Cyprus Mail
Cyprus

‘No more empty promises,’ Larnaca tells hotel developer

larnaca

LARNACA deputy mayor Petros Christodoulou said on Thursday that the town has had enough of empty promises for investments and wants to see actions instead, following criticism from a Russian businessman that the municipality is dragging its feet in the project that will see a 5-star hotel complex on the Phinikoudes beachfront.

Nicolay Potapenko, whose company Lanomex Co Ltd bought The Kimon Project from Lefkaritis Bros in 2014, slammed the municipality on Wednesday for stalling in the construction of the luxury hotel that is expected to cost €120m.

Kimon was designed to include a luxury hotel with 120 suites, and a second complex to feature flats, shops and offices overlooking the beach. The project was designed to exceed 70 metres in height, and was set to extend from the current location of Hobo’s restaurant to an adjacent plot that used to host the Larnaca municipality. The initial agreement between Lefkaritis Bros and the Larnaca municipality had been terminated as timeframes agreed on had not been adhered to.

But in an announcement Lanomex sent to daily Politis, the Russian investor claims that the municipality has been inflexible as regards €5m owed for the purchase of the plot that was municipal property.

Under the agreement signed between the company and the Larnaca municipality, that money would be paid in four instalments. The first payment of €1.5m was already made last year, while upon the second instalment, whose deadline was in November, the municipality had to issue a building permit for the project.

In its latest report on local government the auditor-general’s office, however, expressed concerns over the agreement as the company did not pay the €1m as the second instalment, nor did it file for a building permit, which would lead to a delay in the commencement of construction works, “with the risk for the plot to remain burdened, while the municipality will have received only part of the agreed sale price”. The audit office urged the municipality “to take all necessary measures to safeguard its interests”.

Potapenko claims, according to the announcement, that one of the problems as regards the delay is that he is having trouble evicting the tenants that lease establishments in the property he bought, at least not without time-consuming procedures, and despite their contracts expiring some 12 years ago. “Cyprus is the only European country where owners have no right of recourse in the legal system to force tenants to vacate the property for its timely redevelopment,” the announcement said.

According to rent laws in Cyprus, tenants cannot be evicted if they refuse to. This is usually settled through the court.

The company also said it has suggested a three-month grace period for the next instalment “until a realistic timeframe is set and definite decisions are taken as to how to proceed with the project”. It added that that the company has yet to receive a building permit, whose issuance was a term in the contract as regards the payment of the second instalment to the municipality.

“Not only was no-one willing to engage in a reasonable discussion with us as regards the project, but the municipality’s reaction was to post outside our offices an open letter demanding the payment,” it said.

According to Christodoulou though, the company is simply not willing to proceed with the project.

“We informed them in March that they had to file for a building permit by October, but they haven’t,” he told the Cyprus Mail. He added that the municipality has fulfilled all of its obligations to Potapenko’s company and that the town can no longer tolerate empty promises for investments of millions of euros.

“We want to see the project implemented promptly. The reason is because Larnaca needs more hotel beds. No more extensions,” Christodoulou said. “He hasn’t shown that these are his intentions”.

He added that the municipality is considering taking legal action.


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