Expropriations in the public interest do not afford those affected fair compensation

Hundreds of families affected by public interest expropriations do not receive adequate or timely compensation. Experts criticize the expropriation formula and accuse the government of not deliberately revising the land value map, which has been in effect since 2016. As a result, the compensation costs for the government are quite modest, while the social consequences are immeasurable.

Author: Erjola Jata

Sh. Gj., was expropriated of his 120 m2 in the public interest in 2014, but he received the compensation money only in 2021 after a series of lawsuits for unfair compensation. For the property that was affected by the construction of the Paris Commune-Kavaja Street segment, the government approved a compensation of 1.2 million ALL, counting it as “arable land” and not as “building land”.

With the claim that not only was it not properly expropriated, but an object of 164 m2
, built on his land by his son and which was included in the legalization process, did not receive compensation, Sh. Gj., together with his son, H. Gj., started the legal battle. Today, 88 years old, he has neither the strength nor the desire to recall the ordeal, but his relatives say that the battle for recognition of fair compensation lasted for years.

In 2015, the Administrative Court of the First Instance in Tirana gave the right to the plaintiff Sh. Gj., and confirmed that his property was not assessed properly.

“The obligation of the defendant, the Albanian Road Authority, to compensate the plaintiff, Sh. Gj., for the area of the expropriated plot of 120 m² according to the market value in the amount of 2,502,360 ALL”, – is stated in the decision of this court, which, despite the opposition of the respondent parties, was also upheld by the Supreme Court.

Meanwhile, the son, H. Gj., also won with the decision of the Supreme Court of February 2021 for the open trial in 2016 together with his father for the inclusion in compensation of the property that he used for 15 years as a bar. Although it took him 6 years to win the compensation, going through several steps, his building was recognized as legal, receiving a compensation of 21 million lek.

The Supreme Court decided that a cumulative compensation of 23.5 million lek should be awarded for both claims, a significant difference from the government’s previous compensation of only 1.2 million lek.

Unfortunately, H. Gj. could not enjoy either his property or his money. He died suddenly in August 2021, while the decision of the Supreme Court for compensation was not executed due yet to lack of budget funds. The full execution of the decision took place in December 2021.

“The biggest problem of the whole process has been the execution of the decision, because there are no funds in the state budget for the execution of the decisions. In the specific case, the decision was executed after 6 years and justice was not done at the right time, because, at the moment you expropriate the owner, you must compensate him at that moment, since he had to take measures to be accommodated in a another country”, – says a relative, who has followed the family’s entire judicial ordeal.

Unjust expropriations and delays in compensation have created not only social conflict, but also often an unbearable burden on the state budget.

Clear evidence of the burden of these unjust decisions is also the case “Sharxhi and others against Albania”, otherwise known as Basha’s palace in Lungomare, Vlorë. On January 11, 2018, the European Court of Human Rights granted the right to 18 applicants for the destruction of their property by the state, in the conditions where there was a decision against it by a domestic court. The compensation that was given for this case was 13.4 million euros. Although the deadline for the execution of this decision was August 28th 2018, this amount has not yet been paid by the Albanian state. As a result, the interest for late payment has increased by more than 1.1 million euros.

“According to the latest announcement from the State Advocature, until April 15th 2021, the accumulated value of interest is 1,138,691.57 euros”, the Ministry of Finance explains to INA MEDIA .

At the European Court of Human Rights, according to the latter’s public figures for Albania, in 80 percent of the cases presented, the state was found to be in violation of the Convention.

The law stipulates that the taking of property without a fair payment for its value, as well as not immediately liquidated, cannot be considered as a proportional solution between the parties.

 

Millions of “unfair” expropriations and delays in compensation

Expropriations occupy an important item every year in the budget of the Ministry of Infrastructure. Only for the years 2015-2020, a total of 37 million euros were paid for expropriations, where the year with the highest value is 2020.

Expropriations for a project extend over several years and this makes it unclear how much is the accumulated value of the expropriation obligations that the state has today for the projects it has implemented. A recent audit at the Ministry of Infrastructure and Energy revealed that only in 2021, arrears increased by 341 million ALL, where the majority of the expropriation court decisions.

This ministry did not respond to a request for information on the full value of the expropriations, delays in compensation and the many problems that accompany this process.

Delays in compensation, on the other hand, are a practice that is also accepted by the State supreme Audit (KLSH) in its reports over the years and are mainly related to the expropriation of arable land, mainly outside urban areas.

