KYIV, July 19 -- The construction of Troyitskiy, a new Kyiv trade and entertainment center that has already consumed millions in construction costs is in danger of major delays and possible destruction because of its location within a few hundred yards of the stadium that is scheduled to host the 2012 European football championship. While the Ukrainian investor in the project has lost its project partner and is looking for a new one, state officials are looking for the ways of complete construction liquidation.

Expenditures on the Troyitskiy project, located in the area between Respublikansky Stadium metro station on Kyiv's Tchervonoarmieska Street and Olympic stadium, are reported to have reached $50 million since 2002.  This new trade and entertainment complex is expected to become the best one in Eastern Europe, said Serhiy Ovchinnikov, a coordinator of the project and deputy head of the board of NEST, a Ukrainian real estate developer and shareholder of the Troyitskiy project owner - company Yudzhin.

According to the construction plan, the new center would occupy 106,000 square meters with parking place for 1250 cars, a food supermarket and retail shops, cinemas, cafes and restaurants, with areas for entertainment, offices and apartments. Total investment needed to complete the project has increased by $20-40 million, compared with the initial investment plan.

"The investment will be about $120-140 million because materials have become more expensive," the coordinator explained.

"The location is really attractive. It is situated in the center of the city, giving us an opportunity to build a center on the world level," Ovchinnikov said.

Conception of the Troyitskiy Center as it would appear upon completion

However, it is the place that has caused the threat of plan frustration. Trade center Troyitskiy sits very close to the front side of the stadium that has been announced as the venue for the final championship game of the European football championship Euro-2012. 

The surprise announcement earlier this year of the award to Poland and Ukraine of the Euro-2012 championship series was perhaps the greatest single tourism and development news in the entire history of the two countries. The Euro-2012 opening match is scheduled for Warsaw's 70,000 seat National Stadium with the final championship game scheduled for Kyiv's 83,450 seat Olympic stadium. Both Poland and Ukraine plan rehabilitation and expansion of the two major stadia that will start and end Euro-2012, considered by most as second only to the Olympics in importance and drawing power. Other matches will be held in Poznan, Wroclaw and Gdansk, Poland, and Donetsk, Lviv and Dnipropetrovsk, Ukraine.

The importance of Euro-2012 to both Ukraine and Poland is so great that most observers believe that some major changes or perhaps even dismantlement of the Troyitskiy project may be on the cards. The Observer's interviews with state officials seemed to bear out this widely held idea.

"According to the conception of safe spectator evacuation that was handed to UEFA (in 2006) this trade center is not wanted because there should be gangways of 50 meters and 70 meters for sidewalks... Human security is in first place today," Ivan Fedorenko, the acting director of Euro-2012 in Ukraine, told the Observer on July 17.

Thus, the conception submitted by the Ukrainian side during its presentations to UEFA, generally regarded as the most prestigious and powerful football body in the world, appears to make realization of the Troyitskiy center project as originally planned impossible. Fedorenko explained that the three-belt security control system required before matches and Ukraine's guarantee that evacuation of attendees at matches could be accomplished in 15-20 minutes means that the area where Troyitskiy now sits would need to be free of obstructions. In addition to the final, Olympic stadium is expected to host three group matches, and the quarterfinal, each of which is subject to the same restrictions. 

"Since the start of construction work, the stadium has been filled not more than on 50 percent," he added.
Consequently, meeting UEFA's requirements as agreed in the contract to host the games appears to mean that the trade center cannot be completed. Moreover, part of the complex framework has to be pulled down.

NEST started work on preparing the base for the complex in 2002. Ovchinnikov said they were working under difficult conditions because of underground waters and communication lines. This took a considerable amount of time and money. Despite all existing and possible future difficulties, the company didn't refuse to build near Olympic stadium because "Kyiv's problem is an absence of free space," said the coordinator.

Fedorenko emphasizes that the project owner was warned not "to proceed above ground level," with preparations.
In 2006 the developer was required to stop all work by a decree signed by then-Kyiv mayor Oleksandr Omelchenko. Today, there is still no obvious work seen on the site. 

