The Adriatic Marinas company, which has been developing a project to build a luxury nautical and tourist center, Porto Montenegro, in Tivat since 2007, has contacted the Ministry of Spatial Planning, Urbanism and State Property (MEPU) regarding, as they stated, "the long-standing unresolved issue of compensation for utility infrastructure costs related to the Porto Montenegro project and the Municipality of Tivat."
On this occasion, the Government considered the Information prepared by the Ministry at its session last Sunday.
The document states that Adriatic Marinas managers, in their address to MEPU, stated that from the very beginning of the implementation of the Porto Montenegro project, the company "faced challenges related to investing and building the municipal infrastructure that was necessary to ensure the smooth development of the project."
"Since the Municipality did not have the necessary financial resources, and possibly the technical capacities, to implement the necessary infrastructure, they had no other option but to take the initiative and finance the construction of the necessary infrastructure. This was done with the expectation that, in accordance with the conditions set out in the Concession Agreement concluded with the Government, these costs would be reimbursed through compensation in the form of a reduction in utility fees when issuing building permits for the construction of facilities within the project," the Information states.
Management claims that “such a mechanism is provided for in the Concession Agreement and is often used to support complex multi-phase development projects”. However, Adriatic Marinas does not have a classic concession agreement with the state, but the Porto Montenegro project is being developed on the basis of the Agreement on the Purchase, Sale and Investment in Military Property of the Naval Technical Repair Institute “Sava Kovačević” Tivat and the Military Home Tivat, which were signed in October 2006 by the then Prime Minister Milo Djukanovic (DPS) and owner of the offshore company PM Securities from Barbados, a Canadian businessman Peter Munk as the sole bidder in the Government's tender for the sale of the Arsenal military shipyard.
This contract provided Adriatic Marinas, which emerged from PM Securities, with three consecutive 30-year leases of almost 300.000 square meters of land on the best part of the Tivat coast and several hundred thousand square meters of the Tivat Bay aquatorium, as well as the development of a real estate project with the construction of apartments and business premises for sale and rental on the market. The contract also stated the possibility of providing the investor with some benefits that were unknown either at the time or under the current legal solutions that apply to all other entities. Among them is the legally very questionable method of calculating possible discounts on utilities when building new facilities.
In the Information considered by the Government, MEPU states that the company informed them that they had recently held regular meetings with representatives of the Municipality and that they had "achieved a significant degree of harmonization of positions, but that, despite joint efforts, the issue had become extremely politically and technically demanding without additional support from the Government."
"Resolving this issue would remove existing obstacles to the further development of the Porto Montrenegro project and open up new opportunities for additional significant investments that would contribute to the further social and economic development of Tivat, as well as the creation of an even larger tax base and a greater number of quality jobs for the benefit of the Municipality," MEPU officials wrote.
They remind that the development of construction land "includes the preparation of construction land for communal equipment and communal equipment provided by the local government unit, in accordance with the planning document and the communal equipment plan", and that according to previous and current legislation, the development of construction land can also be carried out by an investor, i.e. an interested user of the space.
The Government, as we learn, has also adopted certain conclusions, but they have not yet been publicly announced, as is usually done with conclusions for almost all agenda items. Unofficially, “Vijesti” has learned that the conclusions mention the possibility of hiring experts to review all documentation, developed and paid for by Porto Montenegro, although this has already been done once, almost ten years ago, and that the Government calls on the Municipality and Adriatic Marinas to resolve the disputes “peacefully”.
The Municipality confirmed to "Vijesti" that they still consider the forgiveness of utilities to Adriatic Marinas in the amount of 5,6 million euros, which was carried out in 2018 by the decision of the then majority in the local parliament, which was held by the DPS, and the signature that the then mayor put on such a document with Porto Montenegro, to be questionable. Siniša Kusovac (DPS).
"According to the Municipality, Adriatic Marinas owes at least 5,6 million euros in utility fees in the long term. This amount was compensated in 2018, with the consent of the then Municipal Assembly, for works that the investor considered to be utility equipment for three luxury residential and commercial buildings within Porto Montenegro," the local administration reminded.
"The municipality disputes this compensation for two main reasons: the costs of demolishing old hangars, rehabilitating land and calculating the area of buildings built before 1945 were recognized. These are preparatory works for a private investment and do not fall under the concept of public infrastructure; a contract for communal equipment was never concluded with the investor that would specify the project, supervision, quantity survey and estimate, so the municipality has no basis to recognize these works as public investment," the local government explained.
The forgiveness of utilities, which no other investor in Montenegro had received before, also interested the EU delegation in 2019, which considered the resolution of this case extremely important for Montenegro's further progress in negotiations with the EU in Chapter 8 - Protection of Competition. In October 2019, the Agency for the Protection of Competition (AZZK) initiated a procedure to determine the possible non-compliance of the state aid granted to Adriatic Marinas with the Law on State Aid Control because it suspected at the time that the multi-million-dollar treat for utilities was state aid that placed the company in a privileged position.
The deliberations lasted for five years, and in October 2024, the AZZK finally came out with an official decision that the forgiveness of multi-million-dollar fiscal obligations was not state aid, and that therefore "there is no room for further examination of whether in this case there was any question of aid in accordance with the law."
The municipality filed a lawsuit against that decision of the Agency for the Prevention of Child Abuse and Neglect with the Administrative Court, and that procedure is still ongoing.
"The municipality is of the opinion that public revenue cannot be reduced by arbitrary interpretations of communal equipment, and that any future request for compensation for the communal equipment fee for land or exemption from it can only be realized through legally prescribed procedures," the mayor's office said. Željko Komnenović.
The local administration of Tivat confirmed to "Vijesti" that since 2007, when the construction of Porto Montenegro began, the total payment of fees for the communal equipment of the construction land of the investor Adriatic Marinas, by transferring funds to the Municipality's bank account, amounts to 10.377.117,36 euros. These funds have been collected for a total of 15 cases of construction of new residential and commercial buildings, hotels and facilities in the Porto Montenegro marina itself, calculated so far.
"Certificates of exemption from payment of utility fees have been issued for a certain number of infrastructure facilities, such as transformer stations and the like," the local administration stated, noting that the Municipality's ownership rights to newly built infrastructure within the Porto Montenegro complex "can only be registered on facilities that truly represent utility infrastructure."
"The works for which compensation was paid in 2018 in connection with the fee for communal equipment (demolition of buildings and rehabilitation of the terrain on the site of the former Arsenal) cannot be considered communal infrastructure, so the Municipality did not act on that basis. Infrastructure facilities that serve the public interest (roads, water supply, sewage, lighting) are generally registered with the local administration upon completion of technical acceptance in accordance with the Law on State Property. In this specific case, such facilities are registered with the state, so the Municipality will, as soon as the status of the disputed works is clarified, initiate the procedure for correction in the cadastre in order to bring its ownership in line with the law," the local administration said.
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