The Kyiv City Council has condemned as illegal new commercial rents charged by the capital's administration as of June 1, and has advised businesses to ignore them. In a statement issued Wednesday May 28, the council's property commission advised businesses, still smarting from a steep rent hike ordered by the city administration in March, to pay rent according to the rates the council itself set in 1996. Council leaders said the administration's May 19 resolution raising business rents across the city contravenes the law on renting state property, as well as a Cabinet resolution on business rents. The administration's resolution divides the city into five zones, with different rent coefficients for each one. This brings prices down for buildings located far from the center, but forces big jumps in rents for businesses downtown. Basic rents are set according to the type of business located on the property. The new rate structure, as the one devised in March, has drawn criticism from the Kyiv Entrepreneurs' Union. The union's leaders accused city executives of promoting their own business interests. 'They've done it to drive businesses away from the center of town, and then lease free premises to 'their' organizations or investors,' said Viacheslav Doroshenko, head of the Kyiv Entrepreneurs' Union Information and Analysis Department. 'Basic rent prices went up, especially for restaurants, bars, casinos and advertising agencies,' said Doroshenko. 'Restaurants, for example, used to pay Hr 10 per square meter: now they have to pay Hr 20; rent for advertising agencies rose from Hr 20 per square meter to Hr 80, and so on.' Rostyslav Karandeev, head of the Kyiv administration's press service, said the administration believes that rental rates in the capital are too low. 'Kyiv is a city where super-profitable businesses are clustered, that's why we increased rent prices for these businesses. But for government-subsidized organizations or socially important organizations, the prices went down – regardless of their location in the city,' Karandeev said. Doroshenko also cast doubt on the administration's right to set rents, citing a clause in the law on renting state property which entrusts that responsibility to the City Council alone. 'As far as we know, the administration was not authorized to [alter rents] they exceeded their authority,' he said. However, Karandeev argued that the administration interprets the clause in the law authorizing the City Council to 'manage property' as applying only to sales of real estate. He said that the administration was following a presidential decree issued late last year which allows it to change rent rates. 'And even if there are some disagreements over laws, it's just due to their imperfection – one article prohibits you from doing something, and another one allows you to do it,' said Karandeev. He added that City Council resolutions are 'recommendations' rather than orders, and do not have to be followed. Kandareev put the union's accusations that the resolution was illegal down to 'the pre-election campaign of those political leaders behind the Kyiv Entrepreneurs' Union.' He challenged the group to seek a prosecutor's ruling that the city administration has exceeded its authority. Doroshenko promised to do that – and more: 'We're going to write letters to the president, the prosecutor and the premier asking them to stop this illegal resolution, as we did when a similar resolution was issued in March, and property rents skyrocketed,' he said.
