most valuable asset: technical documentation for the apartment buildings, which, according to law, must be handed over to the co-owners of the building. The fate of the documents is unknown. The seizure was led by the newly appointed director of the municipal enterprise "Zhilservis-6," Sergei Knyr. Apparently, he calculated that the new police officers in Dnipropetrovsk were illiterate. The employees of the municipal enterprise "Zhilservis-6" called the police almost ten times. A squad arrived. Knyr told them about the city council's decision. The police nodded and left.
But the City Council's decision doesn't mention a single word about the new municipal enterprise "taking it onto its balance sheet," much less seizing non-residential premises and property owned and used by another municipal enterprise for building maintenance. As you can see, it's not even a matter of the City Council's decision being overturned by the court; it's a matter of municipal employee Knyr either being illiterate (and unable to read the decision) or receiving carte blanche from his employers to commit illegal acts.
It was only on the tenth attempt that the police read both the session's decision and the court's ruling. They delved into the situation and opened a criminal case for the seizure of the utility company's premises and property. But the occupants remained in the premises! The police did not intervene.
Imagine for a moment that thieves have broken into your apartment. You call the police, they arrive, draw up a report, and leave with the words, "We'll look for the criminals and the stolen goods." Meanwhile, the criminals are sitting quietly in the burglarized apartment, drinking tea with lemon...
Power reaction
Last Friday, Deputy Mayor for Housing and Public Utilities Mikhail Lysenko responded to this citywide emergency with sincere statements that he "knows nothing about what's happening, that he will look into it and take action," and shifted the blame to Gritsai, head of the city housing department.
"I don't know anything about it. No one has contacted me," Vladislav Gritsai answered with complete sincerity when asked about the situation in the Industrial District.
— So this isn’t your order for Zhilservis to occupy the premises of the district KPZHREP?
"I haven't seen Knyr for a week," Gritsai replied, equally sincerely. Then he thought for a moment and added the sacramental phrase: "I think the two legal entities should sort this out on their own."
And what does Gritsai himself get paid for? What exactly is his job description—to sow chaos and lawlessness in the industry entrusted to him?
Incidentally, on Monday, Lysenko promised journalists he would help the two municipalities find agreement and reconciliation. But on Tuesday, a new draft city council resolution was released that completely duplicates the text of the illegal old resolution, cleverly avoiding the completely illegal language about "balance maintenance" and "provision of services." As the saying goes, by hook or by crook, we'll get what we want...
What are the threats to city residents?
The first and most obvious threat posed by Gritsai and his henchmen is that the buildings in the Industrial (and subsequently, the Zhovtnevy) districts will suddenly be left without any maintenance whatsoever. At least the invaders have secured the KPZhREP equipment, without which some operational repairs are impossible.
The second threat, while not as obvious at first glance, is even more serious: the creation of a condominium association and the independent operation of residential buildings could be seriously hampered by the loss of technical documentation for these buildings.
But that's not the most important thing. The crux of the matter is that several city officials, through their arbitrary decision, have abolished private property rights in Dnipropetrovsk.
What does the July 2016 decision to "take apartment buildings onto the balance sheet" of a utility company mean? The short answer is that it's theft of someone else's property. The buildings don't belong to the municipality or the mayor's office; they belong to the residents of each individual building. No one is allowed to dispose of what doesn't belong to them. Yesterday, utility workers "mistaken" and entered someone else's non-residential premises. Tomorrow, they'll "mistake" and enter your apartment. After all, they sincerely believe the building is "on their balance sheet." And they can dispose of this property as they please.
Moreover, Dnipropetrovsk utility workers not only violate the law, but also demonstratively and fearlessly document these violations. Director Knyr gathered six of his employees, called them a "committee," and drew up a report unilaterally "accepting" all the high-rise buildings in the Industrial District. It seems that the current Dnipropetrovsk officials have decided they've got God by the beard and can do anything.
Incidentally, the Ministry of Regional Development responded quite unequivocally that both the session's decision and the actions of municipal employees violate current legislation (they promised a written response by the end of the week).
Stinginess
In reality, we are witnessing today how a group of municipal employees and officials, led by Gritsai, is using criminal methods to prepare the ground for a monopolization of the housing and utilities market. The law "On the Specifics of Exercising Ownership Rights in Apartment Buildings" opened this market to competition, giving people the right to choose their own service provider based on cost and quality of service. Dnipropetrovsk officials are genuinely terrified by this prospect. They are rushing to gain control of the entire city before the legally mandated competitions among potential service providers are held, so they can then force their own firms on the citizens. The relevant City Council committee is openly stating that the upcoming competition will be lopsided, and that service for undecided buildings will be handed over to municipal companies. And today... To ensure these plans are implemented without a hitch, they are forcibly seizing existing municipal companies, replacing them with "necessary" ones.
Who benefits from this? If you dig into the biography of the newly appointed head of the newly registered municipal enterprise "Zhilservis-15," you'll immediately realize that serious people are eager to become "house managers." The state registry lists Viktor Burymsky as the head of this municipal enterprise.
Burymsky is currently a signatory of Privatland LLC. Privatland's director is Burymsky's wife, Natalia. The founders of this LLC are Pristelli Holdings Inc. and Staferton Commercial Ltd., both registered in the Virgin Islands.
As reported by the anti-corruption resource Nashi Groshi, Pristelli Holdings Inc. and Staferton Commercial Ltd. were among the offshore companies with Privat Group roots through which $1,82 billion was siphoned off to companies in London and the Virgin Islands in the summer of 2014.
Pristelli Holdings Inc. is also a co-founder of Avias LLC, and Staferton Commercial Ltd., according to an official statement by Samopomich MP Viktoria Voitsitska, is also involved in the withdrawal of billions from Ukrnafta.