A report this year, which audited the bypass of Vlora, showed that the total value of the expropriations is 578.6 million ALL, of which 304 million ALL, or approximately 2.4 million euros, or a little more than half, were liquidated. The rest, 274 million ALL, has not been liquidated. The vast majority of owners, who have been affected by the construction of the Fier bypass, have not received the money. KLSH has found that out of 846 million, which is the estimated cost of expropriations, only 331 million ALL (2.6 million euros) have been liquidated and the liability for expropriations in the total amount of 515 million ALL remains to be liquidated.

In addition to expropriations for which companesation has been paid, one of the dubious issues encountered is that of the processes of expropriations, which have found their right anly through the courts.

Dissatisfied with the expropriations for public interest, a significant number of citizens turn to the court. Only for 16 projects, which are involved in public interest expropriations, there are at least 101 cases in court (page 278 of the report). The largest number of appeals to the court is received by the project Pallati me shigjeta-Rreth-rrotullimi Shqiponja with at least 59 cases, while projects such as the Northern Boulevard and the Rehabilitation of the River of Tirana or the Pallati me shigjeta-Rreth-rrotullimi Shqiponja (shtesë) to TEG node have issues as well..

Investigative Network Albania sent a request to the Supreme State Audit Office regarding the findings in the audit conducted at the Ministry of Infrastructure and Energy regarding the issue of expropriations for public interest which have been translated into a large number of cases in court.

“From the audit of 16 expropriation procedures, it was established that 101 judicial processes were initiated on these procedures, reflected in annex 5/1 of the Final Audit Report. These court proceedings have had as their object the change of the estimated value for expropriation, claiming that the value determined by the Valuation Commission was lower than the market price. None of these issues had received a final decision until the end of the audit. The audit also found that the by-laws on which the Valuation Commission is based for determining the value of the expropriation are out of date,” – says the response of KLSH.

The latter in the letter states that he has recommended that “the Ministry of Infrastructure and Energy, in cooperation with the State Agency for Expropriation, should set up a working group for drafting and proposing the necessary changes and updates to the by-laws, in order to optimize of the method of determining the extent of the expropriation assessment and the regulation of the problems found in the expropriation process”

G. Gj. also faced unfair expropriation. His property of 52 m2 was expropriated as part of the Northern Boulevard and Tirana River Rehabilitation project, but the Municipality of Tirana refused to pay the compensation, claiming that he did not have a property title. According to the Municipality, two people who had claims would be expropriated for the same plot. With the argument that the amount was significant and would have financial consequences for the Municipality, if it was paid immediately, the case ended up in the Supreme Court, where the Municipality requested a stay. The Supreme Court overruled the claims of the Municipality, demanding that the decision of the courts, such as the First Instance and the Appeal, be implemented, thus giving justice to those affected by the expropriation after several years.

The Ombudsman has also criticized the way expropriations are carried out. According to a 2021 report, the latter states that in almost all cases, state administration bodies behave “arbitrarily” towards property right holders/owners and their possessors.

“Even though assets were taken from individuals for public interest, there is a delay in administrative procedures on the part of the institutions that have the obligation to complete the documentation for receiving the reward”, – is stated in the annual report of last year of the People’s Advocate.

 

Games with legalizations

Three major infrastructure projects in Tirana: Astiri , Bulevardi i Ri-Sheshi Shqiponja , as well as the reconstruction of the 5 Maji area , have affected a total of 623 properties. It is still unclear the exact number of how many of them have benefited from compensation and how many of them have not been able to benefit from the 75.5 million euro fund made available for this purpose. The figure was derived from INA MEDIA, which referred to the recommendation of the State Expropriation Agency, which suggested the Official Gazzette to derive the values of expropriations. Meanwhile, ASHSH did not prefer to respond to a request for the values that remain unpaid.

All this uncertainty stems from the legalization procedure. A small portion of owners was able to legalize the buildings and the land, some were able to legalize only the building, but not the land, and the majority could not formalize anything, thus making the burden of compensation for the budget easier, but creating on the other hand a large social issue.

The residents of the Astir area say that they have received the compensation, but the problem lies with the ridiculous value of the compensation compared to the market prices. As a result, a significant part have started court proceedings, to seek fair compensation.

In 5 Maji, the Municipality made available to INA MEDIA vague and unclear information about how many agreements were signed or how many residents received the money, when they accepted the expropriation, given that the project is being implemented.

