Will Ukrainians do without local housing authorities in five years time?

Residents of an apartment house in Kyiv’s downtown Podil district have not seen dirty stairs, peeling walls, burned out bulbs, or spilling stinking dumpsters in the backyard for two years now. The elevators always work, there is a well-tended lawn in front of the house, vases with flowers on each landing, and an art gallery in the basement.

Two years ago when the tenants of an apartment house at 31 Turivska St. severed their contract with the local housing authority (ZhEK), and formed an Association of Apartment House Co-owners (OSBB), the building, erected in 1996, started living a new life. Using rent (previously paid to the ZhEK), they replaced the whole power supply network, tidied up the adjacent territory, planted ornamental greenery, and face-lifted the entrances and stairways. In addition, the residents of 60 apartments saved some 40,000 hryvnias during the heating season.

CORRUPT ZHEKS BEING LIQUIDATED

OSBB is increasingly often mentioned among the ways to rescue the Ukrainian utilities. Indeed, by instilling in people a sense of responsible ownership the government will be able to shed the burden of unprofitable and rampantly corrupt ZhEK local housing authorities. According to Yurii Khivrych, Minister of Utilities, ZhEKs are currently consuming 70 percent of the rent while their performance is anything but adequate.

In contrast, the OSBB, tested over nine years, proves markedly effective. The government recently made a statement to the effect that it will finance repairs only in OSBB-run apartment houses.

The utilities minister made it clear that by 2015 all ZhEKs will have been replaced by OSBBs. Khivrych even promised that the Verkhovna Rada would pass a bill prohibiting ZhEKs.

To make this reform effective, the government plans to encourage homeowners to form OSBBs by holding an information campaign in 2011-14, and by budget appropriation for major repairs.

AUTHORITIES’ GOODWILL AND RESIDENTS’ COURAGE

Residents of 538 apartment houses in Kyiv already have OSBBs, though this is a mere 4.7 percent of the capital’s housing complex. There are very few such houses because, however positive and hope-inspiring, this project remains very complicated due to red tape.

The local councils are doing their utmost not to part with the ZhEK network, which is so very convenient for them, The Day was told by Hennadii Kryvosheia, member of the Podil District Council, because these local housing authorities are lining the local bureaucrats’ pockets: “Not so long ago, the Podil District Council resolved to allocate 45,000 hryvnias for the renovation of a playground near one of the apartment houses in that district. In the end a Chinese slide was installed, priced at 6,000 hryvnias on the Internet.”

Besides, a ZhEK must transfer an apartment house to a OSBB’s fixed assets in the same condition in which this building was transferred to those of this housing authority. In other words, placing Ukraine’s housing facilities on a OSBB basis would require stunning sums involved in major repairs. Needless to say, neither the ZhEKs, nor the central budget can afford this.

Another problem is the lack of initiative among the population. Although people can see that OSBB-run houses are tidier, have no problems with water, heating or electricity supply, they are afraid to join such co-owners’ associations. And even when 51 percent of the residents agree (this percentage is required by law to form a OSBB), there arises the problem of OSBB leadership.

“People who live in two apartment houses next to ours also want to have OSBB. The problem is, no one wants to assume responsibility for the project,” says Oleh Holub-chenko, chairman of the OSBB at 31 Turivska St.

It is true that the chairman of a co-owners’ association has a very tight schedule; he has to be informed about all the problems in and around the house, work out the algorithms of solutions, find people who will carry out the tasks assigned to them, contractors who will supply the required raw and construction materials, provide quality services at reasonable prices — and always be prepared to face an avalanche of complaints and criticism. Last but not least, he has to combine this chairmanship with his regular job.

There is no OSBB management market in Ukraine, says Tetiana Boiko, coordinator of housing-municipal programs at the NGO Opora: “In other words, the chairman or board of a Ukrainian OSBB has to know about electricity, sanitary engineering, water supply, all kinds of meters, and bookkeeping. People simply don’t have this kind of knowledge. Those who do [i.e., certified commercial structures that can provide this kind of management] are simply nonexistent.”

THE LAST RESORT

Experts are convinced, however, that OSBB is but the only way to put the Ukrainian housing complex in order. “Sooner or later our society will realize that the OSBB system is the only one capable of dragging our utilities out of the swamp it is in,” says Maksym Horodnii, utilities expert with the Strong Ukraine Party. He is convinced that OSBB will teach the Ukrainian in the street to be a responsible user of municipal services who is interested in improving their quality.

Horodnii further believes that it will be necessary to raise OSBB stabilization funds that will accumulate money for major repairs and the renovation of the adjacent territory. He also believes that fears that by liquidating ZhEKs the state will leave thousands of specialists jobless are ungrounded. Electricians, plumbers, mechanics will always be welcome at OSBBs — they will simply have the same jobs and a different employer: “I’m sure that there are real pros working for ZhEKs and they have to be offered jobs at OSBB-run apartment houses. All these mechanics and plumbers will be interested in working well because their pay depends on their performance.”

OSBB: SOUNDS GOOD BUT STILL RISKY

In 2011-14 the Ukrainian state will have to work out a faultlessly balanced legal framework to regulate the OSBBs. Today each OSBB is on its own, legally speaking.

Therefore, all those willing to form an OSBB should bear in mind the risk of electing an inadequate board and chairman, warns Tetiana Boiko. Her advice is to stay active and never hesitate to check on what those in charge of the association are up to. The thing is that current legislation offers vast room for wheelings and dealings. For example, the OSBB board can single-handedly decide on how to use the money collected by the homeowners for repairs. They can, for example, transfer the sum to a law firm’s account in return for some nonexistent services.

Also, there are constant problems with tax authorities and municipal services, that are natural monopolies. “We’re having a big problem with the pipelines and networks. Under the Statute and the Law on OSBB, we must not deal with matters involving the value added tax, and there is a VAT for the water supply and central heating. These matters must be dealt with by the management company, but the provider hasn’t designated one. The municipal authority has determined that it must be our ZhEK, but it doesn’t want to,” says Vasyl Kotsiuk, president of the OSBB Association of Lviv.

Liudmyla Shans, chairperson of a OSBB in Zaporizhia, told The Day that their confrontation with the municipal services reached the point where the National Electricity Regulation Commission of Ukraine accused her OSBB of “soliciting the theft of electricity and destabilizing the energy market of Ukraine.”