Council learns of waived €750,000 Freeport fine… 18 months later

It was a rude awakening for the cash-strapped Birzebuggia local council to find out, 18 months after the decision was taken, that the government Cabinet had granted a waiver on a €750,000 "planning gain fee" that the Malta Freeport was expected to pay into a special fund.

Last December, the Birzebbugia local council was granted the necessary permits to carry out embellishment works in a car park at Wied il-Buni, opposite the Malta Freeport. But when mayor Joseph Farrugia checked in at the Malta Environment and Planning Authority to access the funds through the Urban Improvement Fund, he was told simply that the funds "were no longer available".

The funds were supposed to come in from a €750,000 planning gain fee that the Malta Freeport, whose operations are privatised, had to pay as compensation on infrastructural works that disturbed the local environment.

Farrugia spoke to MaltaToday yesterday, explaining that when MEPA approves permits for new projects, planning gain fees are paid into the UIF. These funds are then passed on to the local councils to carry out projects improving the locality.

"Once MEPA approved our permits to carry out the embellishment works, the local council sought the funds from UIF, which should have come from the Freeport," Farrugia said.

"But MEPA told me that, shortly before the general elections, Cabinet ordered the authority to return the money back to Freeport."

Farrugia learnt that the Freeport had asked the Cabinet to waive the fee in view of the contribution the Freeport made to the country's economy of the country.

"The Cabinet approved the request in 2012 but no one informed us," he said.

Farrugia added the local council was now asking Freeport to fund the project in return for the inconvenience the locality suffers.

The planning gain is often sought by MEPA as a means of environmental compensation for impacts that may result from development, which impacts cannot be reasonably mitigated.

In this case, in 2009 MEPA imposed a €750,000 planning gain fee on the Malta Freeport Terminal when a permit to carry out dredging works was granted.

The Freeport's operators appealed the MEPA fine, and that same year they lost an appeal contesting the fine.

But a few months after they lost the appeal, a legal notice (LN 339 of 2009) was introduced stating that "no planning obligation imposing a payment may be imposed on an applicant for a development permission, in respect of a development of national or strategic significance or a development affecting matters of national security".

Then Prime Minister Lawrence Gonzi, stopping short of specifically referring to the Freeport project, had argued that one could not expect private companies to pay more after carrying out works that "actually fall under government's responsibility".

He had argued that dredging was government's responsibility.

Shortly afterwards, it was revealed that the Cabinet - and not the Planning Appeals Board - would decide whether the Freeport would have to pay the €750,000.

In the summer of 2012, Gonzi's Cabinet decided that Freeport should not pay the planning gain fee.

Contacted by MaltaToday yesterday afternoon, former environment minister Mario de Marco explained that this had been a government decision based on the investment that needed to be made by Freeport, coupled with the commitment by the government to effect a number of projects in the area.

"I do not recall it being a specific proposal to waiver from my end," he said.