Hungary: What happens to Hunyadi Square?

We would like to share basic information, facts, findings and arguments with you. According to the chief architect of the 6th District, this needs an infusion of capital in the amount of Ft 3 billion, which is not feasible without the involvement of private investors.

The establishment of an “Europe House” within the market hall, and the construction of an underground garage are forecast as providing the potential return of investment. But what do the “Europe House” and the underground garage mean for residents here? Firstly, it would mean that both the indoor and outdoor markets are moved to the cellar, which would presumably mean that fewer farmers will bring their produce.

The rental prices of the selling areas will increase significantly; consequently, less local producers will be able to sell their products, and the chances for local residents to get fresh groceries will significantly decrease. The outdoor market on Hunyadi Square has a special atmosphere and as such is amongst the last in Budapest. To look around, browse and shop for your food here is a completely different experience than among the supermarket shelves.

According to the official standpoint, the market hall will be transformed into “Europe House”, an establishment that will host small shops selling different specialties from the EU countries, commercial shops selling Hungarian specialties, tourism agencies and various boutiques. In other words, shops selling apricot brandy and strings of paprika, restaurants and businesses, while the market itself can retire to the basement.

Meanwhile, on Hunyadi Square and park, sooner or later a similar environment to that on Liszt Ferenc Square will be developed, with a profusion of restaurants and bars taking over, and the small-town atmosphere will be gone forever. As consequence to the development of the 4-5-level underground garage, most of the original trees will be cut and replaced by saplings, while traffic generated will increase the noise and air pollution.

Costs of the rehabilitation of the market and square
The assertion of the 6th District chief architect as concerns the costs is incorrect, taking into account the figures that are available on the site of the local government. For example, the renovation costs connected to the buildings situated on Andrássy út 8 and 52 give us calculations of Ft 300 million per building, and checking the costs for similar buildings in other districts gives us a range of figures similar to the above.

According to the civil group standpoint, the costs of renovation and reconstruction works related to the Hunyadi market and Square can be reduced to one-third of those projected by the municipal government, meaning that these comparative costs would be Ft 1 billion, not Ft 3 billion, but in this case, even a glass elevator, escalator and landmark stained glass windows would be included.

How can this possibly be achieved?
• by giving up unnecessary portions of investment and development (i.e.,  “Europe House” and the underground garage),

• by transparent and appropriate – competitive – public tendering, for the reconstruction and renovation contracts,

• by introducing a continuous control system of the investment, in, which, alongside delegates of the local government, civil organizations, and residents would also be included.

Complying with these, a budget of Ft 1 billion in PUBLIC FUNDS would be sufficient, even considering the higher costs given that the market hall is an architectural site that falls under strict preservation regulations.

Sources of finances for renovation
Does the 6th District municipal government have the finances necessary (Ft 1 billion) for the rehabilitation of such a significant area as Hunyadi Square?

The preservation and maintenance of the architectural and built environment is the obligation and basic task of the local government, for which annual sums should have been allocated, which could have served as a framework budget. We remember the political campaign message of István Verók: in the previous cycle, it was due to their efforts and planning that the financial situation of the district has improved. If he had not planned during this period for imminent compulsory costs, it would have meant that he had faked the picture he showed to outsiders, as well as misleading his own voters and all the residents of the district…

If there are no funds available, let us procure them!
If start-up funds for the renovation of Hunyadi Square and market hall are not available, then they must be procured. On 22 February 2007, the Council of the municipal government has approved the financial revenue plan for 2007, in which an income of Ft 5.2 billion from real estate sales was incorporated, of which 2 billion has been decided upon this summer. This amount is allocated to the reserve funds and deposited. Thus, there are funds available for the renovations – Ft 1 billion, with Ft 4.2 billion remaining as reserve revenues. Why, then, is there a need for private investor capital??

About potential credit
The municipal government claims that it is not only the problem of financial resources, but also that they did not found listening ears at any of the investment banks. It is to be acknowledged that at the base of any bank loan financing, there has to be a background guarantee: if any financial entity has assets or even a state guarantee, it has an advantageous position in a loan request procedure. While the 3200 municipal governments may differ in their dimensions and assets, one factor is common to all: that if something goes wrong, the state (our tax money) is backing them, and they will not go bankrupt.

For quite some time, the banks have been aware of this, so that even in the case of small rural communities that might own only a culture house, even this is considered a symbolic guarantee for credit – with the state behind it. Then, would the Hunyadi Square market alone, that belongs to the famous cultural heritage area of Terézváros, even in its shabby condition, fail bank loan requirements? Especially taking into account the forecasted income of Ft 5.2 billion of „surplus” real estate of the local government, that could easily serve as a guarantee?

Why then do we need private investors when own resources, credit and reserve assets are all available? One could offer many explanations and arguments for this, but it would suffice to survey the sphere of confidential investors selected outside of competition over the past decade. Companies of simple Hungarian ownership or Hungarian headquarters are few and far between. The majority are rather foreign-owned, either in part or in full, with the greater part of these including shares in so-called off-shore companies.

