The government ignored advice from the Lands Authority saying it appeared to have an incorrect valuation for change of use of land in Tigné belonging to the Fortina Hotel owners, documents show.
The Fortina had bought the land from the government nearly three decades ago on condition it developed it only for tourism purposes, but the government is now seeking Parliament approval to allow the company to also build apartments, shops and offices on site.
The Sunday Times of Malta has seen internal documents, prepared by top officials from the Lands Authority and sent to Transport Minister Ian Borg, that cast doubts over the proposed deal.
The documents say that the valuation of €8.1 million made by a government-appointed firm of architects only took into consideration one of the four waivers that the government was proposing to give the owners so they could go ahead with mixed-use development of the land (see below).
The Fortina Group insists that the €8.1 million it is being asked to pay for the removal of restrictions on development of the “landlocked” site is well above market price for Tigné, saying this view is based on a valuation carried out by one of the ‘Big Four’ audit firms. It said that 85% of its site will be occupied by a newly refurbished five-star hotel and associated facilities.
According to the documents, while the Fortina owners requested waivers affecting nearly 2,000 square metres of their land, the valuation of €8.1 million only took into consideration a quarter of that land, roughly 500 square metres.
In a memorandum, officials from the authority questioned this valuation: “It is specifically stated that valuation is being made on the basis of land measuring 565 square metres, or waiver number 3,” the document states.
“It does not seem to have taken into consideration the other three waivers requested by the company. This statement has to be specifically clarified with the architects.”
The internal memo raises a question on another request received from the Fortel Group, which owns the Fortina, soon after the PA had granted a permit to turn the hotel zone into a mixed development area.
The Fortina had bought the land from the government nearly three decades ago
“There is another letter sent by Notary [Charles] Mangion on behalf of Fortel Services Ltd, wherein it is stated that the Planning Authority has also approved that on site there are also erected offices and commercial outlets,” the memo notes.
“He requested that the Lands Authority revoke the limitation imposed on the development of the portions of land already indicated as being solely for touristic purposes and approve that the same portions of land could be developed for all the development purposes in the Planning Authority permit attached to said letter without limitation.
“It is not clear whether this letter was taken into consideration by the architects (in their valuation),” the memo notes.
The Sunday Times of Malta is informed that in view of this memo, the Board of Governors of the Lands Authority, led by former judge Lino Farrugia Sacco, refused to take ownership of the deal. Instead, it left it up to the government, through Minister Ian Borg who is responsible for the authority, to decide whether or not to go ahead.
Last week, the government proposed to Parliament’s National Accounts Office Committee a resolution to grant all the waivers to Fortina for €8.1 million paid over 10 years.
However, the proposal was blocked by the PN members on the committee, MPs Beppe Fenech Adami and Ryan Callus, who claimed the deal was clearly not in the public interest, was based on wrong valuations and should be renegotiated.
Parliament was expected to rise for the summer break last week but the government has earmarked an extra parliamentary session for Wednesday, putting the Fortina deal on top of the agenda.
The issue goes back to 2017, when the Zammit Tabona family – owners of the site – asked the government to waive the tourism-only restriction that had been placed on parcels of the land they bought from government in the 1990s and 2000s.
The Zammit Tabonas entered into a multi-million-euro promise-of-sale agreement with gaming giant BET365 for a still-to-be-built office block on site.
According to the draft parliamentary resolution, the Fortina will pay €1 million upon the release of all the waivers and the rest (€7.1 million) in unspecified instalments by 2029 at the latest.
What did Fortina ask for?
General request: Waiver on an area of 1,810m2 from the total of 9,045m2 owned by Fortel. A total of 8,425m2 of this land had been purchased from the government.
Waiver 1: Request to remove height limitation on land measuring 706m2 to build additional floors as an extension to the hotel.
Waiver 2: Request to remove restriction on another 625m2 in an area of 2,992m2, originally to be used exclusively for tourism purposes, and to waive the height limitation on the whole area.
Waiver 3a: Request to remove restriction on another 565m2, originally to be used exclusively as an extension of the Fortina Hotel.
Waiver 3b: Request to remove waiver restricting height limitation on a room of 23m2.
Waiver 4: Following the issue of a Planning Authority permit, that the Lands Authority should revoke all the tourism-only limitations imposed on the development of the portions of land in waivers 1, 2, 3a and 3b and approve development for all purposes as in the PA permit.
Questions sent to Edward Zammit Tabona – CEO, Fortel Group
Apart from the hotel, what is your company planning to build on the land previously occupied by the hotels? Please specify the number of apartments/offices and number of storeys.
Did you make a valuation of the site, which is currently restricted? If so, can you send us a copy?
Can your company undertake the proposed development if the government doesn’t concede its rights?
Reply
“We refer you to the statement and our right of reply we issued in light of the misconceptions that arose from your coverage of this issue in recent days. We do not wish to elaborate further as we do not seek to influence the parliamentary vote on the removal of the restriction on commercial and residential development on land, which is landlocked and forms part of a much larger site which we have fully owned for the past 30 years.”