(Don’t) Pay Your Rates

DSCN4253A Petersburg housing services worker risking life and limb to clear snow off the roof of a tenement building in the city’s downtown. Photo by the Russian Reader

Russians Are Increasingly Not Paying for Their Flats
Growing Debts for Housing Services and Utilities Reflect Obvious Social Ills
Pavel Aptekar
Vedomosti
February 21, 2018

The increase in housing and utilities rates, occuring alongside a protracted downslide in personal income, has produced an abrupt upturn in debts for housing services and utilities, and collections of arrears in court, especially among low-income segments of the Russian populace.

The Russian Supreme Court has published statistics on the collection of debts for housing services and utilities. In 2014, 2.1 million such cases were ajudicated by the courts. In 2017, the figure was 5.4 million cases, and the total amount of recoverable debt had doubled, from ₽60 billion to ₽120 billion—taking into account, however, the debts of legal entities that paid for heating irregularly. Nevertheless, these figures reflect both an alarming trend—utilities payments have increasingly become a burden for disadvantaged parts of the populace—and the unwillingness of the rich to pay the bills for flats they have purchased as investments.

Generally, the collection of payments for utilities and housing services proceeds calmly. According to the Institute for Urban Economics, 95–97% of apartment residents pay their bills on time, but an individual’s timeliness in paying their bills depends on their income, as well as the climate and budget priorities of the Russian region where they live. According to Rosstat, household expenses on utilities and housing services per family member rose between 2014 and 2016 from ₽1,511 to ₽1,816, i.e., by 20.2%. The share of total household expenses spent on utilities and housing services rose during the same period from 10.3% to 11.3%.

For the sake of budget savings, many regions have reduced subsidies on housing and utilities, which has seriously increased the amount of money spent on these services by local populations, says economist Natalya Zubarevich. For example, housing and utilities account for 25.8% of paid services in Kursk Region, while in neighboring Oryol Region the figure is 41.1%. In Khabarovsk Territory, housing and utitilies expenses make up 26.7% of the cost of all services, while in Amur Region, which has a comparable climate, the figure is 45.8%.

In 2016, housing and utilities expenses accounted for 15.2% of all expenses among the ten percent of Russian families with the lowest incomes, and 14.8% of all expenses among the ten percent of families who were less poor. People who have to scrimp on everything are often forced not to pay for housing and utilities simply in order to survive. However, according to Mikhail Men, Minister for Construction and Housing, some of the arrears are owed by the proprietors of apartments bought as investments, who do not want to pay the bills for vacant flats.

According to Rosstat, the total amount of money owed by the Russian populace for housing and utilities in 2014 was ₽111 billion; in 2015, it was ₽135.8 billion. Subsequently, the debts have grown more quickly. In October 2016, Andrei Chibis, Deputy Minister for Construction and Housing, informed TASS News Agency they had reached ₽270 billion, and in July 2017, Men cited the figure of ₽645 billion [approx. €9.2 billion].

This increase reflects an obvious social ill. Housing and utitilies fees are billed by private companies, who turn not only to the courts to collect unpaid bills but also to the services of illegal debt collectors. Such circumstances could engender serious conflicts, especially in small towns with poor populations.

Translated by the Russian Reader. See my numerous previous posts on the problem of debt in Russia.

Pay Your Rates

Gazprom Refuses to Name and Shame Russian Authorities Falling Behind on Bills
Moscow Times
March 29, 2017

Russian energy giant Gazprom has refused to name and shame regional governments for falling behind on their gas bills.

Previous press releases by the company had turned the spotlight on authorities who refused to pay up.

Gazprom’s last debt report in 2016 slammed local governments in Russia’s North Caucasus, reporting that officials in the region owed more than 48 billion rubles ($845 million)—more than 80 percent of all money owned to the company across Russia as a whole.

This year, the company took a less-confrontational approach, declining to name its main debtors despite a rise in outstanding payments. “Overdue payments remain an urgent problem,” the company said in a press release. “In 2016, it grew by about 6 percent, amounting to 161 billion rubles ($2.84 billion) as of January 1, 2017.”

Some have seen the change as part of a bid to appease Chechen leader Kadyrov after he locked horns with the energy company last month.

Kadyrov, whose government forms a vital part of Russia’s North Caucasus region, accused Gazprom of using “worn out” equipment. He said that the company’s “bad management” forced the Chechen people to live in “19th century conditions.”

“People pay for light, for gas, but the money just doesn’t get there,” Kadyrov said.

The Chechen government has long waged a campaign to see local energy assets handed over to Kadyrov’s safekeeping.

The Kommersant newspaper reported in February that Russian oil giant Rosneft could sell its assets to the Chechen republic in a multi-billion dollar deal.

The Chechen government also took control of property belonging to Chechenneftekhimprom—the state-owned company that controls the republic’s oil-refining and petrochemical industry—in December 2015 after repeated requests to Russian President Vladimir Putin.

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That’s certainly a curious article.

