Thermo-modernized Soviet-era apartment building in Novoyavorivsk near Lviv. The refurbished building's infrastructure is complemented with a fresh facade. An initiative of the condominium association, the project had partial support from the State Energy Efficiency Fund. Source: eefund.org.ua
Now things are changing in the nation’s mindset. Since 1995, and especially from 2014, more than 33,000 associations of condominium owners have been created in cities and towns across the country to manage jointly-owned buildings. This is just one example among several important ownership rights and institutions that successfully restore the spirit of self-reliance in Ukraine. Ukrainians have taken giant strides in terms of ownership rights and responsibilities, and sooner or later this progression will lead to a mindshift in political thinking.
Oksana Syroyid, leader of the Self Reliance (Samopomich) political party, sat down with former Minister of Development of Communities and Territories Alyona Babak to explore these developments under the auspices of the Lviv Security Forum.
What are condominium associations?
One of the communist traumas that Ukrainians experienced was that people could neither own nor rent apartments. Instead, the State provided state-built and state-owned multi-apartment housing to residents, according to party loyalty and an assigned waiting list. Although the accommodation was provided for free, people could not choose where to live — moreover there was always a deficit of accommodation.
Residents were not responsible for the maintenance of their condominiums – that was carried out by the State, albeit inefficiently. Not surprisingly, such circumstances contributed to a societal pattern of paternalism — a reliance on the State. Uncertainty was a natural state-of-mind, as was lack of trust and deeply-seated negativism toward official agencies.
Things changed after Independence in 1991. Within a few short months, Ukrainians were able to privatize their formerly state-owned apartments.
“Almost everyone exercised this right to privatize … But did Ukrainians have the experience of being true homeowners when they had to bargain with their neighbors over what to do with the roof, basement, and so on? … In reality, former public housing tenants never had a chance to handle such responsibilities. One curious thing is that, even after the Ukrainians privatized their homes in 1992, for a long time the law still compelled them to accept that the government should continue paying for the maintenance of all those apartment buildings. It’s just that the government wasn’t yet ready to completely lose its hold on people,” Babak explains.
Indeed, although flats became privately owned and could be sold or rented, the buildings themselves remained state-maintained — as did the facilities inside and the grounds outside. Since the State had no funds to conduct the renovation and maintenance of all multi-apartment housing in the country, buildings usually remained in poor condition. This inevitably led to disproportionate results. While people managed to quickly renovate and upgrade their own flats, common spaces were unattended and many building facades remained as dreary as they had been during the Soviet era. Some owners even used their own funds to thermo-modernize their flat — update insulation and so on, but with lack of coordination.
In 1995, the government proposed an alternative — the creation of condominium associations. These would function as a volunteer governing committee: an elected head and building board to organize maintenance and modernization for individual buildings. In the wake of these new proposals, many people became true owners, taking on full responsibility and upgrading all aspects of their building. Others took a negative approach, holding on to inbred beliefs that they are entitled to certain provisions by the State — at no or higher discounted price.
But the trend in favor of independent ownership — even with its associated responsibilities and costs — has been growing, particularly after 2014. Today, more than 33,000 condominium associations exist across the country. Together, they represent one-third of nation-wide condominium ownership. In addition, these associations have formed their own collaborative NGOs which, in turn, form a significant lobbying force with local and regional governments. Not only has the culture of ownership shifted in a major way, but the realization that strength in numbers has taken root.
Recently, the State together with EU incentive programs have introduced grant funding for the support of condominium associations to reimburse some of the costs for renovation. An example is the building in the small town of Novoyavorivsk pictured above. To receive 70% of funding from these grant programs requires owners to first create a condominium association and demonstrate effective management.
Babak has emphasized that in many cases people simply need basic training to acquire management and financial skills that are necessary to run a condominium. She uses the example of her father to illustrate the benefits of thermal insolation alone:
“This winter my dad called me in saying: ‘You know, dear, I just got UAH 5,000 ($200) in utility bills, with the heating bill alone running into UAH 4,000.’ I said: ‘Dad, this can’t be true! I have a similar apartment, but I don’t pay that much.’ I understood that, indeed, the building, where my father lives, is built of bricks, it’s just perfect in the way an old brick building could be, but it’s absolutely inefficient in terms of energy consumption. It has old windows and inefficient entrances. People are freezing … I asked my father, ‘What do you really need to achieve a change in your building?’ He said, ‘We’d just like someone to come over and tell us what to do, step by step.’”
Further development of condominium associations and its influence in a political shift
“[The paternalist idea that] the management of those properties shouldn’t have been transferred to people until the government has renovated public housing continues to be peddled to this day,” says Babak. “This is the key thing that confuses people today … People had to be told unequivocally: ‘Friends, you are all owners now; you have a good title, which also means a responsibility to manage your property.’” She says this is why a segment of Ukrainians still did not create condominium associations, resulting in bad consequences: “All the while, people kept losing the value of their assets. You can see how the dilapidation of housing value gets worse by the day.”
