Housing and Communal Revolution: What Changes Should the Residents of Apartment Buildings Be Prepared for?

On July 29, 2014 the Cabinet of Ministers of Ukraine has passed to the Verkhovna Rada the draft law “On Housing and Public Utility Services", which completely destroys the old Soviet system of housing offices. Tetiana Zolotukhina, an expert of the Development Fund of the City of Nikolayev, explained in the public reception of the Ukrainian Helsinki Human Rights Union in Mykolaiv what we will get instead.

– Ms. Tetiana, please tell us, what transformations in the housing and public utility services can be expected by the Ukrainians?

– First of all it should be noted that the housing and utility sector (HUS) is a broad concept that includes the management of public transport, cemeteries, and parks along with provision of the public services. Discussing the draft law of the Cabinet of Ministers of Ukraine we are now focusing exclusively on the content and maintenance of residential premises in the apartment buildings, which are still supported by the housing offices. For reference, according to the statistics of the City of Mykolaiv: from among 3,007 apartment buildings of a total housing stock of the city only 10% have formed the condominiums (housing cooperatives).

– Why do we need to change an old housing management system?

– Over 23 years of independence of Ukraine the housing maintenance service has hardly changed compared to the “Soviet” period. Declared in 2004 the state policy of the housing and public utilities development remained only on paper. But for the last 10 years we see no expansion of the number of providers of the housing maintenance services. However, there is an explanation for it:

– In a local infrastructure the companies providing utility services are the actual monopolists in the industry.

– Utilities at the same time are under the jurisdiction of local authorities. This leads to the fact that the companies naturally go through extensive development (they are interested in a permanent increase in budget expenditures in the form of subsidies provided to them) and do not aim to provide comfort stay for the residents by improving the quality of housing maintenance services.

Therefore a resident further remains away from controlling the affairs of an apartment house. For instance, if he/she put forward demands to the housing office to count the services provided to him/her, for example, in 2013, he/she will be answered with a strong language. The cost of housing maintenance services is calculated per a house as a single engineering complex. That is there is an estimate of o house maintenance, and the resident takes part in this process only by the square meters belonging to him/her. According to the law, the housing office shall account its incomes and losses separately for each house. In practice, the situation is as follows: the housing office accounts its income responsibly, not only at a house basis, but also for each individual apartment, but it doesn’t account the costs of the house: it throws everything into one basket. So, it is almost impossible for a resident to find out the actual cost of services provided in his/her house.

But if our government considers itself a democracy, it must provide its citizens residing in the apartment houses, the right to decide on management of their houses by themselves. Under the current law on housing effective since 2004 they do not have such a choice.

The new draft law provides such a right as a possibility of self-organization of the residents of the apartment houses who can independently choose the house management services providers even without establishing the condominiums. In such circumstances at the meeting they will elect a management company that provides all the housing and utility services, is responsible for maintenance of the house, repairs, and will be accountable to the residents and will not depend on “trends” in the local government.

However, everyone understands that without the experience of holding such meeting residents of the apartment house, who include a variety of people in terms of income, social status, will not be able to do so. Most likely, that they will just swear with each other first. Therefore in such cases the transitional provisions in the draft law that can soon become the law, contain a rule, by which the local government shall appoint a management company.

– But won’t this lead to abuses by local authorities in form of imposing their members as the management company?

Before I answer your question I would like to note that all these years we have been imposed by the housing offices which did not fulfil their obligations to the residents of an apartment house. It should be the Prosecutor’s Office to control their activities. However, there is no defence for the way it acts. In addition, according to Decree of the Cabinet of Ministers No. 631 of 2007, the housing offices should be elected on a competitive basis for development of the public services market. Many years have lapsed from the date of adoption of this document, but any civilized market in this area has not formed. As in the absence of a competitive environment competition must create conditions for corruption…

As for the management companies’ destination, it is still necessary to be done, as it will not be so easy to gather the residents of apartment houses at the meeting. But a house should be maintained after the dissolution of the Soviet system of housing offices. There are such works as emergency management, trash removal, repair and replacement of elevators, preparation of the heating system to the heating season, etc., which should be continuously performed. The state simply has no money for this.

Therefore with the adoption of a new Law on Housing it will be impossible even to start the heating season without involvement of the management companies that have to do everything. So, in the absence of agreement between the residents of apartment houses transitional provisions of this draft law provide for their appointment.

That is this legislative initiative on the one hand completely breaks the system of housing offices, and on the other hand – provides for arrangements in a transitional period to help residents to get used to a new system of housing management. Indeed, under the new rules the responsibility for the house as an engineering design will be shifted from the state on an owner of an apartment.

– But all of these apartment houses usually need major repairs. Does this responsibility now come upon their residents?

This draft law does not even have the concept of “maintenance of apartment houses”. Instead we have the term “house management”, with free prices of such services. That is the price will depend on the results of negotiations between the residents and the house manager. The state sets only a limit tariff for management for the purpose of protecting the poor people, and charging subsidy benefits. Thus, the local government is completely removed firstly from determination of a contractor for maintenance services provision/ house management, and, secondly, from setting rates for residents.

Herewith, I would like to note the following: people who live in private houses carry out major repairs of engineering systems, structural elements (e.g. roof) of their own houses by themselves and at their own expense, and do not have any right to at least some compensation from the budget. Overhauls for the residents of apartment houses are carried out using budget funds (the house maintenance tariff does not include expenses for overhauls, and therefore, the resident of an apartment house does not pay for them). But “private owners” pay the same taxes in the budget as everyone else. That is there appears a disparity between them and the residents of the apartment houses. The new draft law equates the rights and obligations of all owners of the housing stock. Therefore, the residents of apartment houses will take care of not only their apartments, but the stairs, elevators, roof and yard. Because the local government does not have funds for it.

In addition, do not believe that the current cost of services provided by the housing offices is justified. The reason is that the fee for maintenance of houses and adjacent territory includes about 8 services, such as maintenance of elevators, garbage collection, cleaning of stairs and yard etc. Each of them has a special account. But it is not stated in the bills we receive at what rates they are counted. Therefore, the price given there may be inflated.

– How does a new draft law regulate the tariff setting for utilities?

The National Commission for State Energy and Public Utilities Regulation of Ukraine should control the price and tariffs for utilities such as cold and hot water supply and sanitation, heating, gas, electricity and even waste management (garbage collection). In this case local governments are suspended from the formation of tariffs for heat supply, water supply and drainage, as was formerly the case.

– Was experience of Western countries taken into account during the development of this draft law?

There are some parallels with the Polish laws in this area, however, such changes were introduced there suddenly, that is people fell asleep in the utility houses, and woke up in condominiums. Our legislators allowed for a transitory period for implementation of the provisions of a proposed draft law – from a year to a year and a half. Thus, in Ukraine the changes will not be so sharp and painful.

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