The financing of Fawlty Towers

Townsquare.Fawlty Tower

The saga of the Mrieħel and the Townsquare towers is now entering a new phase, with the planning appeal stopwatch due to start ticking shortly –  most probably towards the end of the month. It is known that, so far, Sliema Local Council and a number of environmental NGOs will be appealing against the 4 August decision of the Planning Authority to approve the “Fawlty Towers” at Mrieħel and Townsquare Sliema .

Financing of the projects is next. The banks cannot increase their already substantial exposure to loans that are dependent on building speculation. Consequently, the developers will inevitably have to seek the involvement of private citizens and, possibly, institutional investors. Most probably, the process for financing the projects has already commenced; it will involve the issuing of bonds to the public and will normally be sponsored by a bank and a stock-broking agency.

The bank or banks and stockbrokers sponsoring the bond issue will have to ensure that the bonds are subject to an “appropriateness and suitability testing” subject to such direction as the Malta Financial Services Authority  may consider necessary and suitable. Also, in the light of past local unpleasant experiences, the Authority will undoubtedly be guided by the need to ensure  that prospective investors fully understand the inherent risks of the proposed investments.  It will also ensure that detailed information is published in the form of a suitable prospectus in which the small print is both legible and understandable.

Those who finance the high-rise projects should shoulder responsibility for their impact together with the Planning Authority and the developers. They will potentially make it happen, so they should carry the can. It is important to get this message through: those who will invest in the Gasan and Tumas bonds intended to finance the “Fawlty  Towers”  should receive more than a monetary return on their investment. The moment they sign up they will also assume co-responsibility – with the developers, the Planning Authority, the bank or banks and the sponsoring stockbrokers – for this projected development .

Word is going around on the need to boycott the services and products placed on the market by the Gasan and Tumas Groups. Journalist Jürgen Balzan, writing in Malta Today described these services and products as being wide-ranging (hotels, car-dealerships, gaming, finance and property) which easily impact on the daily life of a substantial number of Maltese citizens. However, such a boycott’s only link with  the “Fawlty  Towers”  would be through the owners.  It would be preferable for a boycott to have a direct link with the offensive action.  In this context, the forthcoming bond issue to finance the “Fawlty  Towers”  presents itself as a suitable opportunity.

A boycott is a non-violent instrument of protest that is perfectly legitimate in a democratic society. The boycotting of the forthcoming bond issue would send a clear message that people will not be complicit in further ruining the  urban fabric of Sliema and ensure that development at Imrieħel is such that the historic landscape is fully respected.

A social impact assessment, if properly carried out, would have revealed the apprehensions of the residents in particular the residents on the Tignè peninsula. But, unfortunately, as stated by Sliema Green Local Councillor Michael Briguglio, the existing policy-making process tends to consider such studies as an irritant rather than as a tool for holistic management and community participation.

We have had some recent converts on the desirability of social impact assessments, such as Professor Alex Torpiano, Dean of the Faculty for the Built Environment at the University of Malta. Prof. Torpiano, in an opinion piece published by the Malta Independent this week, stressed that spatial planning in Malta needs a social-economic dimension. Unfortunately, I do not recollect the professor himself practising these beliefs as the leading architect in the MIDI and Cambridge projects on the Tignè peninsula,  a stone’s throw from Townsquare!

Investing in this bond issue is not another private decision: it will have an enormous impact on the community.

Responsibility for this ever-increasing environmental mess has to be shouldered by quite a few persons in Malta. Even the banks have a very basic responsibility – and not one to be shouldered just by the Directors: the shareholders should also take an interest before decisions are taken and not post-factum.

I understand that the Directors of APS Bank have already taken note of the recent  statements regarding the environment by  Archbishop Charles Scicluna. As such, it stands to reason that APS will (I hope) not be in any way associated with the financing process for the “Fawlty  Towers”.  However, there is no news as yet from the other banks, primarily from the major ones – ie Bank of Valletta and HSBC.

This is a defining moment in environmental action in Malta. It is time for those that matter to stand up to be counted – and the sooner the better.

published by the Malta Independent on Sunday – 21 August 2016

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Tall Buildings : the advice ignored by the Maltese authorities

Ali report

 

“Tall buildings cannot be avoided in our times. The choice we have is whether to control them or else whether to put up with their future growth.” These were the concluding comments of a report drawn up by Professor Mir Ali from the University of Illinois at Urbana-Champaign USA after a visit to Malta in 2008 during which he met with and advised MEPA on the future of tall buildings in Malta.The report is entitled Urban Design Strategy Report on Tall Buildings in Malta.

