St. Pete to Redevelop Residential Districts

ST. PETERSBURG -- In a bid to develop outlying areas of St. Petersburg, City Hall has announced a "revolutionary" public-private partnership for the reconstruction of 40 residential districts.

The program "aims to improve the living conditions of thousands of citizens," St. Petersburg Governor Valentina Matviyenko said, and will be realized using funds from private investors and contractors, who will be selected at several upcoming tenders.

The first tender is expected to be held in November, and City Hall has already called on potential investors to send their notifications of interest.

"Construction companies have two months to apply after the information about the tender is published by the St. Petersburg Property Fund on [Sept. 1]," said Roman Filimonov, head of City Hall's construction committee.

The Kirovsky district has been selected as a pilot developmental project, where 15 khrushchyovki -- residential buildings that went up under Soviet leader Nikita Khrushchev -- and 48 other residential buildings will be reconstructed or demolished.

After the new apartment buildings are finished, investors will sell the property to the city, which will return the deeds to the previous residents, who agreed to exchange their old apartments for new ones. The maximum period for the projects is nine years.

The project also has a social aspect -- the living space of the new apartments will meet the minimal requirements stipulated by the city: 33 square meters for single residents and 18 square meters for each family member. The city will allocate money from its budget for the construction of one kindergarten for 380 children and a school for 1,250 pupils in every reconstructed residential district.

City Hall's press office said the city planned to invest $1.5 billion in total in the development program. By attracting private investment, St. Petersburg expects to renovate 40 percent of the city's residential buildings.

In 2009, the city will allocate $1 billion from its budget for the construction of socially oriented residential buildings, Matviyenko said Thursday at a conference held during the PROEstate 2008 real estate forum.

"This is not such a profitable program for us. By settling residents in new and contemporary buildings using a public-private initiative, we will solve the problem of run-down residential districts, creating an opportunity to develop St. Petersburg's territory," she said.

Analysts say the new buildings will increase the size of the population living in the renovated districts will by 20 to 30 percent during the next nine years.

"It is injecting cash into the construction business as well into as the secondary real estate market, thus saving it from crises like those that we are seeing in the other countries," said Mariana Belykova, managing director of the Baltic Mortgage Corporation.