Petersburg Allows Land Sales

St. Petersburg has become one of the first Russian local authorities to authorize the buying and selling of land in a move that could make the country's second city more attractive than Moscow for certain types of investors, lawyers say.

An order (Mayoral Directive No. 1049-r, Oct. 19), issued by mayor Anatoly Sobchak, states that owners of privatized enterprises or of other nonresidential premises have the right to buy or lease the underlying land.

"For projects where land matters, like manufacturing and real estate, this will be an important advantage for St. Petersburg," said Arthur George of Baker & McKenzie's St. Petersburg office. "We've talked with the city authorities a lot on this question and they realize it's important and inevitable to attract capital and have taken a progressive attitude."

The directive sets out local conditions for implementing President Boris Yeltsin's decree on the post-voucher stage of privatization (Presidential Decree No. 1535, July 22) which authorizes the sale and lease of land, George said.

"The real problem in the past was that there was an earlier decree from Yeltsin (Presidential Decree, No.631, June 14, 1992), but no implementation at local level," he added. "This new directive said who will do what."

The directive clearly demarcates local agencies' previously hazy areas of jurisdiction. The St. Petersburg Property Fund is to sell the land, while the city's Committee for the Management of State Property will act as lessor and the city's Land Committee will register ownership and other rights.

The price of land, in accordance with the State Property Committee's basic provisions for post-voucher privatization, is set at no less than the "normative" price, and no more than three times the "normative price."The "normative price" of land is established by the St. Petersburg mayor's office and currently amounts to 50 times the annual land tax charged in the city. Land tax, however, varies considerably between different areas of the city. Rent on land will be set by the authorities.

Certain types of land will be exempt from sale, according to the directive, including land protected for ecological, historical and other reasons, forests, streets, parks, cemeteries and lands under dispute.

Similar legislation in Moscow seems a long way off. While a system of leases is currently being introduced in the capital, local lawyers say the city authorities appear determined to maintain control over land.

"It will never happen in Moscow, because the authorities here want to keep land in their own hands," said one local attorney.

Recent Legislation

Securities Commission (Government Order No. 1374, Dec. 13) Establishes Russia's new Federal Commission on Securities and the Capital Market, called for by presidential decree in November, to regulate the securities market. The commission's composition is:

Chubais, A., first deputy prime minister (chairman of the Securities Commission); Orekhov, R., head of the state-legal department of the president (first deputy chairman of the Securities Commission); Vasilyev, D., deputy chairman of the State Property Committee (deputy chairman of the Securities Commission); Bazhan, I., (secretary of the Securities Commission); Artyukhov, V., deputy transport minister; Boldin, V., deputy communications minister; Bochin, L., chairman of the Antimonopoly Committee; Burgaev, Yu., chairman of the Russian Insurance Inspectorate; Volgin, A., chairman of the Committee for the Defense of Shareholders' Rights (head of the Securities Commission's expert council); Volkov, Yu., chairman of the State Inspectorate for Nonstate Pension Funds; Ignatiev, S., deputy economics minister; Kazmin, A., deputy finance minister; Kozyrev, A., deputy minister of fuel and energy; Koch, A., deputy chairman of the State Property Committee; Moskovsky, I., head of the president's finance-budget department; Petrov, A., head of the government's department of finance, budget, and money circulation; Popov, N., deputy head of the State Tax Service; Ragozin, G., first deputy head of the president's security service; Sokolov, V., chairman of the federal property fund; Starovoitov, A., general director of FAPSI; Khandruyev, A., deputy chairman of the Central Bank; Yudushkin, S., deputy justice minister; Panskov, V., finance minister.