Professor Ali’s report contains recommendations most of which are as relevant today as when they were originally drafted. Central to these recommendations, way back in 2008, was the need to draw a master plan addressing tall buildings and their impacts. “Lack of a master plan,”  Professor Ali stated, “results in uncontrolled developments and unpredictable impacts on urban life.”  The developed master plan,  Prof. Ali emphasised, should be “for Malta as a whole and for the selected sites for tall buildings, individually.”  Drawing up such a master plan with a reasonable level of detail will take time to carry out, a considerable portion of which should be utilised in consultation, primarily with the residents to be impacted. Certainly much more time would be required than the November 2016 target indicated by the government earlier this week.  A moratorium on the issuing of any development permit for high-rises until such time that a master plan has been discussed and approved would be a very reasonable course of action.

Professor Ali considered six sites, which were indicated to him by MEPA, as having the potential of hosting high-rise development. He proposed the following rank order : Qawra, Gżira, Tignè, Paceville, Pembroke and Marsa.  Such a ranking order by Prof. Ali is qualified by an emphasis on the substantial infusion of public monies which is required. Prof. Ali commented that if the number of sites are reduced to less than six it would be much better for Malta.

Professor Ali made a number of incisive remarks.

There is a need for an objective market and feasibility study for each project, which study should include the life cycle cost of the project. In view of the high vacancy rate of existing residential units, Prof. Ali queried the kind of occupancy expected of high-rises. Failure of high-rises will impact the economy of the whole of Malta which has no safety valve because of its size and lack of adequate elasticity, he stressed.

An efficient public transport is a fundamental requirement for the Maltese islands irrespective of whether high-rises are developed or not. But for the success of tall buildings “an integrated sustainable public transport system” is absolutely necessary. Yet, surprise, surprise, Professor Ali observed that “there is no efficient public transport system that is efficient and that covers the whole of Malta”

Sounds like familiar territory!

Infrastructural deficiencies must be addressed. If the existing infrastructure is inadequate or in a state of disrepair it must be upgraded and expanded to meet future needs. Tignè residents in Sliema have much to say about the matter, not just with reference to the state of the roads in the area but more on the present state of the public sewers! Residents of the Tignè peninsula are not the only ones who urgently require an upgrade of their infrastructural services. Residents in many other localities have similar requirements.

Social and environmental impacts of tall buildings must be considered thoroughly at the design stage. However Maltese authorities have developed the habit of ignoring the social impacts of development projects. In addition, it is very worrying that, as reported in the press earlier during this week,  Prime Minister Joseph Muscat does not seem to be losing any sleep over the matter.

People living in a low-rise environment consider high-rises as intrusive. Unless public participation is factored in at a very early stage through planned beneficial impacts on the community in terms of economic benefits, upgrade of services and the general benefits of the redevelopment of the surroundings, such projects do not have a future.

The upkeep of high-rises is quite a challenge which requires skills that are different from low-rise buildings. Notwithstanding changes to the relevant provisions of the law, there already exist serious difficulties in bringing together owners of low-rise multi-owned properties in order that they can ensure that maintenance of such properties is addressed. The challenge of high-rises is exponentially more complex.

The above is a snap-shot of Prof. Ali’s report. From what I’ve heard from a number  of people who met Professor Ali, he was more vociferous in his verbal utterances. Unfortunately,  his advice has been largely ignored.

 

published in The Malta Independent on Sunday – 26 June 2016

Gozo Channel: tunnelling discounts

discounts

 

When the current Gozo Channel tunnel debate was initiated around five years ago, the then Minister Chris Said went on record to emphasise that the proposed tunnel, to be bored under the seabed would cost approximately €150 million. This estimate has now been upped to €300 million.

This is one of the basic assumptions underlying the study commissioned by Transport Malta, together with the Gozo Business Chamber, and carried out by E Cubed Consultants Ltd, commonly referred to as the “economic and financial feasibility study”.

The study makes interesting reading as it considers the economics of the so-called permanent link between the islands of Gozo and Malta. I respectfully submit that the conclusions of this study are as valid as the basic assumptions which underpin it.

I draw the attention of readers to the fact that proposals for various tunnels are currently under consideration in other countries.

The first is the proposed Trans-Pennine tunnel, intended to improve the transport links between Sheffield and Manchester in the UK. The ambitious 18- mile (29km) tunnel would be built under the A628 Woodhead Pass. After having established that the geology of the Pennines was suitable for such a project, it was estimated that the approximate cost would be a staggering £6 billion (€8.40 billion).

The second UK project is the much-debated and controversial tunnel at Stonehenge. Intended to upgrade the A303 road, it is projected to have a length of 1.8 miles (2.9 km) and is currently estimated to cost £490 million (€700 million).

