The City of Kraków wants to initiate two large-scale investments that could entirely transform large areas of the historic city.
One of the most ambitious Polish offers at MIPIM 2005 came from the Municipality of Kraków. It is planning two complex projects, involving a public-private partnership that would construct, develop and manage two venues: a congress center and a multi-purpose sports, recreation and events venue.
The congress center site is across the Vistula from Kraków's most popular tourist attraction, the Wawel Royal Castle. The multi-purpose venue would be situated in the Czyżyny district. According to Monika Piatkowska, a director with the Department of the City Treasury at the Municipality of Kraków: "These are really the last two bits of land available in both locations."
The area for the proposed congress center is 3.4 hectares and has been divided into two stages for development. "The first stage can be developed immediately, because it has already received the building permit for a 1.12 hectare plot and the investor can take it now," says Piatkowska.
Tempting investors to build hotels and shopping centers is one thing, but enticing them to fund a congress center is quite another. However, the Kraków team have built a number of commercial incentives into the project. "We are perfectly aware that in the first initial stage, the congress center won't pay a quick enough return on investment. So we have allowed for the developer to include up to 15 percent of commercial space, so that this will be economically viable," says Piatkowska.
The incentives don't stop there. "The second stage is for the developer to decide what is to be put up in the remaining space [approximately 2.88 hectares]. We don't mind what goes there; it can be retail, commercial, even additional exhibition spaces. The only thing we would be against would be a hypermarket; such functions are excluded."
This still leaves tremendous scope for investors to take advantage of. For an experienced investor, who has worked on such complex projects before, the payback could be considerable. "The most desirable way forward would be to establish a public private partnership between us and the company willing to invest," says Piatkowska. "If we start such a partnership then a special enterprise would be established and into this enterprise the municipality would contribute the land. In return the other half would provide finances to build the first stage and would then receive, in the form of a bonus, the extra land that would go with the construction of the congress center."
The second project, at least initially, would appear to present more profit for experienced investors. Seven hectares, completely owned and controlled by the city, is available for the construction of a multi-purpose sports, entertainment and exhibition arena. A report commissioned by the Kraków Municipality indicated that an auditorium with a capacity of 15,000 would be the ideal size for such a project.
The proposal is that the investor would construct and manage the facility post-construction, either within its own capabilities or as part of a consortium. Prospective operators would also benefit from a 20 percent space allocation for their own commercial purposes.
"We would suggest a slight difference in the financing of the project, as the city has all the necessary funds for the construction of the operation. However, we want a sensible contractor and a professional operator who could manage the premises and site. We want somebody who could use their experience to provide such an agenda of events that the place would be busy throughout the year," says Piatkowska.
For a project on such a large scale, the Kraków team envisages no easy answers. "We want a complex solution to a complex project. [One option is that] one company would construct it and then continue as an operator. If the builder doesn't have the necessary capacity we would expect them to look for an operator and start a consortium and within the consortium manage the building. We do not want a situation where a built hallway waits for two to three years for occupants."
Piatkowska is confident of the projects' viability, which begs the question as to why the city seems so eager to share the spoils and profits of such a large-scale operation. "The city does not feel empowered to do something like that for very specific reasons," explains Piatkowska. "We are not specialists in the running of such sites. This really needs someone who is a specialist to manage it wisely. We want to draw in someone who can attract all those events that would be held there.
"Looking at the Polish market, there is no such congress center, so we would rather be looking to the European market, to somebody who has already organised such events.
"We are planning gains but they are not of a financial nature," she assures. "[These facilities] will enrich our city with certain functionalities that are lagging behind an otherwise harmonised development. We believe that Kraków will need something like this. We believe we will get an enormous boost by indirect gains in tourism and prestige."