People in the Know: A Russian Piece of South

In this interview for Vedomosti, Yuri Rysin, chief architect of Krasnodar, spoke of the prospects and priorities in the region’s development.

-What makes your region attractive for investors?

Kuban (Krasnodar) has good climate conditions, but it is situated at quite a distance from the capital. But then, such a geographical location has its competitive advantages. At MIPIM that was noticeable. After all those two factors – a favorable location and a good climate - constitute a foundation for attracting investments. Two years ago we saw that both Russian and international investors had keen interest in our region.

The [MIPIM] fair provided an opportunity once again to compare our potential with that of other Russian regions. We met our counterparts from other parts of the country and saw for ourselves what progress has made by Sverdlov Region, Nizhny Novgorod, etc. Each region has its niche, its specific orientation. Krasnodar Region is one of the few Russian regions that promote development in a variety of market sectors, in terms of investment.

-But there must be some key, priority sectors?

Those are, to begin with, our production, port and transportation facilities, all of which are of nationwide and international significance. Nobody speaks about a universal friendship between the nations anymore; therefore special attention is now being attached to the defense sector of the region. Motor- and railways, as well as sea routes are closely linked to ports and national borders along the Sea of Azov and Black Sea, the length of which exceeds 1,000 kilometers. This is important, both from the standpoints of national economy and defense strategy.

Our second focus is seaside resorts. Russia is a northern country. And only Kuban is our little piece of the South. It became especially felt recently, after other seaside regions, such as Crimea or Georgia, ceased to be a part of our country. Already because of that Krasnodra Region needs protection against excessive industrial impact and dense development. One has to consider negative consequences Cote d’Azur in France has suffered as a result of urbanization. The French themselves admit that the area requires urgent measures to protect it against overpopulation and excessively dense development.

We have no right to repeat the mistakes of western resorts. At the same time we realize that considering how many people live in the northern Russia and need a vacation in the South that will not be easy. In short, the development of our resorts, too, is of great significance. If we are to attain the goals set in the federal plan aimed at improving the demographic situation in this country we cannot ignore the need to develop recreation facilities in our region. Therefore, in addition to development of sea resorts as Anapa, Gelendzhik, Tuapse, and Sochi, it is necessary to build new resort facilities at the Sea of Azov. That area, too, is of great economic significance for the region. No less important is the agricultural sector.

-Which of the sectors brings the highest revenues to the region? Resorts?

No, not yet. But we hope it will be so in the long run. For the time being the leading sectors are ports, manufacturing and farming. Those are long-established stable sectors which have developed for decades, if not hundreds of years. The hospitality and recreation industry is still relatively young, and resorts in Krasnodar have their specifics. Their role in the economy is only taking shape. Comparing its effectiveness with that of the resorts on Cote d’Azur is hardly possible. The real growth in tourism and hospitality sector began only five years ago, after Governor Alexander Tkachyov and his team had took over the government.

-How high investment in regional seaside resorts has grown over those past five years?

Approximately, by 20 times.

-How are market shares distributed between Russians and foreign investors?

For the time being Russian investors dominate the market, but that is not bad at all. In our country, there is enough cash and it should be invested domestically, instead of using it for, say, acquisition of foreign soccer clubs.

-What type of properties the region is especially short of?

We experience an acute shortage of modern infrastructure such as roads, engineering lines and installations. That is why we make trips abroad in order to learn how to build those, introduce foreign technologies and know-how at home, to invite world's leading specialists to our region. We enter into agreements to the effect. For example, we have set about creating a network of toll highways. The project was backed by the federal government. Our investment fund will provide cash for construction of what is to become the region’s first freeway linking Krasnodar to Kabardinka via Abinsk.

-Does that mean that the region’s road infrastructure will be developed at the expense of the federal budget?

Yes. The federal government has allocated 100 billion rubles for the project. . A total of over 300 billion rubles have been allocated for the federal plan of Sochi's development, half of which is provided by the federal and regional governments, the rest by private investors. No matter if Sochi wins the bid to host the Olympics or not, the infrastructure, first and foremost, the road network, will undergo a radical overhaul.

The region suffers a severe shortage of housing, especially of moderately-priced apartments, building which could help solve problems of hundreds of thousands of our residents. If we built at least 1sqm of homes per person per year, we would be able to launch 5 million square meters annually.

-Is your region among the leaders or does it fall behind other provinces, in terms of the volume of housing developed?

We are among the leaders. Last year, 2.6 million square meters of housing were launched. Krasnodar had never seen such construction volumes before. The structure of development has changed, too. Low-rise homes are predominant.

-In people’s minds Krasnodar Region is understandably associated namely with Sochi. Information about other towns is scarce. This creates an impression that Sochi, indeed, is the only rapidly growing city in the region.