Another projected tunnel, recently given the green light, will pass between the Danish island of Lolland and the German island of Fehmarn. Construction work on this 19 km tunnel should start next January and it is estimated to cost €8.7 billion.

The estimates for the proposed tunnels in the United Kingdom indicate that the cost of a 10 km tunnel would exceed the €2 billion mark, even before taking into account the fact that excavating below the seabed would cost substantially more. In addition, the Danish/German tunnel indicates a pro-rata cost of €4.7 billion for a 10 kilometre tunnel.

In addition, the geological parameters below the Gozo Channel are still largely unknown: geological studies have to be carried out and examined in detail in order to establish the facts. Without these facts, the basic information necessary to take essential design decisions is still unavailable. What is known is worrying enough: the presence of active geological faults running right through the proposed route of the tunnel.

The study’s conclusions – that the proposed tunnel is economically viable – have  been reached prior to the carrying out of geological studies. Even the estimated costs used in the economic viability study have been established before these essential geological studies.

In this type of project, no estimate of costs can be precise – especially if it is not based on adequate and essential information.

This indicates that the conclusion of the economic viability study was premature.

In addition to the geological studies, additional important (and essential) studies have (as far as is known) not yet been commissioned. These include studies on the environmental impact, business impact and social impact.

Once concluded, such studies will inevitably point to other issues that will require detailed consideration, including the extent to which the projected permanent link between Malta and Gozo will toll the death knell for holiday accommodation in Gozo: hotels, flats and farmhouses.

The above indicates that, unless the promoters of the tunnel have some cast-iron guarantee of substantial discounts on the costs, the proposal is a non-starter even before any consideration of the environmental, business and social impact. It is about time to begin serious work on the practical alternative: a fast ferry service between Gozo and the Grand Harbour.

published in The Malta Independent on Sunday : 6 December 2015

Environment Policy and the Budget

The National Environment Policy Issues Paper, launched by the Parliamentary Secretary for the Environment, Mario de Marco, on July 27 requested the views of the public on a move towards a taxation system that “penalises pollution rather than jobs”.

When launching the 2011 pre-Budget document on the same day, Finance Minister Tonio Fenech was more clear as to the government’s intentions. Under the heading Tax Shifting, he proposed the shifting of taxes from economic goods to economic bads. The pre-Budget document goes on to say: “In order to incentivise the creation of work by making labour less costly we are proposing the lowering of government-induced employee costs as well as corporate and income taxation.” The pre-Budget document then praises the merits of a carbon tax as a fiscal tool.

It seems that both the minister and the parliamentary secretary have forgotten that taxation does not penalise jobs. It is an instrument for the attainment of social solidarity. That is what the post-1977 Nationalist Party I remember was in favour of. It seems that time has changed the PN. It cannot be anymore described as being “un partito di centro che guarda a sinistra” (a party of the centre that looks to the left), as the old guard, quoting Alcide de Gasperi, justifiably boasted.

The drafters of the documents launched could have consulted the Cabinet-approved National Sustainable Development Strategy for the Maltese Islands (page 59), which established 2008 for the conclusion of a strategy on environmental taxation. The year 2008 is 32 months away and the strategy on the use of economic instruments to regulate environmental impacts is still not in place. Instead of asking for views of the public they should have drafted the strategy that has been promised but not delivered. It could be a useful guide for the finance minister.

At issue in this debate on tax shifting are points already emphasised during the eco-contribution legislation debate in 2004/05. Which ministry will be in the driving seat of environment taxation policy: Finance or the environment? Will the primary objectives of environment taxation be environmental or fiscal?

The strategy to be adopted and, thus, the specific proposals to be brought forward will depend on whether fiscal policy is used to regulate and reduce environmental impacts or whether the environment will be used to compensate for shortfalls in tax revenue.

After 17 years, the government has woken up to the proposals of a Jacques Delors EU White Paper in 1993 on growth, competitiveness and employment [COM (93) 700 final] who had the argued in favour of taxing environmental impacts and resource use.

In its 2008 electoral manifesto, the PN promised it will reduce income tax in the higher bands. It is now seeking ways to deliver without subjecting the Exchequer to further problems. It is very unfortunate that an inappropriate tool was selected. As a result of the tax shifting proposal, a tax, which is socially progressive (income tax) will be partially substituted with a carbon tax that, viewed on its own, can be socially regressive. The proposal aims to reduce taxation from a band which is paid mostly by companies and those who have a substantial income. To compensate for the resulting shortfall, it will spread the tax-load on everyone without discrimination, irrespective of their means.