Previously, Burymsky was also a co-founder of Vinibur LLC, whose founder is now Palmara LLC. Palmara LLC was implicated in the bankruptcy scandal involving Igor Kolomoisky's Aerosvit airline.
Today, the same address as Privatland LLC (2 Akademika Chekmareva Street, Office 2) in Dnipropetrovsk also houses the companies of Dmitry Mishalov (father of the current Secretary of the Dnipropetrovsk City Council, Vyacheslav Mishalov): Master-Finance LLC and Master-Stroy LLC, as well as Vinibur LLC. It can be assumed that the Mishalov family is behind Gritsai and Knyr.
Экспертиза
Here's how housing and utilities experts comment on the city council's decision to change balance holders and service providers in the Industrial and Zhovtnevy districts.
Kateryna Chizhik, Deputy Chair of the National Council for Housing Associations (AHOAs) under the Cabinet of Ministers and Head of the Association of Housing Associations and Housing Cooperatives of Dnipropetrovsk Oblast "Our House":
"The city authorities can tender a company to handle the building's maintenance and management. But nowhere in the law does it state that they have the right to make a decision to transfer ownership of the building from one balance sheet to another without the owners' consent. I think the courts will make very harsh decisions on this matter, because it upends all property relations. Also, nowhere does it state that even in this case, they transfer the building from one balance sheet to another. This year, Cabinet of Ministers Resolution No. 301 was issued, which, for some reason, has gone unnoticed by the Dnipro city authorities. The Resolution stipulates that all residential buildings in multi-apartment buildings in which even one apartment has been privatized be written off the municipal property books."
If the housing and communal services offices remained in place and the building hadn't terminated their services, they were supposed to hold these assets in off-balance sheet accounts and continue to service them, meaning maintain the building based on contracts with the owners. This means the new housing and communal services company was supposed to enter into contracts with the owners for the maintenance of the building and its surrounding area. Therefore, the first illegal decision was to keep the buildings on its balance sheet, and the second was to transfer them from one balance sheet to another.
Coordinator of housing, utilities and energy programs of the Civil Network OPORA (Kyiv) Tatyana Boyko:
— The very existence of buildings on someone's balance sheet, whether it's the housing office, the local government, or the condominium association, is absurd. Because this property belongs to the owners of both residential and non-residential premises.
For comparison, imagine a situation where my car is listed on your balance sheet. You can write some paperwork and sign it yourself. But that doesn't mean my car becomes yours. The same thing applies to apartment buildings.
Under the Law of Ukraine "On the Specifics of Exercising Ownership Rights...," a procedure for writing off buildings from the balance sheet was developed and approved by a Cabinet of Ministers resolution. Although some cities have already written them off without this procedure, there are cities that are clearly sabotaging this process. Dnipro is probably one of them. Since transferring property from one balance sheet to another is, I repeat, absurd.
In fact, what's happening is that funds from local budgets are being written off for repairs to these so-called "municipal property" buildings. In fact, if you check where this money is going, you'll usually find the names of people close to the city council who are carrying out the contract work. And the amounts can be inflated by 20 to 60%. If people aren't commissioning and overseeing this work, the likelihood of it being of high quality is slim to none. In other words, corruption is often behind these transfers. This isn't a statement, but that's usually how it works.
Sergey Nikitin, lawyer and organizer of the social and educational project "School of Management" for residents of high-rise buildings:
— In accordance with Article 10 of the Law of Ukraine "On the Privatization of State Housing Stock," owners of residential and non-residential premises in an apartment building are co-owners of the entire building—its auxiliary premises, technical equipment, and amenities.
The Civil Code of Ukraine establishes that the management of joint property is carried out, firstly, exclusively by its co-owners and, secondly, jointly!
This same provision is also enshrined in the new Law of Ukraine "On the Specifics of Exercising Ownership Rights in an Apartment Building." Article 9 of the Law stipulates that the management of an apartment building is carried out by its co-owners, while Article 10 of the Law defines the procedure for such management: namely, co-owners make decisions regarding the management of the building at meetings.
Thus, the city council, not being the owner of apartments or non-residential premises in the multi-story building, is not its co-owner and does not have the right to make decisions regarding the management of the multi-story building.
Thus, decision No. 20/10 of June 17, 2016 was adopted by the city council in excess of its authority and in violation of the legal rights of co-owners of multi-story buildings.
Furthermore, in the text of the City Council's resolution No. 20/10 of June 17, 2016, we see a complete disregard by the city authorities for the essence of housing reform and the provisions of the Law of Ukraine "On the Specifics of Exercising Ownership Rights in Apartment Buildings." And the desire to transfer the ownership of apartment buildings to companies that, at the time of the decision, were not registered with the Unified State Register of Enterprises and Organizations (EGRPOU) and lack the necessary staff and resources to provide housing services suggests that the City Council is not acting in the best interests of the residents!
Instead of an afterword ...
I don't know if the mayor is aware of what's going on. Perhaps this will become clear on Wednesday, at the next City Council session. But I understand perfectly well that Boris Filatov bears the reputational risks from this absurd situation.
It is the mayor who appoints the directors of the municipal enterprises, signs the decisions made at the session, and therefore is responsible for all of this. Does Boris Albertovich, as well as his highly respected deputies—lawyer Sanzhar and the staunch business executive Lysenko—understand that the actions of the head of the city housing department, Gritsai, and the director of the municipal enterprise "Zhilservis-6," Knyr, will sooner or later boomerang on the revolutionary image of the mayors themselves? Is it really so difficult to strictly demand that the officials under their command not break the law? There is nothing more to demand. Just one thing: don't break the law, gentlemen officials!
Vitaliy Teplov
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