Czech Republic: Town approves fence around privatized ghetto locality as investor fails to deliver

A locality on Škodova Street in the Czech town of Přerov over which local government is involved in a lawsuit with property owners will soon be fenced off.  The town council has agreed to the measure with the bankruptcy administrator for the firm that owns the property.

The securing of the locality, which was previously inhabited by Romani families, should prevent illegal garbage dumping and looting there. The fence will surround a 2 855 meter square area and the town will pay half of the cost of erecting it.

Six years ago the town sold an apartment house complex on the land to a private investor. The original plan to build multifunctional buildings on the ghetto site has ended up a fiasco.

The firm responsible has is now undergoing bankruptcy. "The bankruptcy administrator proposed the fence. It will prevent people from moving around and looting property there. It’s our obligation to take care of this, illegal garbage dumping has already begun there," Vice-Mayor of Přerov Michal Zácha (Civic Democratic Party – ODS) told journalists on Friday.

Fencing off the locality will cost up to CZK 150 000 total. Mayor Jiří Lajtoch (Czech Social Democratic Party – ČSSD) said the proposal was unanimously approved by the councilors.  

"This is for safety and so children won’t go to the work site. We want to avoid possible injuries and more illegal garbage dumping there," Lajtoch said.

This is not the first money the Přerov town council has had to spend to safeguard the locality since the privatization. Previously the council paid roughly CZK 200 000 to secure the devastated buildings there.

That money was used to board up entrances and windows. Six years ago the town sold the apartment complex to the Immofin firm, which later changed its name to Opera Bohemia, for CZK 1.5 million.

The firm promised to build new apartment buildings on the site. After it failed to fulfill its contract with the town, the local government decided to take the locality back.

The investor has been fined half a million crowns. Municipal leaders acknowledge it will be difficult to re-acquire the locality now. 

According to the website of the Czech Justice Ministry, the firm has been in bankruptcy proceedings since April. The Remedies firm has filed liens on the land against the CZK 7 million it loaned to Opera Bohemia to demolish the existing buildings.

Zácha says other creditors are also waiting for their money. The firm’s debts are estimated at several million crowns.

According to the bankruptcy administrator, the firm has no employees or money. The indebted CEO claims to have lost the company’s accounting records when he left them behind on a train.

The bankruptcy administrator is quoted on www.justice.cz as saying Opera Bohemia’s defense is that its plans were spoiled by the town’s failure to build a transportation line it had been counting on. The section of Škodova Street that was sold by the town to the firm included buildings with 81 apartments, 55 of which were occupied at the time of the sale.   

Four of the buildings have since been demolished; the town estimates the cost of the demolition at several million crowns. The bankruptcy administrator says the firm’s estimate of its costs (external to the purchase of the locality) is CZK 7 million.