Once the government decided on the reduction of the higher band income tax, I understand that it did not have much of a choice. In order to ensure a regular flow of income, which would have to substitute a reduction of the forfeited income tax, it had to select a subject in respect of which (at least, in the short term) demand is largely inelastic to tax-induced price changes.

It would be interesting if any studies on the impacts of the pre-Budget tax-shifting proposal are available. Such studies should clearly demonstrate the two basic flaws of the proposal: first it’s being socially regressive and, secondly, it’s exploiting of the environment as a tax revenue generator without ensuring environmental improvement as a primary objective.

If environmental improvement was a primary objective, the projected tax revenues would not be generated as they would be reduced gradually, in line with environmental improvement.

A carbon tax would force business and industry to address their environmental impacts. However, the impacts of a carbon tax on SMEs and households have to be assessed more carefully before policy declarations are made in view of the limited size of the former and the lack of resources of both. Given that most of Malta’s business is in the SME sector, matters should first be studied in their proper perspective before declarations are made or decisions taken.

There are various alternatives to the government’s proposals. Each one of them must however be tested through studies to ensure that the social and environmental impacts of fiscal policy are either positive or else substantially mitigated.

Studies made must be available at this stage. Otherwise, the discussions on both the National Environment Policy and the pre-Budget document would be just kite flying exercises.

 

published in The Times Saturday, September 4, 2010

 

Past mistakes, present-day decisions

by Carmel Cacopardo

published on Saturday June 12, 2010

___________________________________________________________________________________

“Our environment is too small to afford to suffer any more mistakes than we have already committed in the past, sometimes even in the name of tourism and progress.” This was not stated by AD chairman Michael Briguglio but by Parliamentary Secretary Mario de Marco with reference to the pending Ħondoq ir-Rummien Mepa application (The Sunday Times, May 30).

In considering large projects for development permission, the Malta Environment and Planning Authority is not considering environmental and social impacts adequately, opting instead to focus on perceived short-term economic gains. Unfortunately, the paths leading to decisions are guided by experts who should know better.

Some time ago, Mepa approved the extension of the Malta Freeport. In the process, it ignored that such an extension gobbled up the existing buffer zone established way back in 1995. The end result will be a Freeport operating area that is much closer to the Birżebbuġa residential area. The Freeport as it is operating already severely impacts the daily lives of the Birżebbuġa residents. Making things worse will only raise tensions and the loss of at least part of the accumulated social capital of the locality. No amount of mitigation will ever restore what is being lost with Mepa’s blessings.

In deciding on the matter, Mepa has been misguided by an EIA process, which, being financed by the developer, had an interest to shift attention on the over-emphasised perceived economic gains, simultaneously downplaying social and environmental impacts.

The Ħondoq ir-Rummien project seems to be the next issue which further highlights the developing tensions between the residential community and those interested in making a fast buck. The proposal, which involves substantial rock excavation, aims to develop a 170-room hotel, 25 villas, 60 self-catering apartments, 200 residences, parking space and a 150-berth yacht marina.

This proposed development will squeeze out the current uses at Ħondoq ir-Rummien. It will conflict with the public recreational uses the Gozitans and Maltese alike make of the area.

Jeremy Boissevain, in a report commissioned by the Qala local council, has highlighted that the massive scale of the project will practically double the Qala population. The local community has not accepted the proposed intrusion into their lives, which the proposed project suggests. As evidenced by the local referendum held in Qala some years back, the community does not consider the economic aspect on its own. Rather, it should be weighed and compared to the environmental and social impacts it will necessarily generate.

The social and environmental externalities of the project are being repeatedly downplayed by those who want to cash in on the economic benefits such a project will undoubtedly generate for the few. After having cashed in the benefits of property speculation aimed at a 70 per cent foreigner occupancy target, they will then leave the community to carry the burdens and pay the costs, deprived of basic facilities which, to date, have been much used by the public.

Mepa has yet to decide on this project and there is no way of knowing the direction such a decision would take. It is however logical to assume that the line of reasoning the current Mepa board has applied in other cases is of relevance. Hence, the validity of Dr de Marco’s warning on the need to ensure that past mistakes are not repeated, not even on behalf of  “tourism and progress”.

The government is aware that, to date, it has given conflicting signals. Very late in the day, it is realising that it cannot run with the proverbial hares while simultaneously hunting with the hounds. The current state of affairs is the direct result of the ambivalent attitude to environmental issues by politicians from the major parties which have developed the skill of quickly switching mode depending on their audience.

The causes are various.

