Tbilisi City Hall has made the decision to terminate its agreement with City Park. The agreement will take effect on April 10. Several days ago, Tbilisi Mayor Kakha Kaladze noted: “Tbilisi City Hall has made a decision to terminate the agreement with the City Park company, and the decision will come into force on April 10, 2018.”
“The company has showed irresponsibility and misused authority and that’s why we have made this decision,” Kakha Kaladze said.
The Tbilisi Transport Company will replace City Park to execute necessary functions until a new system can be shaped, Kaladze said. Tbilisi City Hall also explained that the agreement termination will not change parking fees or the penalty sanctions amounts. Consequently, the parking fee will be paid in the same manner and amount.
“Starting April 10, 2018, the Tbilisi Transport Company will execute regulations of the parking system in constant regime. Parking fees shall be paid to the City Park account up to April 10, 2018. The payments will reflected on the account of Tbilisi Transport Company starting April 10 and citizens will not have to pay parking fees repeatedly. Starting April 10, 2018, parking fees will be paid to the account indicated by the Tbilisi Transport Company and citizens will receive information about this in advance. Up to April 10, 2018, City Park will impose fines for violations and these fines shall be paid to the account indicated on the fine papers. Starting April 10, lawbreaking citizens will be fined by the Tbilisi Transport Company. Fines imposed before April 10 shall be appealed through City Park, while the process will move to the Tbilisi Transport Company starting April 10. If lawbreakers do not pay their fines, according to the current practice, the fine will rise to 150 GEL from 10 GEL. The lawbreaking vehicles will be evacuated to existing locations up to April 10, but starting April 10, violating vehicles will be taken to the location preliminarily announced by the Tbilisi Transport Company,” the Tbilisi City Hall statement reads.
As for City Park, the company asserts that the Tbilisi City Hall has made an illegal and ungrounded decision, and the company plans to appeal it. According to company management, this decision is an example of how Georgian authorities treat foreign investors.
“The statement released by Tbilisi Mayor Kakha Kaladze yesterday on unilateral termination of the agreement with LLC City Park is an illegal and politically motivated decision, and the best sample how the Georgian Authorities treat foreign investors. The whole state office, including various branches of the Government, have been pushed by specific forces and this is a coordinated decision for the illegal expulsion of City Park from Georgia. The Authorities have acted dishonestly, ignored communication with investors and the two lawsuits underway, in which LLC City Part argues against absurd accusations of law violations. The Authorities have tried to organize an illusion of legal proceedings, when a final outcome (illegal termination of agreement on behalf of specific groups, ignoring law and court) was determined preliminarily.”
“City Park is considering all legal options and will resort to all necessary mechanisms of the Georgian and international court systems. The company owners will also spread this information in Israeli and international business communities. This fact will have a negative impact on Georgia’s investment climate, and apparently, the ruling bureaucrats do not worry about this, as they follow their own private interest,” the City Park statement reads.
As to how many people City Park employs and what will happen to them, City Park explains that the company employs about 200 people. “As to employment issues, we have no information about this,” City Park representatives said. Tbilisi Vice Mayor Irakli Khmaladze does not rule out that a portion of the City Park personnel may be employed by the Tbilisi Transport Company. If there is a need for strengthened resources, experienced people may assist the operation of the Tbilisi Transport Company.
“At this stage, we cannot specify the situation in relation to the employees. We have to assume functions. We have certain resources. We have our own employees and controllers. If necessary, resources may be expanded. Naturally, experienced people may continue operation at Tbilisi Transport Company. One thing is clear – there is high public interest in relation to parking regulations, our decision is right, just and oriented on civil rights. Therefore, we will take all steps to alleviate and prevent negative outcomes,” Khmaladze said.
Caucasus Business Week (CBW) has interviewed officials about their appraisal of this Tbilisi City Hall decision and what outcomes they expect.
Vaso Urushadze, the executive director for Eco Transport Center, noted that it would be better if Tbilisi City Hall had introduced an action plan and strategy, and not only this agreement termination. “How should the balance be restored between parking locations and number of vehicles? Today we have the following balance: 15 vehicles for each parking place.
What kind of payment system will we have? These issues were to be arranged in advance,” Urushadze said.
Itzik Moshe, president of Israeli-Georgian Chamber of Business, says that the current situation around City Park will bring unfavorable outcomes for both Georgia and Israel.
“City Park did not enter Georgia through the Israeli Business Chamber. Regretfully, we do not know details of the contract agreement. Naturally, unpleasant effects will emerge in Israel and Georgia in the transient period until casting light on this issue. We have 20 years of experience in similar issues. In about 90% of the cases we have uncertainty because of different business cultures. Frequently, the contractual parties perceive the contract details differently,” Itzik Moshe said.
The President of Israel-Georgia Chamber of Business expressed willingness to engage in this process, if asked. “I would like to note that Tbilisi City Hall has always backed Israeli companies,” Itzik Moshe added.
Former Tbilisi Mayor David Narmania has also commented on the agreement termination with City Park. City Park has made a lot of serious mistakes over the years, Narmania said. “I welcome the termination of the agreement with this company. It is important that the procedures after the agreement termination be less painful and society receives better conditions. We should not forget who originated this criminal agreement, and they should be called to account,” Narmania noted.
Another former Tbilisi mayor, Gigi Ugulava, has also appraised the agreement termination with City Park.
“Now the main thing is that as soon as possible I will ask our faction at the City Council to summon Tbilisi Transport Company officials and request them to introduce an action plan as to what Tbilisi
Transport Company will do after April 10; I think the current administration of the City Hall is unprepared for this situation and we may have chaos in the capital city after April 10. I understand very well that nobody likes parking inspectors. But this is a necessary evil that the city must continue to keep basic order. Even the worst order is better than chaos, which we have left in the 1990s. Today we may be in a worse situation than in the 1990s, because the quantity of vehicles has increased considerably and now it is a key issue that Tbilisi City Hall introduce a new action plan and address which resources they have and the differences between City Park and the new system after April 10,” Gigi Ugulava said.
City Park and Tbilisi City Hall signed an agreement in 2007. The agreement’s validity period was set to expire on December 31, 2024. In the case of agreement termination, City Hall must pay 25 million GEL to the company.
Tbilisi Vice Mayor Irakli Khmaladze says that City Park may be called to account. The guaranteed amount is about 0.5 million GEL, he said. “However, additional legal procedures are required and we will continue negotiations in a bilateral regime. The transition process should start within the next month, because parking operation should be continued without disruptions,” Khmaladze noted.
City Park used to pay only 40% of revenues to the municipal budget, and 60% was absorbed by the company, Khmaladze said. “As part of this agreement, incomes were generated in the Tbilisi budget from various sources. All incomes had various methods of distribution. About 40% of the total income was transferred to the municipal budget and 60% was transferred to the company account,” Khmaladze said.