Prague 4 in a rent trap. The inflation clause increases the rent of the town hall by millions every year

We want to initiate a referendum in which we would commit, currently led by Prague 4, to the help of those responding to the first steps to dream of an inordinate amount of foreign money, not to extend the contract for too long and to evaluate the economic suitability of the town hall building itself, one of the initiators of the petition and the representative of Prague 4 Tom Kaplan (KDU- SL).

By the end of April, the opposition would like to get the first thousand votes and then link the referendum with the parliamentary elections in the fall of 2025. At least one tenth of the initial vote, i.e. about 9,400 signatures from the residents of Prague 4, is needed to be annulled.

In the fall ballot, the people should decide whether to extend the contract in 2046, as it contains an option for another ten years. He gave the opportunity if Prague 4 could try to dream more. And finally, should the municipality commission the preparation of a professional study concerning the cultivation in its own or municipal premises.

It houses the town hall of the four municipal districts in Kri u tinct years. In 2011, the city leadership concluded a contract with the then mayor Pavel Horlk (ODS). According to initial estimates, over 35 years, for which the contract is signed, the cost of the project will be 1.5 billion crowns. The problem was the inflator.

The current city hall confirmed that from May 1, the owner of the building applied inflation at a maximum of 10.7 percent. Thus, it was not possible to negotiate even a minimal dream, informs the representative of the opposition Luk Kaiser Zicha (STAN), who is one of the initiators of the referendum.

Pestoe in 2012 cost less than 52 million crowns, for example this year the town hall paid 76.5 million for it. This is 15 million more than two years ago, during which the Czech Republic experienced high inflation, at least fifteen and then almost eleven percent. Given that another seven or eight million will cost a year of energy and other services, the city has paid 800 million crowns to date.

The problem, however, is not only the building contract, but also the lack of supply of suitable replacement premises. Both the opposition and the coalition agree that, in terms of availability and size, the ideal place for the construction of a new town hall would be the land in Na Stri Street, where the building once stood. This one was bought by the capital at an auction for no more than 400 million. In addition, there is a parcel in the neighborhood that belongs to Prague 4.

In terms of traffic and location, it is a place that is accessible and perfect for the future, but they are still being filled, the preparation of the project will take some time, the permitting processes are equal. In fact, a new town hall could be built there within ten years, explains the mayor of Prague 4 Ondej Kubn (ODS). With the mayor of the Prague 4 town hall, it is possible, but even so, the city council would have to come to an agreement regarding the rent, which is not possible at the moment.

Kubn noted that upon taking office, he signed the contract as it was created in 2011, i.e. without any rights or amendments. According to him, at the beginning of 2023, Prague 4 City Hall invited the owner of the building to make an official request for the right to valorize the property, but also with regard to many other rights in the contract, such as one-time discounts and the like.

Substantial change of condition

According to the mayor of the city, the owner of the building only offered to rent the building and invest more in the restoration of the building and its surroundings. As an argument for the right or termination of the fixed-term contract, the opposition proposes inflation as a significant change in circumstances.

According to Kubno, however, such a tax has little effect on the rush, which even experts are inclined to do. Whether an inflation of fifteen percent can be qualified as a substantial change of circumstance would have to be carefully assessed by the court, based on the circumstances of the conclusion of the contract and the negotiated context, but we are inclined to the view that the mere amount of fifteen percent cannot without further ado be considered a substantial change. The situation would be different in the case of hyperinflation, i.e. inflation in the hundreds or thousands of percent, as we know it from Latin America, explains Ji Brta, a partner in the law firm bpv Braun Partners.