Having studied at the University of Ottawa, Babak refers to the Canadian example of similar associations. People know not just how to buy or sell apartments but how to manage them efficiently so that assets do not lose their value over time.
“I was simply surprised by the Canadian case, where they’ve had so-called condominium ownership since 1967. This covers residential buildings with individual ownership of apartments and common ownership of shared areas and structural elements. In Canada, each condominium is legally required to calculate the cost of maintenance and overhaul of the common property for 30 years in advance. This is done to enable anyone considering buying an apartment in the building to clearly know the extent of their financial obligations and compare them with their options. Of course, if renovation has already been done, then such a prospective buyer understands that they won’t face major financial pressure over the next, say, 15 years. Why do I quote the Canadian case? .. They put in place provisions based on residential market mechanisms, where you can’t sell your apartment unless you have the so-called status certificate indicating relevant costs.”
Economic advantages are the first, most obvious, benefits that association members receive. However, with time, they expect their elected representatives to protect their rights and interest, and demand legislation that ensures transparency. This is key to the nexus of personal concerns with political power.
Babak and Syroyid discussed the views of philosopher John Locke who made ownership the key concept in his writings on the nature of government. Locke believed that the most important purpose of government for its citizens is to protect their property rights. Now it is more important than ever for Ukrainian citizens to demand from the State transparent institutions and fair practices, rather than to remain passive and wait for ready-made handouts. Babak says,
“If asked what is the greatest asset of the Ukrainian economy, I’d reply that it’s precisely those people who have realized they are the owners, they are in charge, and the government should be there for them to exercise its function of protection of their public interest. Condominium associations are the true cornerstone of Ukrainian statehood. They have said: ‘I take responsibility for my property, but you, dear government, follow the provisions that you agreed to.’ I believe this is the right path for Ukrainian society to follow … Imagine that there are a hundred apartments in each [condominium association]. This means millions of people who’ve already realized they are a force to be reckoned with. They don’t care what political party rallies for the issue. They must operate on behalf of owners.”
Babak also explains how condominium associations can change local governance. An apartment building is a huge property that needs reliable servicing, such as electricity, gas, water, HVAC (heating, ventilation, air conditioning), as well as sewage, garbage collection, etc. When individual owners deal with service providers independently they face so many bureaucratic obstacles that they feel discouraged and helpless.
For this reason, as soon as multiple associations create a critical mass, they can act as a unified force. Collectively they are major customers for service providers and can approach them with concerns as a powerful group, not a single person. Moreover, associations are composed of voters who tend to elect officials that are responsive to their demands.
The culture of creating and following the rules
Running a condominium association is not easy. A system of management needs to exist to establish and manage policies and procedures. Meetings are held, agendas are set, discussions take place, minutes are recorded, decisions are ratified, and reports are issued.
Many people are not familiar with such functions and how to share responsibility for them. As well, many laws to formalize such association regulation do not even exist. Reforming regulations has begun, but much of it is still in the early stages. For example, land registry of many kinds of property, including apartment buildings, is not yet properly administered. Such lack of formality creates obstacles and conflicts, even at a neighborhood level.
However, progress is underway. Citizens have made great strides in learning how to insist on their property rights. The demand to protect and regulate property rights needs to move rapidly through municipalities and Parliament itself. This is how people become true owners, not only economically but politically. It is a path not without thorns but the rewards are evident.
“The key thing today is that it isn’t easy to think of ourselves as owners, as those who have something to offer and demand something from the government in return. We have to put rules in place that we ourselves will follow and demand from the government to enforce a fair compliance with those rules by everyone. These things, this connection, not just the fact of owning something somewhere or a fence-sitting attitude, but the idea that the common, public interest will serve everyone’s interest better is what ultimately matters.”
A condominium association, just as other new institutions — individual entrepreneurs registered by simplified procedure and the long-awaited launch of private land markets — are precisely what make for better political culture as opposed to mere paternalistic expectations. Babak claims:
“Why do I pay so much attention to housing and the land around buildings? Because it is the first, basic level of the economy in any nation. The word economy is derived from the words ‘household’ and ‘law’ in Greek. ‘Oikos’ stands for a ‘household,’ and ‘nomos’ – for ‘law.’ That is, it’s a law applying to a household, a house, a home. The whole economy revolves around this.”
She concludes by pointing to the major contrast between slaves and owners:
“A slave differs from a freeman in only two ways – property and freedom. A slave with no property expects to be given something to eat, a place to stay, and so on. Slaves don’t get to govern, that is, they don’t need justice for distribution, protection of property and other things. Slaves expect hand-outs from the government, a solution to their problems, so that it isn’t their problem anymore. By contrast, only owners can demand justice from the government.”
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