While Sheshi
Shqiponja-Bulevardi is in the process of expropriation and currently the list has been published and the owners are submitting the documents to benefit from the expropriation, but even in this case the value of the compensation is the “Achille’s heel”

Ardi Marku has applied for the legalization of the apartment since 2006, when the process started, and again in 2009, and he still does not have such a document in hand. At that time, to be included in the legalization process, a self-declaration was enough, but the rules changed in 2014.

“From “legalization to urbanization”, the law passed “to urbanization and then legalization”, – explains Bledi.

For Artan Manushaqe, what constitutes a deadlock in the case of expropriation in the country is the different standard that is applied to the same area for constructions without permit.

“Some residents, who have built informally and put these constructions in the legalization process, have managed to get the documents, thus benefiting from compensation for the land, in addition to the building. Others, who are in the legalization process, but have not managed to get a document, due to the delays that the legalization process has had, lose the opportunity to be treated like the rest, thus receiving an even lower compensation”, – he explains.

The largest part built after the 90s, about 255 buildings, residential houses or buildings for other functions, are affected by the Great Ring project , Sheshi Shqiponja-Bulevard i Ri . (Lot 1 – 154 objects; Lot 2 – 19 objects; Lot 3 – 82 objects).

The cost of the expropriations of this segment (lots 4, 5, 6 – phase 2) is estimated to be 3.27 billion ALL (27 million euros) through two requests announced by ASHSH. Currently, a part of the lists for expropriations has been released. Residents, who agree with the amount of compensation, are submitting the documents.

According to the predictions of the contract, “Construction of the Sheshi Shqiponja-Bulevardi i Ri road segment , Lot 2″, should be completed in July 2023, but dozens of owners are still anxiously waiting for what will happen. But those whose houses were razed are unhappy with the measure of compensation and the “game” with the legalizations.

Despite the residents’ claims, the Albanian Road Authority told INA MEDIA that they are waiting for the full release of the construction site; while, regarding the expropriations, “the clarification of the basic DCM is expected in order to proceed with the decision for this segment”, given that it has been approved by the State Expropriation Agency (ASHSH).

 

Formula of expropriations

The formula for how expropriations are conducted in our country has often been at the center of criticism, as there is a large gap between property prices in the free market and reference prices, with which the state operates for compensation.

Currently, the basis for land expropriation remains DCM 89/2016 “On the approval of the land value map in the Republic of Albania”. According to this map, the average price per 1 m² for Tirana (page 181) ranges from 23,703 ALL for cadastral area 8110, which includes Tufina, to 66,969 ALL for cadastral area 8380, which includes the center of Tirana. Even for the prices of buildings, the value is determined by the National Housing Authority, according to the construction cost of 2016.

Myrshit Vorpsi, from the association Property with Rights, considers the lack of review of the prices since 2016, intentional. According to him, the land value map, which includes the whole of Albania, has scandalous prices, which are far from the real market value, but the prices have also changed a lot.

“The reason for this “freeze” is directly related to the obligation of the Albanian state to the owners for their compensation. It is deliberately kept at low levels, so that the value of the compensation is as low as possible”, – accuses Vorpsi.

He illustrates this benefit scheme from the state with the Ring project , where the residents on average were compensated with 53,500-70,000 ALL/m² . According to him, the constructions of that area are being conducted at a real selling price, 1500-1600 euros/m² , far from the value that the state has compensated. Not including other additional costs, such as the percentage the owner receives.

“Even if we assume that the owner earns for every m² of land, which he delivers – 1 m² of construction, he would receive at least, if he sold this construction for 1500-1600 euros/m² . With the government map, he will benefit only 30,000 ALL or 260 euros per m². Here it is clearly understood what the owners loses and what the government gains”, – underlines Vorpsi.

According to him, the map of the value of the land should be reviewed urgently, in order to place those who are expropriated for public interests in a fair profit ratio.

Elona Selmani, managing partner of Realpas, which has real estate at the core of its activity, sees the problem related to the lower values of property transactions than the real price, avoiding taxes and duties.

Under these conditions, she considers expropriations for public interest as sensitive limitations of the constitutional right to property, so she suggests that they be handled carefully, so that they are not perceived as arbitrary by individuals.

“The application by state institutions of only one methodology has resulted in a real estate value that is significantly far from the real market value,” – she confirms.

