On November 21 of this year, a private bailiff announced the sale of two properties owned by the Municipality of Smolyan. They are located along the road between the neighborhoods of Raykovo and Ustovo, on both sides of the tunnel that runs through the bypass road.
One property has an area of 16,571 square meters, with bidding starting at 279,625 leva, while the other, covering 7,000 square meters, has an initial price of 107,520 leva. The two properties are being sold in favor of the transport company “Rozhen Express” AD, which has imposed a lien on the land due to unpaid municipal debts owed to it. Bidding for the regulated land plots will continue until January 10, 2023, with the candidate offering the highest price to be announced the following day.
“A cunning way to bypass the Municipal Council?”
At the end of November, Emil Keleshev, a councilor from the “Continuing the Change” party, expressed his suspicions in a social media post that there is a hidden agreement between “Rozhen Express” and the Municipality of Smolyan to sell the two properties behind the back of the Municipal Council. His argument was that the local administration holds a 26% stake in the company, and the executive director of the firm is Maria Semerdjieva—a former head of the Regional Inspectorate of Education and a municipal councilor from GERB.
In May of this year, the Municipal Council refused to grant the company “Link Assist” the right to build on these same two properties without a tender or competition.
Proposal from Smolyan Mayor Nikolai Melemov was for the properties to be leased for a period of 30 years for the sum of 386,750 leva for the construction of a photovoltaic park with a capacity of around 5 megawatts.
“I have always said that anyone who submits an application will have it considered by the Municipal Council,” Melemov told the municipal councilors. “The Energy Act perhaps intentionally allows for this possibility to grant without a tender or competition.”
“We managed to prove through experts that the property is worth much more, and we believe that we thwarted an attempt to exploit municipal land,” stated Michal Kambarev, a deputy from the “Continuing the Change” party.
Is there a secret agreement between “Rozhen Express” AD and the mayor of Smolyan?
The facts do not support this conclusion. The reason “Rozhen Express” imposed a lien is a decision from the Plovdiv Appellate Court (PAC) dated August 15, 2022, which ruled that the transport company is to be paid 246,870 leva by the Municipality of Smolyan. The case was initiated earlier, in 2021. The decision of the PAC has become final, and the carrier has been issued an enforcement order. It is within their rights to seek all possible ways to recover their claim. However, the Municipality of Smolyan has appealed the appellate judges’ decision to the Supreme Court of Cassation (SCC). This appeal case is scheduled for October 11 next year.
Since the aforementioned appeal does not suspend the enforcement, the Municipality of Smolyan can only stop the sale of the properties if it deposits 246,870 leva into a guarantee account with the SCC. If the court grants the cassation appeal, the municipality will be able to withdraw its funds back. If it loses, it will save taxpayers tens of thousands of leva in costs for bailiffs.
In this situation, the question remains open as to why the Municipality of Smolyan continues its doomed legal battle, which will also inflict significant financial damage on its budget.
Why is “Rozhen Express” suing the Municipality of Smolyan?
On July 8, 2003, after a competition, the Municipality of Smolyan signed contracts with several companies for the transportation of passengers according to an established transport scheme. With this contract, Nikolai Melemov’s administration took on the obligation to pay compensation for subscription cards for pensioners and students. A mechanism was also agreed upon, whereby “Rozhen Express” and the other carriers issued invoices for the compensations owed to them for discounted tickets and subscription cards sold to students and pensioners. These invoices, along with the accompanying reports, were submitted to the Municipality, which accepted and accounted for them.
According to this mechanism, the monthly subscription card for public transport in Smolyan costs 50 leva, which is the same as its price without a discount. For student cards, which cost 25 leva, the compensation is also 25 leva. Of this amount, 6.20 leva is paid by the Ministry of Finance from the state budget, 6 leva is the compensation paid by the Municipality of Smolyan, and 2.80 leva is the non-compensated part paid by “Rozhen Express” AD. In this situation, there remains a non-compensated sum of 10 leva, for which the carrier is claiming in the ongoing lawsuit. From 2016 to 2019, a total of 9,513 cards were issued, amounting to 95,130 leva.
For pensioners’ subscription cards, the total price is again 50 leva, of which 12 leva is paid by the pensioner, 3.95 leva is covered by the Ministry of Finance as a state subsidy, and 2.80 leva is borne by the carrier. This leaves a difference of 31.25 leva, which is the non-compensated part up to the full value of the card. From 2016 to 2019, “Rozhen Express” AD issued 18,508 cards, for which the compensation at 31.25 leva totals 578,375 leva.
The Municipality of Smolyan is in debt to “Rozhen Express” for over 1 million leva.
In addition to the compensation for 2020, the claim from “Rozhen Express” against the Municipality of Smolyan amounts to 761,700 leva in principal plus legal interest. In court, the company has filed a partial claim for the amount of 163,315.50 leva and interest totaling 71,055 leva. Once the case regarding the partial claim is concluded, the company will have full grounds to request the entire amount of 761,700 leva plus interest. With outstanding compensations for 2021 and 2022, the debts of the Municipality of Smolyan to “Rozhen Express” will exceed 1 million leva. If the mayor continues to fail to pay the agreed-upon compensations, the company will begin selling any properties of the Municipality of Smolyan that it has shown interest in.
How many times will the mayor of Smolyan step on the rake?
The Court of Appeal is unequivocal that the contract between the Municipality of Smolyan and “Rozhen Express” dated July 8, 2003, although long expired, is valid, including the clause contested by the Municipality of Smolyan (Article 3, Paragraph 6). It remains in effect until a new tender is conducted, and such a tender has not been announced for over 10 years. The responsibility for this lies not only with the mayor of Smolyan but also with the Municipal Council.
The court also takes into account the finalized decision No. 9 from January 10, 2014, issued by the Smolyan District Court in commercial case No. 39/2013, which entered into force on August 28, 2015. With this decision, regarding the same contract and the analogous dispute over the owed compensations for subscription cards for students and pensioners, the Smolyan District Court ruled that the Municipality must pay the carrier 450,000 leva, accrued for the previous period.
Following in the footsteps of “Rozhen Express,” another transport company, “Orfei Express,” has also taken action. The Municipality of Smolyan owes it several hundred thousand leva in compensations for student and pensioner cards. A partial claim for around 100,000 leva has already been filed. Before initiating the lawsuit, the company’s manager, Dimitar Stanchev, attempted to reach a settlement with the Municipality to avoid litigation, but without success.
For unknown reasons, the mayor of the Municipality of Smolyan, Nikolai Melemov, has become obstinate, neither paying the agreed compensations, now in his third term, nor announcing a new tender for public passenger transport, despite being obligated to do so by both law and public interest.
The actions and inactions of Mayor Melemov, as well as the Municipal Council, inflict significant damage to the budget of Smolyan, to the companies that provide public transport, and to the citizens who use public transportation. We cannot expect good service or comfortable buses when companies lack funds for investments and salaries that exceed the minimum wage. Unlike other cities that allocate substantial resources for public transportation, the Municipality of Smolyan has deemed that it has no obligations toward it. It does not even comply with the commitments it has made. The only beneficiaries are a few lawyers and bailiffs.
