Rent Historic Moscow Building for One Ruble — But You Gotta Fix It Up First

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Andrey Rudakov / Bloomberg / Getty Images

The Moscow skyline, April 18, 2011.

This post is in partnership with Worldcrunch, a new global-news site that translates stories of note in foreign languages into English. The article below was originally published in Kommersant.

(MOSCOW) — The Russian capital may have found a new path to an urban facelift.

As part of an innovative new program to promote restoration of the city's landmarks, Moscow held its first historical building auction this week. The program allows the city of Moscow to rent historical buildings in need of restoration for the symbolic annual sum of 1 ruble (about three cents) per square meter, on the condition that the renter has completely restored the building.

Based on this first auction, which included three historical buildings in various stages of disrepair, the program looks promising. The first buildings included two city-owned mansions and an apartment building, ranging in size from 705 square meters to 993 square meters. The apartment building is half-destroyed, and of the three was the only one on the city's list of landmarked buildings whose condition is classified as "dangerous."

This auction comes after the city's government confirmed its commitment to a revolutionary scheme to restore the city's architectural heritage this past winter. According to the program's rules, investors will be offered a 49-year lease on buildings in "inadequate condition," and they will pay the market rate rent until the restoration work on the building is complete. Once the work is complete, Moscow's Heritage Commission will reduce the rent to a symbolic 1 ruble per square meter, which will be in effect for the remainder of the lease. But the investors must complete the restoration within five years of signing the contract, or face a fine.

Moscow's Heritage Commission has indicated that there are a total of 244 historical buildings in a precarious state that it would like to have renovated through this program, and has said they have 50 applications from potential investors.

Upfront costs

At Wednesday's first auction, there were nearly 20 participants competing on the market-rate rent they were willing to pay for each of the three buildings. The yearly market-rate rents, at the end of the auction, ranged from $470,000 to $682,000. The auction documents stated that the investors had to pay the first years' rent upfront when they signed the contract with the city.

The Heritage Commission also clarified that the reduction to 1 ruble would take effect only after the investor shows the city Buildings Department a certificate of acceptance of the restoration work from the city's Heritage Commission. The restorations will be held to high standards, and shoddy restoration will not be accepted. One of the heritage commission's directors specified that all three buildings are expected to look as they did in the 19th century.

The developer MR Group has say that the cost of restoration for the buildings in question could range from $2,500 to $10,000 per square meter, depending on the building's condition. Based on the yearly market rate rents at the auction, the restorations would cost the same as four to 15 years of rent.

Konstantin Mikhailov, coordinator of a historical preservation non-profit association in Moscow, said he welcomes the new program, and is happy that the city has gotten away from "intentions and protocols," and started a real program. He says he hopes that the Heritage Commission will monitor the work closely. "You have to make sure that the auction winners follow the law when they restore the building," he said.

The Heritage Commission has already submitted documents to the city government in preparation for auctions on 19 other structures in precarious condition.

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