I was walking round town the other day and came across several instances of Gazprom’s engaged in quite the opposite behavior, that is, naming and shaming ordinary flat dwellers to their neighbors for the money they had failed to pay the gentle folks who “hold[] the world’s largest natural gas reserves.”

The funny thing is that the worst gas-bill shirker in this particular block of flats, the bourgeois wrecker who lives in flat no. 48, owes mighty Gazprom the equivalent of a whopping 35 euros. The bastards in flats no. 35 and no. 41 owe a bit over nine euros each, but they’ve already been tied to the same whipping post as the foreign saboteur in no. 48.

The circumstances at a nearby block of flats is a bit more dire. Flat no. 58 has seemingly gone rogue, racking up an unseemingly debt of 245 euros. And yet Gazprom, which, as the Moscow Times article, above, suggests, has learned the lesson that discretion is the better part of wisdom, has also ratted out flat no. 9 for owing it the equivalent of eight euros fifty cents.

So the takeaway is that if you’re a North Caucasian republic, you can get away without paying your gas bill, which, I imagines, amounts to more than nine euros a month.

For the record, my monthly gas bill amounts to a little over six euros a month and I always pay it on time, such a fervid patriot am I.

But not everyone is conscientious as I am, as I saw a bit further down the same street, where Gazprom had named and shamed packs of shirkers wholesale—alas, to no avail.

Sigh. These folks don’t want to pay their rates at all, apparently.

Or maybe they can’t afford to pay them?

Well, that never stopped maniacal Russian debt collectors from going after debtors like Murder, Inc., carrying out a hit.

So pay your rates.

All photos by TRR

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Tatarstan’s Zelenodolsk District: Pay Your Rates or We’ll Take Your Kids

Aerial view of Zelenodolsk, Tatarstan. Photo courtesy of Wikipedia
Aerial view of Zelenodolsk, Tatarstan. Photo courtesy of Wikipedia

Children Removed from Families of Utilities Debtors in Tatarstan
Natalia Vasilyeva
Vechernyaya Kazan
January 12, 2017

Alexander Tygin, head of the Zelenodolsk District, has instructed his subordinates to remove children from families who have gone into debt for nonpayment of gas and electricity bills. Vechernyaya Kazan has obtained a copy of the relevant document, whose harsh wording could make even the most hard-boiled reader shudder. No one in Tatarstan has yet taken such a radical approach to solving the problem of poor families whose homes and flats are threatened with having their electricity shut off in wintertime due to unpaid utilities bills.

“The children’s protective services of the Zelenodolsk Municipal District executive committee should be ready to remove minor children living in dwellings in debt for energy bills,” read the official instructions, signed by Alexander Tygin after a staff meeting on December 12, 2016. Short and to the point, as they say. Readers are free to interpret the instructions as they fancy. Will the children be removed forever from the families of debtors or only for the winter, keeping the minors from freezing in houses in which the heating has been turned off or burning to death in a fire? According to our information, in December, two children from families of debtors in the Zelenodolsk District were taken into care.

Copy of Alexander Tygin’s instructions. Courtesy of Vechernyaya Kazan

The problem of families in persistent default on their payments for utilities and housing services became a serious matter in January 2016, after the tragedy in the village of Staryi Kuvak in the Leninogorsk District, in which 27-year-old Olga Zhuravlyova and her five children, aged six months to ten years, burned to death in their own home. It was discovered the gas supply to the house had been turned off since August 2013 without a court order, and the family had been heating the house with electric heaters and a wood stove, the cause of the tragedy. In addition, it transpired the Zhuravlovs had earlier been registered as a vulnerable family, but shortly before the tragedy they have been removed from the registry.

At the time, Tatarstan President Rustam Minnikhanov harshly criticized district officials for “short-sighted actions” and ordered the republic’s government to improve how it worked with vulnerable families in debt. After the tragedy in the Leninogorsk District, around 300 families whose gas and lights had been turned off due to debts were identified.

According to Guzel Udachina, ombudsman for children’s rights in the Republic of Tatarstan, a year on, the president’s orders have not been forgotten at the local level.

“Since last winter, the republic’s towns and districts have worked systematically to identify problem families and restructure their debts,” said Udachina, noting, however, that she did not have statistics for the oversight work.

As Vechernyaya Kazan discovered, the Leninogorsk District checks on a quarterly basis whether families with children have payment arrears.

“We regularly ask the billing center who has large debts. If someone’s debt has reached the critical mark, our social services go into action. They work on getting non-paying parents into employment, restructuring their debts, and searching for sponsors,” said Vladimir Druk, the Leninogorsk District’s deputy head for social issues.

According to the executive committee, there are currently around thirty large families in the Leninogorsk District who have defaulted on their housing and utilities payments. By law, energy companies can cut off hardcore debtors whether they have children or not. But our sources in the executive committee say they have an agreement with gas and electricity suppliers that if they decide to cut off a family with small children, they will inform the authorities in advance, giving them the chance to intervene quickly. Hence, matters had never come to taking children into care, the same sources assured us, telling us the story of a mother with four children who, due to debts and a broken gas furnace, found themselves in an unheated house during December’s cold snap. The woman was warned she would have to take action or she could lose her children. She quickly took the children to their grandmother’s. Meanwhile, the gas furnace was repaired for free, and philanthropists helped to partly pay off the family’s debts.

