St. Pete Leaves Khrushchev Houses to Investors

ST. PETERSBURG -- St. Petersburg is in the second stage of a program to renovate its khrushchyovki, the five-story mass-produced housing projects built during the Khrushchev era in the 1950s and 1960s. Judging by the slow rate of progress and the lack of funding for the program, more recent buildings -- those built between the 1960s and the 1970s -- will be in need of repairs before the first are rebuilt.

The first wave of mass building accounts for 10 million square meters of housing in St. Petersburg, and 700 million square meters in the country as a whole. Experts say the load-bearing elements of the khrushchyovki can stand for a few more decades.

"Russia has 700 million square meters of first-series housing that is still usable. They need some upgrading, like design, layout, utilities, windows, facades, attics and heating," said Anatoly Petrakov, deputy chairman of Gosstroi, the State Construction Committee, expressing the government's approach to the issue of rebuilding the khrushchyovki.

Everyone understands that the khrushchyovki aren't very attractive to consumers when compared to other housing on the market. And no matter what tricks the builders have in their arsenal to improve the housing, "there's no way to make [the 2.5-meter ceilings] any higher," Vice Governor Alexander Vakhmistrov said. But even though Vakhmistrov refers to the khrushchyovki as "low-amenity housing," he does insist that they should be kept around -- after major repairs.

The most radical solution to the problem of upgrading the khrushchyov-ki is to demolish the old buildings and erect new housing in their place. This is what has come to be called the "Moscow route." But Vakhmistrov thinks the economics should also be considered. Some old five-story apartment buildings in Kupchino, for example, will be demolished "Moscow-style" to make way for new 20-story buildings. These will use the same panel construction technology as the khrushchyovki, which has led some market participants to question the project's rationale.

"By building panel homes today, we are creating time bombs. Twenty years from now we will encounter the same problems," said Viktor Polishchuk, deputy chairman of the city's urban planning and architecture committee.

Different approaches to rebuilding mass-produced housing are used across Russia. A key issue is the degree to which local authorities are interested in the buildings' fate.

Rockwool Russia, the Danish company that owns a Russian subsidiary producing stone wool insulating fiber, has participated in a number of projects throughout the country.

Company spokesman Alexei Voronin admits that the first projects were mostly promotional. The company needed to demonstrate the results of reconstruction. But work is going forward where regional programs were adopted.

For example, in Surgut in 2000, the local legislature adopted a plan to rebuild 130 apartment buildings dating back to the 1970s. The program will operate for 10 years and rely on 3.5 billion rubles ($123 million) of state funding. Seven buildings were rebuilt in the first stage, including insulation of exterior walls, conversion of first-floor apartments to commercial space, replacement of old pipes, and construction of attics.

Similar work was done on housing in Ulyanovsk. According to estimates, converting first-floor apartments into commercial space can generate a profit of 10,000 rubles ($350) per year from each entranceway. This money covers the cost of reconstruction.

Moscow is using its own methods to rebuild blocks of apartment buildings from the first wave of khrushchyovki. Residents of the aging five-story buildings are relocated, the buildings are demolished and new high-rises are erected in their place.

There are several companies engaged in this process, including construction material manufacturers, that erect new buildings with up to 14 stories. The Moscow authorities require that new buildings have parking, and that the first-floor space be commercial.

The nine-story apartment buildings that dot the khrushchyovka neighborhoods present Moscow with another problem. It is not cost-effective to demolish them. They are in better condition than the khrushchyovki. But these buildings will also need work soon, either in the form of repairs or demolition.

Moscow builders are working on a pilot project in block 31 in Kupchino. The Moscow developers will build housing on block 31 -- an empty plot of land -- to receive the inhabitants relocated from five-story buildings in neighboring block 18. Then the khrushchyovki in block 18 will be demolished, the utility lines rebuilt and new high-rise apartment buildings erected in their place.

The Moscow Investment and Construction Company, or MISK -- 51 percent of which belongs to the Moscow mayor's office -- will carry out the project. The advent of MISK is a result of an agreement signed in July 2003 between the administrations of Moscow and St. Petersburg concerning joint investment in developing the economy of St. Petersburg. Investors plan to enter the construction market in the spring.

The Moscow method is one of many tried out in St. Petersburg during the first stage of the regional program.

But no matter which method the authorities choose, financing is needed. Under the 2003 program the administration has issued resolutions giving a few companies whole blocks for reconstruction. These companies include the Dachnoye ART, M-Industriya, IVI-93, and 47th Trust, Inkom-DSK-3, and Spb-Yug. Some of the buildings in these blocks will be demolished and some rebuilt. The investors will also need to erect new apartment buildings and public services. Specialists say planning alone could take between one and two years, and the entire project will be completed in about 10 years.

The city is developing its own blueprints for blocks 5, 6 and 8 in the Moskovsky district. Investors will be rounded up later.

IVI-93 is already working on block 12 of the Grazhdansky Prospekt neighborhood. This 72-hectare block is bordered by Ulitsa Vavilova and Severny, Nauki and Grazhdansky prospekts.

The company's general director, Boris Rogovoi, said that 70,000 square meters of housing will be built as fill-in construction in place of 20 demolished cinderblock structures built by German prisoners of war in the 1940s. In lieu of paying for the right to build on this plot, the company will refurbish 12 five-story apartment buildings and utility lines. The cost of refurbishing the khrushch-yovki is 20 million rubles ($700,000), and the utility lines will cost about $5.5 million. Thus the cost of building 1 square meter of housing is about $600.

Governor Valentina Matviyenko visited this site during an administration-organized tour of fill-in construction. She called the project an example for other investors and proposed solving the khrushchyovka problem block by block: "We need a comprehensive solution to reconstruction, giving investors blocks. Let them handle the refurbishment. Or let them relocate residents and demolish."

But for such a plan to work, the money the investor would otherwise pay for the right to build should go not to the city budget, but to the reconstruction project. While Matviyenko welcomes the idea of block-by-block refurbishment, at the same time she requires that investors' funds go directly to the budget. This makes it clear that the city is unwilling to participate in reconstruction even if funded by outside sources.

In addition to the Danes and the Germans, Finnish builders have expressed interest in rebuilding khrushchyovki in St. Petersburg.

Finnish company CT-Centre has chosen as a pilot project a five-story apartment building at 70 Ulitsa Lensoveta. Specialists say the building is in bad shape due almost exclusively to inconsistent maintenance.

If the St. Petersburg administration likes the results of the Finnish project, then the Finns are prepared to obtain funding from the European Bank for Reconstruction and Development to expand the project.

So far the St. Petersburg administration has preferred refurbishment without relocation.

The city construction committee puts the cost of refurbishing at $210 per square meter of space.

The decision to refurbish without relocating residents is often made for reasons of economy. Officials and investors are unanimous on the fact that relocating residents is the most labor-intensive part of the project. Apartment owners usually demand apartments similar in size and get their way in court.