Former PN infrastructure minister Michael Falzon, consultant to the Malta Developers Association, punches the ITS land deal full of holes. He spoke to Ivan Camilleri.

Michael Falzon, an architect who founded the MDA, knows a thing or two about how public land should be transferred to private parties for mega projects.

Back in the 1990s, he, together with then Finance Minister George Bonello du Puis, spearheaded the Manoel Island and Tigné projects – today’s Midi. Portomaso was also delivered under his watch.

And although with hindsight he says that even in those projects – despite different contexts – things could have been handled better, he takes serious issue with the deal struck between the government and the db Group.

The agreement hands the db group 24,000 square metres on Malta’s golden mile in St George’s Bay for what is perceived to be a pittance.

“This deal is a series of firsts. From its inception to how it was negotiated and concluded, the whole affair raises a lot of questions which need convincing answers.

“Many, including the majority of developers, are very concerned about how this land was given to the Seabank Group so cheaply. There must be some things which we are not seeing,” he says.

Here are his views on different aspects of the deal:

On the government request for tender proposals:

“In our system, you either issue a tender – with all its rules – or you issue a Request for Proposals (RFP). You can’t issue both at the same time – as the government has done. In itself, this is a contradiction in terms.

“A ‘Request for Tender Proposals’ as issued by the government doesn’t legally mean anything. It’s either one or the other, and this needs clarity.

“Also, the call did not even include a development brief stating clearly what could be allowed to be built and what could not. This document opened the way for many interpretations.”

On why only one bidder – the Seabank Group – made an offer for a highly sought-after area:

“There are many who say that the call was made during the Christmas period to limit competitors. Others say that no one else dared waste time on submitting a bid, as it was known that Silvio Debono [Seabank’s] had an agreement with Labour. Of course, this is all speculation.

“However, what is sure is that Silvio [Debono] had wanted this land for a long time.

“I was present at a meeting where he and Arthur Gauci said they had asked the Gonzi administration for the ITS land and had not been given a reply. This is fact, not speculation.”

On how a project intended for leisure and tourism came to have real estate for sale:

“Potential investors could have been easily misguided. The call’s title clearly stated it was ‘for a project of upmarket mixed tourism and leisure development’.

“The only reference to the building of real estate for sale was a small line in the middle of the document stating that ‘the project may also include a number of residential units’.

“Now we know that a substantial part of the project is residencies – 209 luxury apartments – in two residential towers

On the valuation of the land by Deloitte and the negotiated price:

“Although the Prime Minster said the government would be getting €60 million, it soon transpired that the Seabank group would only be forking out some €15 million over a long stretch of time.

“Now, I don’t really know the nitty-gritty details on how Deloitte arrived at this valuation, but the result is so off the mark that it is obvious to everyone that it is completely wrong.

“In our architectural practice, we calculate the value of land according to how many units can be built in a particular area. The price of €15 million even for just the apartments – 209 – is ridiculously low in today’s market.

“The problem for the developers is that they will now be competing with this Seabank project because they have had to fork out much more cash for their land, just a corner away. I don’t call this a level playing field.

Now I am not going to say how much the ITS site should have been sold for, even though according to the government’s draft master plan, it could fetch more than €200 million. What I am saying for sure is that the price negotiated is not on”.

On the payment terms given to Seabank:

“I don’t remember one occasion where the government transferred public land and the investor paid his dues over a number of years. In my memory it has never happened.

“The problem is that first they told us it would be €60 million, then we discover it’s only €15 million, and then we discover that it’s only €5 million and the rest will be paid over seven years. To make matters worse, it’s also interest free.”

On planning issues and the project:

“This is another aspect which raises many questions. In the way this project was presented, it surely cannot be done.

The current polices don’t permit the towers.

“Now, is the government going to change the rules to accommodate Silvio (Debono).  I’m sure that this will not happen until the election. But then, most probably the government will somehow find a way.”

On the PN and the project:

“I was critical of the PN, as I thought they were not raising the obvious, probably because of their perceived contacts with Silvio Debono.

“However, subsequently Mar-these Portelli spoke up very strongly in Parliament, and this was a signal that things were moving along.

“Simon Busuttil took a very strong stance, despite the problems that this might have created for the party.

“An investigation by the NAO may at least provide answers to the questions everyone is asking.”

ivan.camilleri@timesofmalta.com