Such an impression is wrong. The region is growing rapidly and evenly. This is so not least because the share of districts and towns that have been covered by the region’s plan for urban development is among the highest across the country. This year we will finalize the plan of territorial development of the region – our main town-planning document of multilevel, systemic, strategic importance, affecting all industries, including housing.

We are about to finalize our work on urban development plans both for Sochi and the city of Krasnodar. The plan for Krasnodar envisages reconstruction of the city’s historic center comprising 240 blocks and development of new areas, engineering installations and roads.

There are also plans to create special economic zones focusing on tourism and recreation. There will be five such zones, two in Anapa, and three more in Gelendzhik, Tuapse and Sochi respectively. In the northern part of the region, near the border with Rostov Region, we are planning a gambling zone. Our governments have already signed an agreement to the effect and the work on territorial planning has been launched.

We have also adopted a plan aimed at developing processing industries. Large agricultural complexes are planned in a number of rural areas. Then, there are plans to create new mountain resorts, for example, in Apsheron. That is Switzerland at the Black Sea, with gorges, a unique place… A new alpine ski resort will emerge near Tuapse. All across the region over 1,000 investment projects are to be implemented. 300 of those are priority projects. The regional authority oversees and controls that process.

-You have said that you would try to learn by mistakes of the Mediterranean seaside resorts and avoid excessive urbanization. How this could be achieved? And one more thing, approximately six months after the government launched the project aimed at providing Russian citizens with affordable housing a new focus emerged, namely low-rise development. But then, what is to be done with previously adopted urban development plans, which did not envisage such constructions?

All the general plans, even those adopted recently, are adjusted to meet the new challenges although the fundamentals remain unchanged. This is an ongoing process. It has been actively implemented in our region over the past four years. Such is the policy of our governor. There is an agency in charge of realizing that program. The governor has decreed on establishment of a triune system of architectural agencies. No other Russian region has anything of a kind. The foundation is formed by the Krasnodar Region department for architecture and town-planning, the next tier comprises territorial departments in districts and towns, and finally, there are municipal architectural bodies. That system helps to address town-planning issues in full and support investment projects.

The only means of avoiding excessive urbanization is the development of general plans, building regulations and rules of urban development. In Soviet times, town-planning rules were very rigid. They were abandoned with time, but new regulations were never introduced. Meanwhile, developed democracies, such as France or Germany, have always observed highly restrictive laws governing urban development.

The only method of protection against unsanctioned or excessively dense development, overurbanization of seaside resorts is of administrative nature. Recently, our security council held a special session entitled “Arbitrary construction – a threat to economic security of the region”. Namely the security council ruled on restoration of the vertical of power in architecture and urban planning; law enforcement have been involved in fighting unauthorized construction. Thus, there is only one solution, that is to use the force of state and observing the rules of the game, clear-cut, transparent and comprehensible.

-The market functions in such a manner that builders, attracted by high returns, will claim new and new plots for themselves. Thus, the region risks exhausting its natural wealth. Do you feel how acute the problem is? Is Mr. Mitvol a regular guest in your region?

We do feel how acute the problem is. As to Mr. Mitvol’s visits, I'd say that for the most part those visits are undertaken as part of yet another publicity campaign. We back his efforts. But that work needs to be well organized. It is better to prevent than to fight something afterwards, although we do not reject the fight.

-What is the sum of a fine for an unlawfully felled tree in Sochi?

I cannot give you a precise figure. But what matters is that it is necessary to rule out the fact itself, the possibility of doing that. At the same time, one has to understand that cities cannot grow without development of a certain part of farmlands. There is no need to harbor illusions. A solution could lie in regeneration of territories, transforming wastelands and dumps into recreation zones, green places, parks.

-Some believe that Sochi is to become a seaside resort for the rich. What are the prospects for moderately-priced resorts? Will investors agree to go there?

I cannot agree with those who believes that Sochi is an elitist resort. Of course, there is a specialization. When several yeas ago a delegation of the regional government met a mayor of Cannes we said that our key objective was to bring as many vacationers as possible to Sochi. To which the mayor said, “Our task is to attract as many rich people to Cannes as possible”.

Perhaps, Sochi will be more expensive but then Anapa, Gelendzhik and Tuapse will be more affordable for tourists. Those areas have witnessed construction of plenty of small privately-run hotels lately. Gelendzhik ha issued 4,000 licenses for construction of such hotels. The situation is similar in other towns. The most affordable resorts are to be found on the seaside of Azov.

-Will we live to see those resorts reach the standards of Turkey’s hotels?

Let us call a spade a space. Turkish resorts enjoyed strong government backing. They received enormous subsidies, tax cuts and foreign investment. Sochi is about to embark on that path. The federal plan of financing has been adopted. You can rest assured that by 2014 that city will become a resort of international standing. Regardless, whether it wins the bid to host the Olympics, or not.