Updated at 2.50pm, adds Fortina statement
The owners of Sliema’s Fortina Hotel are about to have restrictions on former public land lifted by the government, allowing them to build shops and apartments potentially worth tens of millions on land currently reserved exclusively for tourism.
During negotiations between the Lands Authority and the hotel owners, the Zammit Tabona family, it was agreed that the restrictions could be lifted against a payment of €8.1 million at current market prices.
This valuation followed reports submitted by government architects.
However, instead of paying the agreed sum all at once, as would normally be the case, the government has agreed to take a payment of just €1 million upon the signing of the contract.
The rest – more than €7 million – will be paid interest free at the end of a 10-year period from when the deed is signed.
No call for tenders has been issued for the land in question, which was originally intended exclusively for tourism purposes but will now also be developed into office, retail and residential units.
Industry sources have complained about the “simply ridiculous” terms agreed, saying the €8.1 million valuation is already on the low side.
“€1 million won’t even buy you a small plot in the area let alone the space to build a massive commercial development.”
The land on which the Fortina Hotel is built had been acquired by the Zammit Tabonas in bits and pieces since the 1960s, from both private owners and government.
Three separate public deeds were then signed in 1991, 1996 and 2000 through which the owners managed to acquire another 4,000 square metres of public land to extend the hotel, paying the government €1.4 million for it.
One condition, however, was that this land could only be used for tourism-related purposes.
Under the new deal, this restriction has now been lifted and the government has agreed to a request by the Fortina owners to be granted ‘freehold’ over the land.
The government still needs the approval of Parliament and a resolution is expected to be presented shortly.
Last year, Edward Zammit Tabona, CEO of Fortina Developments Company, acquired a permit from the Planning Authority to demolish one of the hotel blocks and instead build a 15-storey office block on its existing land. At the time, there was no approval yet from the Lands Authority for this development.
Approval was also granted to raise the height of the hotel by a number of storeys and to build residential units for sale together with a retail complex.
Times of Malta is informed that if Parliament approves the resolution, the government will be signing the new deal with Edward Zammit Tabona and Antoine Portelli on behalf of Fortina Developments Ltd and with Julian Zammit Tabona and Adrian Zammit Tabona on behalf of Fortel Services Ltd.
Times of Malta has reported that the office block, still to be built, has already been sold to a gaming company for over €65 million.
Asked to say whether the company had carried out its own valuation for the concession and whether the development could take place without Parliament’s approval, Mr Zammit Tabona did not reply.
James Piscopo, a former Labour Party CEO who was appointed CEO of the Lands Authority last year, was a business partner in commercial companies with members of the Zammit Tabona family, including the Fortina CEO.
While he had failed to declare his interest to the Lands Authority board on time, as he was obliged to do, Mr Piscopo had declared he was not going to participate in negotiations over this deal to avoid a conflict of interest.
He had also declared that he was going to sell his shares in various companies to avoid potential conflicts of interest.
In a statement on Tuesday, Fortina said the group has long been in negotiations with the authorities to lift a restriction on development, other than for touristic purposes, on part of its site, which concerns a circa 1,250sqm landlocked plot that has been owned by Fortina for 30 years.
Fortina considered the €8.1 million premium requested by the Land Authority to be far in excess of market value, but it still decided to meet this request.
A spokesperson said that the premium worked out at around €6,480 per square metre of buildable area, which was "an enormous sum, especially when one considered that we already have full ownership of the land in question".
Moreover, 85% of the plot would still be occupied by a newly refurbished 5-star hotel and associated amenities, with the remaining section used for residential and commercial purposes.
“The biggest travesty is that the plot was not offered by tender, when we have fully owned the land since the 1990s. It’s truly a shame that such a major investment on our part is being portrayed in a negative manner,” Fortina said.