Банкеръ Weekly



The leisure industry branch sighed with relief at the news that the long-awaited draft bill on the Bulgarian Black Sea coast is at last ready and will be moved for discussion by Parliament in September. But instead of calming down passions (and reaching consensus between the municipalities and business) it inflamed them further. The accentsin the bill are several. First, the future law will ban construction during the active summer season, from May 1 till September 30. According to its provisions the seaside will be divided in two: zone A, including 100 m of the beach strip and 50 m of the coast in case there is no beach, and a 2 km-wide zone B behind zone A. Building shall be absolutely forbidden in the first zone, and a special regime of construction is projected for zone B. Buildings there cannot be higher than 17.5 m, the intensity should be up to 1.5, and the density - up to 30 per cent. Moreover, half of the territory of the resorts and the holiday villages is to be occupied by parks and gardens. The idea is that each visitor uses at least 8 sq. m of beach area. Consultative councils will be established with the governors of Varna, Dobrich and Bourgas. They will be approving each investment project worth BGN1MN-plus, which means practically all projects. The councils will include representatives of the ministries of regional development and public works, of the economy, of transport and telecommunications, of agriculture and forestry, of healthcare, of culture, of defence, and of internal affairs, and one representative of the seaside municipalities, of a nationally represented tourist agency, and of an ecological organisation. The responseson the part of mayors and of the branch are quite controversial. In end-September local municipal councils will come out with a single stance on the bill, supported by the Bulgarian Union of Architects, the BANKER weekly learned. The apprehensions are that the future law, drafted by the Ministry of Regional Development and Public Works, will practically stop the investment process, mostly in the small municipalities, which hoped good times were in front of them after the congestion of big resorts like Golden Sands and Sunny Beach. In its present version the bill will infringe the interests of the poorer southern coast, towards which serious companies show interest, especially to the village of Rezovo, said Petko Arnaudov, Mayor of Tsarevo. Various restrictions for construction on the beach are already in effect in our municipality. They are included in the so-called protected territories, which are 12 in number. On the other hand, the document is inapplicable to the resorts, because there are already too many buildings in Sunny Beach and Golden Sands. I don't mean to say the law is not necessary, but it should be in compliance with the actual situation and protect equally the interests of the State and of the municipalities, he explained. According to the Mayor of Tsarevo, the law on the seaside should had been passed prior the adoption of the Restitution of Agricultural Land Act. The beaches are not owned by the municipality, but by the State, and it should had thought about the compensation of owners whose plots of land were in immediate proximity to them. We'll witness quite a strange situation - construction will be allowed at a spot according to the currently effective law on settlements planning, and banned at a neighbouring place as it will be under the provisions of the law on the Black Sea coast, Mr. Arnaudov noted. His stance is largely shared by Maria Nedyalkova, Deputy Mayor of the Nessebar municipality. You cannot make rules that have been broken before. Restrictions are necessary, but they should not infringe the investors' interests. The law had to be passed long before the restitution of agricultural land and of plots from the State Forestry Fund. Private owners have already sold them to serious firms. Procedures for changing their status are going on at present and their outcome is not known. The draft bill is not clear in that respect, she said. The seaside municipalities are also sceptical about the projected establishment of consultative councils with the governors in Varna, Dobrich and Bourgas, defining it as a new attempt at centralization of power. Mayors cannot be deprived of having a say on the planning of their settlements and the approval of each investment project, to be implemented on their territories. Coordination with the consultative council is mere foolishness and unnecessary bureaucracy Petko Arnaudov is adamant. According to Maria Nedyalkova, a substantial gap in the draft bill is the lack of a term for approval of investment projects over BGN1MN. The members of the consultative council are representatives of central power. This means that the staff of municipal councils should be increased... The fate of rejected projects is not clear either. I am sure the bill won't be adopted in its present version, Ms. Nedyalkova said. Branch organisations are much more sparing to the draft bill, proposed by the team of minister Valentin Tserovsky. According to the Chairman of the Bulgarian Chamber of Tourism Tsvetan Tonchev, the provisions do not restrict investments in any way. They rather set order in the architecture and construction of the seaside resorts. We were praised earlier for building resorts and not something resembling towns. Holiday villages with low-rise buildings among greenery are always preferred, Mr. Tonchev pointed out. His colleague Blagoy Ragin from the Bulgarian Association of Hoteliers and Restauranteurs was of a similar opinion: It is absurd to say that entrepreneural initiatives would be restricted. We have 380-km long coastal strip, as on the Balearic islands. Investors have already turned their eyes north of Golden Sands and South of Sunny Beach. However, both Mr. Tonchev and Mr. Ragin admit that the projected stipulations for restriction of construction along the seaside hamper business somewhat. All the time I get calls and somebody asks me: Shall I buy land or shall I not?, Mr. Tonchev confessed to the BANKER.The effectof the still non-adopted law can be already felt in the seaside municipalities. The rumours about the forthcoming introduction of strict control on construction stirred up the real estate market and resulted in a boom of land prices, which reached EUR130-150/sq m. Due to the deficit of spare plots of land between Varna and Golden Sands prices there hit a record high level of EUR200/sq m. The interest towards plots of land near the sea has been rising over the last few years, local mayors say, but feverish hurry can be noticed this year. At the same time, tour operators and hoteliers predict a recession in the leisure industry branch in 2005, caused by the disturbed balance between demand and supply. The rate at which the number of beds goes up is higher than the rate of vacationers' growth. According to data of the Bulgarian Chamber of Tourism the beds this summer are 20% from last year. In Sunny Beach alone 57 new hotels with 70,000 beds were opened. The new hotels in Golden Sands are 20 and the number of beds increased by 7,000-8,000 this season. A reflux from big resorts can be noticed as well, at that in high season. This made some hoteliers offer discounts for Bulgarians in August. This was expected as the tourist product offered in Golden Sands and Sunny Beach is almost the same and covers only a small segment of demand. For sceptics recession is inevitable in 2005 as foreign tour operators will withdraw and stop to invest not only because of the unending confusion caused by construction that has not been completed in due term, but also because of the oversupply of beds. Prices have already reached a maximum level and cannot go up further. At the same time, there is lack of well-qualified personnel that would guarantee a high level of services. Oversupply could lead to much damage, Mr. Ragin admitted. The State should not sit with folded arms, but improve infrastructure, security and advertising, he recommended. The proposalsThe mayors of seaside municipalities hope that a much more liberal version of the draft bill (than the one proposed in June) will enter the plenary hall. Undoubtedly, provisions regarding the concessioning of beaches will be attacked too. The Varna municipality and the Riviera holiday village have proposed that concessionaires should not be chosen for just one season, but for at least three years, and that the concession fee should be bound to the minimum working wage. The Mayor of Tsarevo Arnaudov will insist that 50% of the concession fee should remain in the respective municipality, instead of 30% as stipulated in the draft bill. It's a paradox that the municipalities have no controlling functions on the beaches. Just imagine, there are 20 beaches in Tsarevo, let out to some 15-20 concessionaires. I get complains all the time, but I cannot react. And the holiday-makers want to keep the feeling of being near to nature. Alas, they cannot have that feeling even when they are at the beach, Mr. Arnaudov says.

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