New Year for Many Residents of Riga Will Start with Major 'Utility' Troubles 0 10

Residents of Riga will find out that, for example, their house, having formed a cooperative, has left the care of the municipal enterprise "Rigas namu parvaldnieks," but the de facto created cooperative has not started managing the house. So what then?

Who will issue bills for utilities, clean the stairwells and yard, that is, hire a janitor (or janitors), and provide emergency and regular plumbing services?

Incredible but true: the law does not stipulate such a situation! Legislators simply forgot (or did not think to) include such a situation in the law!

And in the morning they woke up…

Yes, on January 1 of the following year, a rather long process of privatization will end, and from that moment on, municipalities will bear no responsibility for the maintenance of apartment buildings. This means that apartment owners in such buildings, along with the buildings themselves, will be left to their own devices: they must either retain the company that has been servicing their house (in Riga, this is most often still the municipal enterprise "Rigas namu parvaldnieks" (RNP)), or organize themselves and create their own housing cooperative, electing governing bodies for this cooperative (the board), or switch to the management of one of the many private companies servicing houses. There is very little time to make a decision — effectively until December 31.

No, of course, if no decision is made, there will be no disaster — the company that has been managing the house until now will continue to do so until the apartment owners make a decision.

According to a survey conducted, more than 800 houses may leave "Rigas namu parvaldnieks." Where to go? Again, either create their own cooperative or switch to another servicing company.

On the Brink of Major Changes

The main complaints against RNP are unfavorable service contracts for residents. The Consumer Rights Protection Center has also raised concerns about the contracts proposed by the municipal enterprise "Rigas namu parvaldnieks" and is preparing a corresponding letter to the management of the municipal enterprise.

Rumor has it that after a series of critical articles in the media, the Riga City Council instructed the RNP management to correct the contracts or, more precisely, to significantly revise them. This process is currently underway.

Apparently, RNP is on the brink of major changes. What kind?

First, in connection with the completion of the privatization process and a new approach to managing houses, the question of… privatizing Rigas namu parvaldnieks itself may arise. That is, the Riga City Council may begin discussions about whether the municipality should abandon this type of business. After all, the state and municipalities should not engage in business in areas where there is sufficient competition. There is no shortage of competition in the field of house maintenance in Latvia! In Riga alone, there are about a dozen companies, including those with foreign capital (in particular, Lithuanian businesses are well represented), that service numerous apartment buildings.

As is known, since last year, there has been discussion about the possibility of first "listing" RNP on the stock exchange, that is, conducting a stock issuance and attracting investors to this company. However, the matter of municipal enterprises participating in stock listings has not progressed. Now, in light of the completion of the privatization of housing ownership, the question arises whether to sell all shares of the municipal enterprise RNP into private hands. Apparently, this question will become relevant right after January 1, when it will be clear how many houses remain under the management of this enterprise and whether RNP can maintain its current large staff in the event of a mass exodus of houses.

Second, in light of the recent decision by the Competition Council, the enterprise "Rigas namu parvaldnieks" will have to… find a legal way to terminate contracts with those companies that the Competition Council has found guilty of collusion. These companies, by the way, have acknowledged their guilt by paying the corresponding fine. As far as can be understood, the management of the capital city council has once again obliged RNP to find legal grounds for terminating agreements with these companies. Another question will immediately arise: should a new competition be announced or should the heat networks be serviced with their own resources?

A New Legal Entity — Community of Residents

And one more important point. The work on amendments to the Housing Ownership Law is currently concluding in the Saeima. The amendments allow apartment owners to create a community of owners — that is, a new legal entity to be registered in the Register of Enterprises. This is necessary so that apartment owners can, if necessary, obtain loans — for the renovation of the entire building (increasing energy efficiency) and for various repairs, including emergency works. The existence of a community of residents will allow for better protection of the rights of apartment owners — against the arbitrariness of the same management companies, including, for example, RNP.

One way or another, it is clear that the day and hour will come when apartment owners, whether they want to or not, whether they know how or not, will have to delve into the affairs (problems) of the house in which they live and of which they are co-owners. No one else, including the municipality, will take care of your private property. To start with, apartment owners should get used to… at least participating in the apartment owners' meeting. So that all important decisions affecting all owners are not made without them — by merely a third, or sometimes even less, of the owners. And so that later it does not become painfully difficult… to repay the loans taken out for the house.