AD is on record as pointing to two immediate solutions: firstly regulating the funding of political parties and, secondly, for the government to share with the community the process of appointing the Mepa decision-makers, by having the appointees subjected to a public hearing prior to their being appointed.

The major political parties are hostage to the construction industry. This is also evident by the reluctance of Parliament to legislate on party political funding. The parliamentary select committee appointed two years ago has, to date, been ineffective in this respect. Likewise, the Mepa reform process will result in a wasted opportunity, as while it will tinker with a number of issues, it will retain the most essential matters requiring reform untouched.

It is one thing to speak on past mistakes and quite another to move up the learning curve. Past mistakes will most probably be reflected in present-day decisions. At least for the time being.

I hope that I will be proven wrong.

original at Times of Malta website

Overdevelopment of the Tigné peninsula

_________________________________________________________

by Carmel Cacopardo

published on April 10, 2010

The publication of the State of the Environment Report (SoER) for 2008 is an opportunity to take stock of the manner in which environmental responsibilities are being shouldered or neglected. One point the SoER fails to inform about is the link between overdevelopment and a negative social and environmental impact on the community.

Tigné peninsula in Sliema is a suitable example.

Two of the mega-projects in Tigné, namely the Midi and Fort Cambridge projects, have government fingerprints. The social and environmental impacts on the Sliema community more than outweigh the economic benefits derived. Yet, they have been given the go-ahead. While these two mega-projects were approved by Mepa, a third (Townsquare) is being processed. Other projects of various sizes and impacts have been approved or are in the pipeline both in Tigné and in other parts of Sliema.

Focusing on the macro-scale, three main issues need to be addressed: vacant dwellings, traffic generation and the quality of air.

In my opinion, given the large number of vacant dwellings, further large-scale development is not required. About 54,000 vacant dwellings were identified during the 2005 census and this number has been on the increase ever since.

Newly-constructed dwellings may or will be occupied but they are still the cause of a disintegration of the existing urban fabric in various localities as a result of an internal migration away from existing settlements.

Some areas are being depopulated, awaiting their turn to be demolished and redeveloped after someone makes a quick buck. The few remaining tenants are then squeezed out by “developers”. Some years back, an old lady at The Strand, Sliema, was faced with buildings being demolished all around (and above) her home in order to persuade her to move out.

This is resulting not just in urban decay but also in the forfeiture of an accumulated social capital.

This is not surprising in a society that only appreciates financial capital. Unfortunately, public authorities are on the same wavelength.

The 710 vehicles on the road per 1,000 population (2008 figures) is substantial. In a small country, rather than being a sign of affluence, this vehicle per capita ratio is the clearest indicator of the failure of public policy to address issues of sustainable mobility over the years. Past governments have been ineffective in this respect. The large number of dwellings being constructed at Tigné peninsula begs the question as to where the substantial additional traffic generated is to be accommodated. I am referring to both the traffic directed at the new residences and that directed towards the new commercial outlets. Roads in Malta are already bursting at the seams.

When Mepa is approving more intensive development through the construction of high-rise buildings, it is not giving sufficient weight to these impacts. In particular, it is ignoring the cumulative effects of so large a number of developments in so restricted a space.

A Strategic Environment Assessment (SEA) of the local plans and planning policies would have pinpointed these shortcomings had it been carried out. Yet, the government tried to wriggle out of its responsibilities by clinging to a loophole, which exempted it from applying the SEA to policies on land-use planning. This has been done by a government that boasts about the central importance of the environment in its electoral platform. Yet, when push comes to shove, it wriggles out of its commitments.

Quality of air data is only made available relative to 2006 and 2007 in the SoER indicators.

Limiting my comments to the 2007 data relative to the Msida station, the available SoER indicators clearly show that PM10 measurements exceeded the EU limits on 24 per cent of the days measured and were very close to the permissible limit of 50μg/m3 with respect to the rest.

PM10 measures particulate matter, having a diameter not exceeding 10 microns. The primary source of such particulate matter, as is also emphasised by the SoER indicators, is fuel combustion from traffic and power generation. It is therefore clear that heavy traffic increases the incidence of PM10 with the consequent risks of a greater incidence of respiratory diseases. Studies carried out in Fgura and Żejtun in the 1990s point in this direction too.

These are the risks posed by an increase in traffic in an area such as Sliema, which is already heavily congested.

The issue of development has so far been considered within the framework of the rights of the owners of the property to be developed. It is about time that the rights of the community are factored in as, to date, they are not being given sufficient weight. In particular, the cumulative impacts of development are being ignored. This is applicable not just to Sliema but to all Maltese territory.

The net result is a quality of life which could be much better.