What, then, is the fundamental motive?
The abolishment of traceability of the appropriation of public funds. In the case of Hunyadi Square, then, just who is the investor selected outside of any competition? Amelus Ltd., whose chief owner at the time of contract-writing was the Marshall Islands Labor Ltd., i.e., an off-shore company. In the spirit of increasing transparency of their administration of public monies, they have just recently transferred their bookkeeping to Spain...

Market hall and/or marketplace?
There are two possible solutions, which are not mutually exclusive, and in fact, according to European practice, function well in tandem. The essence of the first commercial concept is that a constant supply is maintained over the 365 days of the year, fulfilled by imports from changing locations in the case of seasonal fresh produce. This solution requires the refilling of produce according to a list and a shelf-system.

The other concept logically comprises a supply of agricultural and bio produce, generally in an open-air space, providing at the same time the natural psychological charge of the traditional marketplace, and all the merchandise that does not have a place in the former... Both function complementary to each other in all European cities, large and small – from Zurich to Paris, from Vienna to Bratislava. It is indisputable, however, that from the perspective of food hygiene, a building is necessary: a modern marketplace cannot consist solely of vendors’ tables.

It is undeniable that the sale of perishables first and foremost simply cannot be conceived of otherwise. Such is the case for meats and all sorts of produce which requires uninterrupted refrigeration “from the slaughterhouse to the dinner table”. Alongside the refrigerator shelves, a storage infrastructure, cold storage rooms and social conveniences are also necessary, among others. While it is indisputable that open-air or moveable stalls are most suitable for greengrocers, it is also beneficial to provide potential shelter in the case of inclement weather. This does not mean that the open-air greengrocer section of the farmers’ market should be terminated or moved to the souterrain. Unfortunately, what previously occurred at Lehel Square is now underway at Hunyadi Square.

The owner, favouring the investor, will sabotage his obligation to preserve the building, which could in fact be implemented with relatively little expenditure, to the point that the stalls will fall to complete ruin, and with everyone waiting for something to happen – anything at all, since the present situation is untenable. And this is precisely the situation – the moment when one can come forward with otherwise unnecessary concepts – as a kind of redeemer.

Underground garage – why exactly on Hunyadi Square?
Building and operating underground garages is a business. But it is only profitable if the investment period is relatively short and the expenses are recovered at least in the middle term. Subsequently, the only expenses are related to its maintenance, with operation bringing profit. But how can this be attained? Through keeping investment and maintenance costs low, and with the help of effective demand.

How can investment and maintenance costs be decreased?
- If the investor pays no compensation – neither one-off, nor continuous – to the owner of the land,
- if numerous obligatory factors are disregarded during the investment, such as the consent of the majority of the neighborhood’s inhabitants, insurance, and many other factors ordained by decrees, which would increase expenses,
- if no compensation – neither one-off, nor continuous – is paid to the inhabitants of the neighborhood, for the unfavorable consequences caused by its operation, for the increased burden on the environment and for the decrease in real estate prices,
- if no parking allowances are granted to local inhabitants,
- if the investor and the local government tender together for national and international (EU) funds, where cooperation between the private sphere and local governments is preferred,
- if the investor manages to include public funding into the investment, the majority of which will be later drained out through the chain of subcontractors and by overbilling,
- if the majority of unpleasant tax- and duty-paying can be avoided by including off-shore companies.
How can effective demand be increased?
- Through decreasing the number of existing surface parking lots
- by making the use of existing surface parking lots unviable by transferring their supervision to interest groups (private parking companies)
- through not creating the P+R system existing in every other part of the world; moreover, by making the few such places fail, in order to prove that this system cannot work in Hungary
- through installing further offices and institutions on the vacant sites
- through installing further offices and institutions in previous apartment buildings
- through increasing the prices of public transport until it equals the costs of car use
- through driving out, or, at best, buying out, low-income local inhabitants, who only use surface parking, so they be replaced in private flats by inhabitants who can afford monthly fees of underground parking lots without difficulty.

The parking problems of the inner city should not be “solved” by constructing more and more underground parking lots, but by decreasing car traffic, increasing the quality of public transport, and by constructing P+R parking lots. For instance, at Felvonulási Square, from where the inner city and Terézváros can be easily reached by trolley, bus and subway. Klauzál Square, in the neighboring 7th District could be renewed without an underground garage, just as Almási Square, or the Károlyi Garden in the 5th District.

Why do investors want to build underground garages exactly on Nagymező Street, Jókai Street or Hunyadi Square? Because the 6th District local government welcomes them with open arms, and place their interests before those of the local residents… Because in the 6th District, those doing business here are more important than those living here.

It is common knowledge that the 6th District is one of the most desolate in Budapest, with the smallest green area per capita. We consider it symbolic that the local government of our district still wants to cut down trees at any cost. They were not able to manage this on Jókai Square, and perhaps they will also fail on Nagymező Street. So they are now baring their teeth at the trees on Hunyadi Square…

Hunyadi Square is a public park, a public property, where, according to the latest plans, the construction of the underground parking lots would cover 65% of the square, most of the trees would be cut down, which, even in case new ones were planted, would entirely change the square’s image, ambiance and function.