Our sources at the Zelenodolsk District executive committee told us they had registered around a hundred families with minors who had defaulted on their housing and utilities payments.

“During 2016, eleven children from such families were removed for up to three months,” said Alexander Korshunov, head of the press office for the Zelenodolsk District executive committee. “All these children lived temporarily in a shelter. Would it have been better to leave the kids in houses with no light or heat, where they were not getting the proper care? It is unacceptable for children to live in such conditions. The head of our district is quite strict when it comes to protecting minors. Therefore, our children’s protective services vigilantly check all familiies.”

“Just yesterday, I visited in a family in the village of Nizhnye Vyazovye who had defaulted on their gas payments. I suggested assigning the children to a shelter for the winter so the kids would be well feed and warm,” Ludmila Minnigarayeva, head of children’s protective services in the Zelenodolsk District executive committee, shared with Vechernyaya Kazan.

In turn, Tatarstan children’s ombudsman Guzel Udachina explained that arranging for children to live temporarily in a shelter or social rehabilitation center is permitted only with the written consent of the parents, not on the basis of an arbitrary decision by children’s protective services or by order of a district head.

“The orders issued by the head of the Zelenodolsk District are inappropriate, to put it mildly,” Udachina argues. “If it turns out the district’s children’s protective services have been removing children from families due to debts, their actions are illegal. The state has the right to take the children into care only in instances where there is a threat to their lives and health. It is a moot point whether having the gas or lights turned off can be considered a direct threat. If a dwelling is unheated during a cold snap, there is such a threat, of course. The child could freeze, become ill or worse. But local authorities can solve the problem without resorting to extreme measures.”

Translated by the Russian Reader. Thanks to Russkaia smert’ and Meduza for the heads-up

Eviction Addiction

1. Everyone shall have the right to a home. No one may be arbitrarily deprived of his or her home.

2. The bodies of state authority and local self-government shall encourage housing construction and create conditions for exercising the right to a home.

3. Low-income people and other persons mentioned in law and in need of a home shall receive it gratis or for reasonable payment from the state, municipal and other housing stocks according to the norms fixed by law.

Article 40, Constitution of the Russian Federation

Photo courtesy of Alexander Drozdov/Interpress/TASS
Photo courtesy of Alexander Drozdov/Interpress/TASS

Head of Federal Bailiffs Service Assesses Legality of Justice Ministry Proposal to Confiscate Debtors’ Dwellings
Vladislav Gordeyev
RBC
January 10, 2017

A draft bill, proposed by the Justice Ministry, that would in some cases permit the confiscation of a debtor’s only dwelling, does not violate Russians’ constitutional right to housing, said Arthur Parfenchikov, director of the Federal Bailiffs Service (FSSP).

“The proposed legislation stipulates guaranteed housing during forfeitures, but within the established norms,” he wrote on his Twitter page.

He tweeted in response to remarks made by ex-children’s rights ombudsman Pavel Astakhov, who had written, “The Russian Constitution guarantees everyone’s right to housing. There is nothing in it about the obligation to pay debts, only taxes.”

In addition, Astakov called the draft bill “quite controversial,” since it could “make people homeless who don’t have any means as it is.”

Parfenchikov also noted the law was being adopted “in accordance with the provisions of the Constitution,” and “the Justice Ministry [was] implementing the mandate of the Constitutional Court, which ordered [it] to establish this procedure several years ago.”

As published on the Federal Portal for Draft Regulatory Acts, the draft bill stipulates a debtor’s only dwelling can be sold if two conditions are met. First, if its floor area is twice the size of the legally approved norm for the debtor and his family. Second, if its value is twice the value of the dwelling due to him by law.

Moreover, the debtor must have no money and other property that could be sold to repay his debts.

The controversy surrounding the bill has been underway since November 2016, when it was posted for public comment. The Justice Ministry has proposed making the relevant amendments to the Civil Procedure Code, which currently includes a ban on confiscating a debtor and his family’s only dwelling. Exceptions are made only for real estate that has been mortgaged.

According to the Housing Code, the legal norm for the provision of living space is set individually by the regions. In Moscow, for example, the current norm is 18 square meters per person.

“At the present time, the rights of creditors (claimants) are violated, since there is a ban on the forfeiture of residences (or their parts) if they are the only suitable dwellings available to debtors and members of their family living with them in the residences owned by them. In addition, a difficult situation has arisen around debts for child support payments, and the rights of minors to living quarters are also violated when their parents divorce,” it says in the one of the documents accompanying the draft bill, as posted on the Federal Portal for Regulatory Draft Acts.

Translated by the Russian Reader

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Since the otherwise odious Pavel Astakhov has suddenly reverted to his previous incarnation as a social liberal and passionate defender of human rights, I would like to dedicate this song to him. TRR