Ukrainian NEST and the Lithuanian real estate investor and developer Hanner have participated in the construction as shareholders of the company that owns Troyitskiy. Nevertheless, the work stoppage in 2006 and the continuing uncertainty changed the shareholding structure of the future complex owner.

"The Lithuanian investor refused to continue participation in the project because of the unclear political situation and uncertainty as to how long this stoppage would last," Ovchinnikov said.

"We know what company we see as a possible shareholder, but we are not ready to name it now," he said about future investment prospects.

According to the source, NEST has a really serious candidate as a possible project participant that is already working on the Ukrainian real-estate market.

In spite of the problems, Ovchinnikov said that Yudzhin now has all necessary permissions for building and promises to renew works in September and finish in 14 months after that.

"We don't want to quarrel with someone and be at law. We want to finish with this situation and continue work," he said, underlining that Yudzhin is ready to help with reconstruction of exits and stadium fence as well.

While investors consider the situation around their project is caused because of prevention of someone's plans, Fedorenko explains the situation with simple lack of responsibility among Ukrainian officials.

"Frankly speaking, I think that most of those who signed [the conception given to the UEFA] didn't believe that we would get the right to conduct Euro-2012," he said.

Polish and Ukrainian officials celebrate after win announced

Presenting documents with all necessary guarantees to the UEFA in 2006, the Ukrainian side didn't pay attention to the fact that their guarantees about spectator evacuation were in conflict with the Troyitskiy construction and the company's right to the land plot for 49 years.

The future of the project is in the city authorities' hands. President Viktor Yushchenko asked Kyiv mayor Leonid Chernovetsky to solve the problem as quickly as possible.

"I am sure that conducting Euro-2012 can't be a hostage of any local or central collisions," he stated.

Unfortunately, after repeated attempts the Observer was unable to get any comments on the situation from the city administration.

Market insiders call the situation with Troyitskiy a "conflict of interests" and state that the future of the project depends on connections of conflicting sides. 

"Legally the construction can be pulled down if it upsets the general plan of the city or the owner [of the project] does not have necessary permissions," Chinvi Mgbere, the head of development department in the Project-Management Business Consulting, explained.

"But the project has already got some political shade," he added.

In this case, if the city administration decides to pull down the construction and to reverse permission on the land, it would be obliged to pay all spent money back to the investor. Vladimir Stepenko, the PR department director in the real estate consulting company SV Development, said the city would count minimal expenses on the construction and pay them to the investor. However, this sum would definitely be less than real expenditures.

"Any way, this situation will be solved in favor of that side which has more contacts, not even money," he concluded.
Troyitskiy could become the top trade and entertainment center in Ukraine, but there is also a chance it will be the first project pulled down after significant investment and five-years' work put into it.

The sums that might have to be paid by the state, probably from Kyiv city coffers, to pull down the Troyitskiy project could be quite large. However, when viewed in the light of the overall investment and development expected by both Ukraine and Poland, the cost of removing the Troyitskiy project would be, as one observer put it, "chicken feed."

At the initial meeting of Ukraine's Euro-2012 coordinating committee, Vice Prime Minister Dmytro Tabachnyk suggested to President Viktor Yushchenko and other members that Ukraine would need to raise $18 billion to cover the cost of infrastructure and other costs of Ukraine's participation in the championships. However, the respected German news service, Deutsche Welle, reported on July 8 that Ukraine plans to spend a considerably larger sum, 20 billion euros, with Poland's spending set to exceed 30 billion euros. Of course, the fiscal pain would be much less for Poland, since the European Union has already budgeted 29 billion euros in support to Poland for games preparation.

For both countries, gaining the rights to host the UEFA Euro-2012 championships is an almost incalculable prize. The amounts of money that should and will be spent on new roads, highways, metro expansions, new hotel construction and tourism infrastructure will represent a quantum development leap for both countries.

If UEFA insists on Ukraine making good on its promises so far as such issues as ability to evacuate venues, as it almost certainly will, it seems likely the Troyitskiy project will be seriously altered and possibly even partially or completely removed. Ultimately, the numerous errors that seem to have been made in the handling of this matter will almost inevitably become a matter for the taxpayers of Kyiv and Ukraine to set right.

The source: http://www.ukraine-observer.com