Expropriation for the public interest is regulated by the 1999 law “On expropriations and taking temporary use of property – private property – for the public interest”, as amended (last time in February 2020). Expropriations fall under this law, when the state must fulfill its obligations due to treaties or international conventions; the construction of roads, energy works or waterworks, and cases where certain constructions may pose a risk to the surrounding community.

 

The case of May 5

After the earthquake of November 26, 2019, the Albanian state added a new precedent of expropriation for public interest, that of building new development areas. Not being fully included only with the existing legal framework, the development of new areas was legitimized by the normative act of December 16, 2019 “On Coping with the Consequences of the Natural Disaster”.

In support of this act, A DCM dated January 6, 2020 was approved “On the conditions and procedure for expropriation and/or exchange of property, for public interest, in function of the reconstruction process”.

All these movements gave way to the government to open new grounds for reconstruction. The two most controversial projects of this process are the Kombinati and the area known as 5 Maji .

In the first months of this year 5 Maji, an overpopulated neighborhood after the 90s, would turn into a “war” scene. At least 222
homes in this area were razed to make way for the construction of a large complex for those affected by the November 26 earthquake, as well as institutions. Some of the residents accepted the agreement offered by the Municipality and some rejected any compromise.

Liza Marku learned that the legalization permit had been issued for a long time, only after the bulldozers flattened her house and she took the case to court. The elderly woman refused to sign the agreement with the Municipality nor the rent bonus. Her only request is to give her the area she had, the contribution of 14 family members from emigration.

“I want the house and the land, as we had it. Legalization had come to us and no one told us anything, even though we were constantly interested at that time”, – emphasizes Liza.

Liza Marku, resident of 5 Maji

Not even Mark Deda has agreed to sign the agreement with the municipality, fearing that the “formal” donation of the house could eventually leave him on the streets. Although he was involved in the legalization process, he was unable to follow through as his house was razed. Currently, he lives in a rented apartment with the bonus he receives from the Municipality, but uncertainty accompanies him every new day.

Mark Deda, resident of 5 Maji

The Municipality of Tirana did not prefer to be transparent about the deeds of the residents who owned the houses in this area, about the legal status of three of them, the total number of those who receive rent bonuses and the progress of the project, but was satisfied with an answer about the public lottery.

“At the Directorate of Reconstruction of Social Services, 329 applications of Administrative Unit no. 4 and no. 8, of which 186 were declared winners by Decisions of the Municipal Council, while 113 practices are in the review process. Currently, in the 5 Maji area, 58 beneficiaries have received apartments through the public lottery”, – informed the Municipality of Tirana, promising more detailed information as soon as it was made available by other relevant structures, but this information was never received.

Gjin Nikolla, resident of 5 Maji

The house of Gjin Nikolla, which he had built since 1991 in the area known as 5 Maji , was demolished in January 2022, to pave the way for the construction of a new area for the families left homeless after the November 26 earthquake.

“In 2018, a decision was issued that recognizes me, both as the owner of the land and the house. I received the deed for the house, but I never received the deed for the land”, – says Nikolla, who has refused to enter into a deed agreement with the Municipality.

Currently, the Municipality of Tirana has offered him an agreement, according to which it will offer him an apartment in the same area, but without giving any specifics.

Facsimile of the agreement that the Municipality of Tirana has distributed to the residents of “5 Maji”

Gjini thinks that the Municipality’s document is unclear and does not promise fair compensation in relation to the property he owned. He considers the rental bonus and the deed worthless.

“The Municipality asks you to donate the house, but it will give it when it has the opportunity; no date, no year, no building, which entrance, which palace… there is no clue. And all this, says the Municipality, is based on a law that will be approved in the future”, – he says worriedly.

He lives in a rented apartment and the financial conditions have forced him to surrender to the rent bonus that the Municipality gives him.

“We also consulted with the Ombudsman and we were told that this agreement is not valid, so we did not sign it”, – concludes Nikolla nervously.

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Ky shkrim është pjesë e projektit që mbështetet financiarisht nga Zyra e Mardhënieve me Publikun e Ambasadës së SH.B.A. në Tiranë. Opinionet, gjetjet, konkluzionet dhe rekomandimet e shprehura janë te autor-it/ve dhe nuk përfaqesojnë domosdoshmërisht ato të Departamentit të Shtetit. / This article is part of a project that is financially supported by the Public Relations Office of the US Embassy in Tirana. The opinions, findings, conclusions, and recommendations expressed are those of the author(s) and do not necessarily represent those of the Department of State.