Land Dual Power is a state of legislation in the Nizhny Novgorod Region that arose because the governor of the Nizhny Novgorod Region and the former Mayor of Nizhny Novgorod Bulavinov fought for power in the capital of the Volga region. As a result, dual power emerged in the management of land resources.
Galina Shcherbo, staff correspondent for Expert magazine, "Expert Volga" in Nizhny Novgorod:
Governor Valery Shantsev secured the right to manage land in Nizhny Novgorod and throughout the region
The governor of the Nizhny Novgorod Region, Valery Shantsev, is trying to clone the Moscow system of governance in the region under his charge, in which the head of the federal subject holds practically unlimited powers. The latest step toward the governor's ideal was taken by deputies of the regional legislative assembly, who finally approved a new version of the regional law "On the Regulation of Land Relations in the Nizhny Novgorod Region," which had been in the works since 2006. This document expanded the powers of the regional government. The city authorities, for their part, are resisting the encroachment on their rights as best they can. Shantsev has not yet managed to do things "the Moscow way," but after the adoption of the land law it is only a matter of time.
Land is money and power
In Nizhny Novgorod, every new administration begins by revising the established land relations. The current mayor of Nizhny, Bulavinov, upon taking charge of the city in 2002, likewise started by canceling a number of orders issued by the previous administration allocating land plots for residential and commercial development. Several dozen contracts with prospective investors were terminated at the time, since, in the assessment of the new city hall leadership, they had been concluded behind closed doors on terms unfavorable to the city. However, the matter went no further than annulling the existing contracts — the mechanism for allocating land for development did not change, a developer's proximity to one or another representative of the authorities still played the decisive role, and the pricing mechanism never became transparent. Payments to the city for approvals and resettlement could reach 25% of a project's cost, on top of the cost of the plot itself. In addition, a developer could be required to make a so-called investment contribution: at a minimum — landscaping a public square, at a maximum — resettling residents and demolishing dilapidated buildings.
Valery Shantsev also took up the revision of land law as soon as he took office as regional governor in 2005. Nizhny Novgorod has recently been becoming increasingly attractive to investors. In terms of housing prices, the city ranks fifth after Moscow, St. Petersburg, Novosibirsk, and Yekaterinburg, explains Tatyana Romancheva, director of the Nizhny Novgorod Center for Scientific Expertise. And over the past three years, already under Governor Shantsev, the average price of a square meter in the city has more than doubled — to 54 thousand rubles. Land in Nizhny is both money and power; by controlling it, it is easier to bring the head of the regional center to heel, and Shantsev's relations with him have become very strained. Shantsev began wresting land away from Bulavinov by publicly assessing the city's land-allocation system, calling it cronyism. According to him, all free plots are "covered by decrees" of the city administration, each with an owner intending to carry out some project on it. In reality, the governor said, a significant portion of the plots are held for speculation rather than being developed.
Nizhny Novgorod Mayor Vadim Bulavinov believes the amendments to the land law will harm entrepreneurs and city residents
Soon amendments to the law "On the Regulation of Land Relations in the Nizhny Novgorod Region" were submitted to the regional parliament. Already in July 2006, after heated debate, deputies of the regional legislative assembly approved a version of the law granting the regional government broad powers to manage land plots whose state ownership had not yet been delineated — which constitutes the bulk of the land.
However, the regional prosecutor's office concluded that the amendments violated federal law and had them overturned. As the prosecutor's office explained, in drafting the regional law the government had mistakenly treated all municipal formations and urban districts of the region as administrative centers, whereas under the Land Code of the Russian Federation the authority of regional government extends only to Nizhny Novgorod as the administrative center of the federal subject. The assembly deputies accepted the prosecutor's arguments and returned to the heads of local self-government — except the mayor of Nizhny Novgorod — the right to manage land plots. It was these amendments that the regional parliament approved the other day.
In practice, however, the change in the law did not affect the established order. First, in the autumn of 2005 the heads of local self-government signed agreements with the governor on the joint exercise of powers in land relations, effectively delegating their land-allocation rights to the regional government. All that remained at their disposal were plots of less than 200 square meters, suitable for small business projects. Second, the decision to grant a land plot for a specific business project is approved by the investment council headed by the governor, through which all applications of any real significance pass.
Under the adopted amendments, the Nizhny Novgorod authorities can no longer manage not only vacant lots but also built-up sites — the question of whether it is worthwhile to develop these territories is now also decided by the region, which also sets the starting prices at auctions. In addition, the city authorities must hand over to the regional Ministry of State Property the originals of the current land lease agreements concluded with the owners of real estate.
There are still other levers of influence
The governor defeated the mayor, but the Bulavinov administration still retained ways to take part in land matters — indirectly, but quite effectively nonetheless. Dual power took hold in the city, a possibility that Serikov, had warned about during discussion of the amendments to the law. Now the region controls city land, while city hall controls connections to utility networks, the development of the social-services network, and other related matters, without which owning land becomes a sheer punishment.
Even the "single window" — which, according to the regional government, was meant to cut the time for reviewing documents and making decisions from several years to two or three months — did not ease the situation. "Regulations and procedures, incentives for investors — all of that is spelled out clearly enough and raises no questions. The rules of the game are clear, but they are often hard to fulfill, — says Tatyana Kormilitsyna, deputy director of the Nizhny Novgorod branch of the law firm "Yakovlev & Partners." — For example, the governor's investment council decides on granting a land plot. But zoning the land, processing paperwork, issuing technical documentation — that's already the authority of the municipal government, which operates by its own rules. In addition, the regional monopolies "Vodokanal," "Teploenergo" impose their own conditions, and entrepreneurs cannot do without their services. This means the mechanism is still not fully worked out, and the share of subjectivity remains quite high." Olga Sazhina, marketing director of the company "Zhilstroy-NN," echoes her: "Being granted a plot by the investment council is still no guarantee that construction will start quickly — too much depends on approvals from city hall."
It is clear that the power struggle between the mayor and the governor cannot go on indefinitely, though for now it does not much hinder the investors who came to Nizhny from Moscow in Valery Shantsev's wake. Over the past few years, Moscow-based companies have firmly entrenched themselves on Nizhny Novgorod land. For instance, SU-155, through a joint venture formed with the regional government called "Nizhegorodkapstroy," obtained seven sites in Nizhny Novgorod and two in the region. And "Nizhegorodkapstroy," together with the Italian-British firm Dante O. Benini & Partners Architects, is developing a concept for a new satellite town of Nizhny — Globe Town in the Borskaya floodplain — worth about 700 billion rubles. Construction (which may logically well be carried out by the project's own developer) is set to begin in 2010.
Another Moscow-based company, "Barkli," together with the regional government, set up a development company called "Development of the Nizhny Novgorod Region" and through it leased 13 land plots in Nizhny, including 120 hectares on the waterfront at the confluence of the Oka and the Volga. Here, by decision of the investment council, a business center called Strelka City" will be built, with an estimated cost of about four billion rubles. Another major project — the construction of hotels, sports and entertainment facilities, and more than 1.2 million square meters of commercial real estate — will be carried out by the company on a 12-kilometer stretch of the Nizhne-Okskaya Embankment. Local investors can now only dream of such choice pieces of city territory.