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29 September, 2011  ▪  Oleksandr Krasnohorodsky

Parking Corruption

Smart dealers fleece drivers for over UAH 100 million for parking in Kyiv

Parking attendants kept journalist Dmytro Fedorenko in a parking lot for over six hours, demanding a UAH 50 fee and refusing to present any documents authorizing them to charge it. They only let him go late at night after a police patrol intervened. Our colleague was shaken but unhurt – in some place the parking “service” involves beating recalcitrant drivers. It also comes to ridiculous cases such as when parking attendants demanded payment from the driver of a rescue service car. Such incidents are a consequence of non-transparent schemes developed by ex-Kyiv Mayor Leonid Chernovetsky’s “young team” and implemented in the parking business while he was in office. They are serving the new Kyiv administration as well.

WHERE THE MONEY GOES

Kyivtransparkservis has been the only official parking operator in Kyiv since 2007. It has the exclusive right to charge fees for using parking places along or on sidewalks or in so-called “nighttime” parking lots. The company charges UAH 11-13 per day for parking in the latter depending on the district. Daytime parking lots can only be serviced by this company, while nighttime lots can be rented out to entrepreneurs. An addendum to the 2011 Kyiv city budget specifies that the company has 1,166 parking lots, including 649 that can be rented out. The total number of car places it can operate is 100,000, according to a Kyiv City Council decision.

Over the past several years, Kyivtransparkservis had an estimated income of UAH 160 million but transferred no more than UAH 5-6 million a month. The administration explained this saying that the number of parking lots the company actually operates is smaller than the figure on paper. The reason is that district parking companies in Kyiv refused to hand over their parking lots in defiance of the above city council decision. Moreover, officials say that parking lots have never been filled to capacity and car owners do not always pay, while Kyivtransparkservis has high operation expenses. Until recently, the Kyiv city budget in fact only received the parking fee (a local tax) paid under the then current legislation by the drivers themselves. The fee was UAH 0.51 for one hour of using a parking lot place. As a self-sustaining business, Kyivtransparkservis spent the rest of the money on its own needs. It was virtually impossible to calculate how much its employees really charged drivers. No one cared to introduce non-cash payments. Kyivtransparkservis has a mere 57 parking meters to service its 1,166 parking lots.

NEW RULES

The new rules of the game came with the new Tax Code. Starting from January 1, 2011, parking operators must make advance payments to the city budget regardless of whether parking lots are actually used. The amount is 0.03-0.15% of the minimum day charge per square meter, i.e., UAH 0.28-1.41. In 2010, the city council set the maximum rates that Kyivtransparkservis was allowed to charge and made it mandatory for the company to pay UAH 2.8-6.7 per car place per day (regardless of the zone). However, it continued to pay to the budget one-fourth or one-fifth of the projected sums.

The council members decided to look into this sector to see what was really going on. They set up a temporary commission on Kyivtransparkservis in March, and presented its report in July. The report said that the company was unable to pay the required amount because it only serviced 20% of all the parking lots. Its contribution to the city budget was around UAH 12 million per quarter, which means that the city is failing to receive UAH 150-170 million per year from this source, the report said.

“Eighty percent of parking lots are now in the shadow sector,” says Yuriy Dmytruk, Kyiv Council member and chairman of the commission. “They continue to be controlled by either district parking services or private entrepreneurs who charge drivers fees without having any authorization. They do not transfer any part of these fees to anyone. Why this is so is a question for tax inspectors and law enforcement agencies.”

OUTSIDE THE LAW

New Kyivtransparkservis CEO Andriy Dudko claims that the company is already working hard to increase its contribution to the city budget. But will they put their money where their mouth is? It is hard to find a reasonable explanation for the fact that district parking services were not closed down, for example, immediately after the district councils were disbanded in Kyiv. (Four such district companies continue to operate and, according to the commission members, do not pay a red cent to the city budget.) Most experts agree that Kyivtransparkservis needs them to explain its modest official income. Specialists also doubt that the parking monopolist will pay the requisite amount to the city budget after the district companies are removed. Moreover, the council’s commission did not find even one violation in this company’s activities, which is exceedingly strange by itself.

“For several years, the administration of this communal enterprise did nothing to officially fix parking lots on its own based on planning permissions as required by the Land Code. It only kept promising to switch to non-cash payments,” says Dmytro Hnap, leader of NGO “Direct Action Committee.” “None of the 1,166 parking lots is officially assigned to Kyivtransparkservis. Moreover, it has purchased 57 parking meters with budget money since 2007, paying € 9,000 per item for several of these, while the Barrel-Ukraine company, which installs meters in all Ukrainian cities except Kyiv, charges USD 800 per unit.”

As the Kyiv City Council approved the commission’s report, it did not, for some reason, demand that the parking monopolist switch to non-cash payments in dealing with drivers and officially register the land under the parking lots as its property. The land is communal property now. The new parking rules set by the Cabinet of Ministers permit parking operators to refrain from making the changes. But experts believe that this contradicts the Land Code and common sense – in this case, Kyivtransparkservis may continue to claim that its parking lots were seized by unauthorized persons, refuse to pay parking fee receipts to the budget and conceal the real number of parking places. “In other words, Kyivtransparkservis will still have room for corrupt schemes,” Hnap sums up.

Viktor Hleba, ex-Deputy Head of the Kyiv Chief Architecture Department, concurs. “A parking lot registered as the property of an enterprise based on planning permissions cannot be taken away from it,” he explains. “But the way it is now, Kyivtransparkservis may claim at any moment that the police are doing nothing to help them clear their parking lots of unscrupulous competitors, while the prosecutor’s office even provides ‘cover’ for entrepreneurs who seized these lots using their own security guards and installing barriers.”

At the same time, it is impossible to obtain official permission for 60% of the parking lots in Kyiv. According to Hleba, they cannot be legally used for parking, because, contrary to construction standards and regulations, they are located too close to the façades of buildings and bus stops, on underground communications, on sidewalks that are too narrow and so forth. Neither the Sanitary-Epidemiological Service, nor the Ministry of Emergency Situations will grant their approval. This means that the majority of parking lots in Kyiv are outside the law.


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