A group of businessmen about to strike a deal with the government to take over the development and operation of the Marsa horse-racing track facilities are estimated to start raking in some €2 million a year from a commercial shopping complex and offices to be built on public land.

The revenue will be generated mainly through rents (in current prices) by the developers from some 12,000 square metres of space.

While the government is pushing the deal through parliament, to obtain the necessary green light, horse owners and polo enthusiasts are objecting to the deal on grounds that it is just another speculation project of public land.

After years of negotiations between the government’s Privatisation Unit and Marsa Race Track Limited, a draft concession agreement was presented last week to parliament to approve the deal.

The company, formed in 2017, is controlled by Hugh Morshead,  one of the shareholders in Henley & Partners – the company involved in Malta’s controversial cash-for-passports scheme. Maltese contractors F. Schembri Holdings, known as Tad-Dobbu, and lawyer Pio Valletta are among the minority shareholders.

This is pure speculation as public land is once again being given away for free

According to the draft agreement, which is being questioned by the Opposition, the company will take over the entire race track from the Malta Racing Club for the next 65 years.

Apart from obligations to build a new racecourse with state-of-the-art facilities, including new spectator stands, the government is also granting the businessmen the right to use a large area of dilapidated public land in the racecourse confines and build a fully-fledged commercial complex.

According to architect Valerio Schembri, who was engaged by the government to make a valuation of the public land, the company is estimating to invest €14 million to develop a nine-storey commercial complex. He estimated that some €2 million a year in rents, in current prices, will be raked in by the developers from some 12,000 square metres of space available.

In return, the government will receive €650,000 a year in ground rent from this area, or some €50 per square metre.

A leading estate agent who preferred to remain anonymous said: “This is pure speculation as public land is once again being given away for free.”

“Commercial real estate, even in Marsa, fetches much higher rates than the pitiful €50 per square metre negotiated by the government.”

The government has also conceded to the private businessmen another large portion of public land, currently used as a park and ride facility together with a bus terminus, to be turned into a separate 1,200-space private car park.

This public land did not form part of the original request for proposals and was added by government negotiators after the call closed.

On this land, the race track concessionaires will have to build the current bus terminus, at their expense, to be used by the public transport operator. Since the land had already been allocated to Enemalta to install a solar farm, a new agreement was reached so that the utility company can keep its rights using the roof of the commercial car park.

What about horse enthusiasts?

Horse owners claim the government has not consulted them and the deal does not benefit their interests.

“We have been sold”, one horse owner said.

“There should be better facilities but there are no guarantees about our future,” he said.

While according to the draft agreement, the prize money – the money paid to race winners – will be increased by 10 per cent upon the signing of the concession, horse owners said no further guarantees have been given that this will continue to increase.

 They are also contesting the future of the signing fee, which has already increased in the past years. The signing fee is the charge horse owners have to pay to participate in a race.

Horse owners also questioned the role of the Malta Racing Club – which has managed Marsa for the past 150 years.

Polo players, who have also been using the race track for many years, claimed they had been given a “raw deal”.

A member of the Polo Club committee said: “At first we started negotiations but then they gave us a ‘take it or leave it’ deal which leaves much to be desired. The agreement is full of ambiguous clauses and gives the private company the power to eradicate our sport whenever they feel like.”

During the parliamentary committee meeting, Parliamentary Secretary Clifton Grima said the government was still open to striking an agreement with the Polo Club. However, he insisted negotiations could not derail the whole deal.

Timeline:

June 2015: Government issues Request for Proposals (RFP) for privatisation of racecourse

October 2015: On closure of submissions, only one offer is received from an unknown group of businessmen. Government says it will still conduct negotiations.

March 2017: After a long period of negotiations and reports that the bidder wanted to change the terms of the RFP, Prime Minister Joseph Muscat announces a preliminary agreement (MOU) with Marsa Race Track Ltd. Their representative, lawyer and shareholder Pio Valletta categorically excludes any type of real estate in the deal.

September 2017: Government decides to extend MOU to continue negotiations as company reputedly makes fresh demands for real estate.

April 2018: Times of Malta reveals that during negotiations government conceded to allow a commercial complex as part of the deal. This was not allowed in the RFP. Government does not react.

June 2019: Government presents motion in parliament to approve the transfer of land and sign a concession on the race track with Marsa Race Track Limited. The concession includes the possibility of building a nine-storey commercial complex as part of the deal and to develop land which was not in the original call for proposals. Parliament is asked to approve the deal.

Main highlights of the deal:

Term: 65 years

Includes: Race track and stands, large undeveloped area to be turned into a 9-storey commercial complex and the area of the current bus terminus to be turned into a commercial car park for 1,200 cars.

RFP: The area of the commercial car park was not on offer in the Request for Proposals but inserted later by the government.

Estimated cost of project: €28 million

Estimated cost of commercial complex: €14 million

One-time concession payment: €200,000 for 65 years

Ground rent on track and facilities: €100,000 a year

Ground rent on Commercial Complex: €650,000 a year (€130,000 for first five years)

Bus terminus ground rent: €50,000 a year (€10,000 first five years)

Employees: Nine race track employees to be employed by new owners at cost of €130,000 a year

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