The government has not answered questions on the amount that the Sadeen Group will be compensated for the expenses it incurred on architect and Planning Authority fees for its American University of Malta project.

Last week, Parliament approved a resolution which saw Sadeen renounce its emphyteusis on land in Cospicua and Zonqor in Marsascala. The Jordanian company was instead given a tract of land to develop the rest of its AUM campus.

The government took this step after AUM failed to reach its student enrolment targets.

The resolution, put forward by Economy Minister Silvio Schembri, states that government will be compensating AUM for any architect and planning application fees that were incurred for projects that will no longer be taking place after the transfer of the concession. It does not, however, provide compensation figures.

Speaking to The Malta Independent, a spokesperson for the economy ministry said: “As explained during the parliamentary debate, all the details are in the resolutions and the contracts which have been submitted to the relevant parliamentary committee. The AUM had already commenced works on plans regarding the renounced Bormla and Żonqor sites before government initiated talks to review the deeds. Therefore, the renounciation and relocation agreement that led AUM to renounce the land in Żonqor and Cospicua, inclued a povision to compensate the actual costs incured in relation to the renounced land against receipt.”

The ministry, however, did not state the amount that AUM will be receiving in compensation. 

What does the resolution say?

The original contract, drawn up in 2016, would have seen the AUM given a 41,000sqm tract of land at Marsascala. AUM has built a campus in Cospicua and had already submitted plans to develop it further, including through the construction of a dormitory. Part of the original agreement included the embellishment of the Dock 1 area in Cospicua. According to the resolution, AUM has spent some €50 million on restoration works.

The resolution says the Covid-19 pandemic and travel restrictions affected the educational system, including AUM’s performance.

This explanation is questionable, however, seeing that AUM had failed to attract the projected student numbers in the years before the pandemic. The faculty was also plagued by a stream of staff resignations.

AUM will be renouncing its title over the area known as St Paul’s Car Park and Zonqor which add up to some 45,000 sqm. It will instead be given a 31,658sqm site at Smart City. It will retain the Knights building in Cospicua.

The government will be embellishing a nearby car park area and provide ten parking spaces to the university.

The resolution also states that AUM must adhere to its obligations with regard to job creation. According to the 2016 document, it was expected to create around 300 jobs.

In fact, the amended contract states that AUM must reach its 4,000-student target within the project reaching full capacity. It also lays down the terms and conditions for the use of the land at Smart City, imposing an insurance policy of €1m and a €100,000 monthly penalty if the project falls behind schedule.

The emphyteusis is of 99 years, starting from March 2016.

 

The ground rent

The Nationalist Party has claimed that the government is giving away a piece of land that is worth €63m for an annual rent of €15,000. Questions about this were also sent to the ministry.

“The Nationalist party’s arguments, as also explained during parliament, are false and based on half-truths,” the ministry spokesperson said.

“Three independent Architects have valued the land renounced by Smart City Malta. Only a portion of that land has been allocated to the AUM, with the rest of the site to be used for other projects.

In this regard it is pertinent to note that the ground rent for the AUM portion alone (i.e. excluding the Cospicua site) far exceeds significantly the figure being quoted. This can be quoted from the deed which clearly shows that the annual ground rent reaches €600,000 after 30 years.”

The amended contract, in fact, states that, in the first year, AUM will be paying €24,800 in ground rent, which increases to €613,719 in the thirtieth year.

Ground rent for the Cospicua site is listed as €15,200 for the first year, rising to €376,151 in year 30. The combined ground rent (for both Cospicua and SCM sites) is €40,000 for the first year and increases to €989,870 by year 30.

According to the contract, the land being allocated for AUM at Smart City was valued at €45.5 million, which is far less than the figure being quoted by the Opposition.

The land renounced at Zonqor was valued at €43.9m, while the lands renounced at Cospicua were valued at €3.75m, for a total of €47.6m

The ministry further added that the conditions and obligations in the AUM deed as regards the newly allocated SCM Site are “indentical to those in the original Smart City deed.”