Luzhkov May Not Rebuild Moskva

Friday, October 22, 2004. Page 1.

Vladimir Filonov / MT With the demolition of the Moskva Hotel, a new vista of Red Square and the Kremlin has opened up from Okhotny Ryad. Mayor Yury Luzhkov, never too shy to wade into controversy, has taken the city by surprise with an announcement that he may build a huge public square next to the Kremlin. Luzhkov infuriated preservationists by approving the demolition of the historic Moskva Hotel last year. But now the mayor has said he likes the panoramic view that opened up after the hotel's demolition so much that he may abandon his plans to construct a replica of the 1935 landmark and build a square instead. "I imagine what this square may look like, and I think it will become one of the most magnificent ones not only in Moscow. It will become a favorite. The views that have opened up overwhelm you with their beauty," Luzhkov said during a visit to Brussels on Wednesday, RIA-Novosti reported. Luzhkov's unexpected suggestion seems to fly in the face of the lax position on preservation taken by City Hall, which has been accused by critics of destroying Moscow's historic heritage in the name of profit. On Thursday the architectural community and real estate experts met Luzhkov's announcement with a mixture of muted approval and bewilderment, but could not agree on what moved the mayor to change his mind. Because of the high stakes of the reconstruction project, estimated to cost as much as $500 million, as well as its position in the very heart of the city, experts were doubtful that the idea of a public square would ever be realized.

Located between the State Duma and Red Square, the Stalin-era 1,000-room Moskva Hotel was once a symbol of new Soviet architecture.

Its demolition, which was completed in August after nearly a year of work, was accompanied by protests from activists and the Culture Ministry, which accused City Hall of destroying yet another important Moscow landmark.

Luzhkov promised to build a replica of the building, albeit with twice as much floor space, an interior redesign and a massive underground parking garage.

From the point of view of City Hall, the new Moskva, run by a Western five-star hotel operator, will be the centerpiece of an ambitious plan to upgrade Moscow's Soviet-era hotels to international standards. In August the gargantuan 3,000-room Rossiya Hotel was also slated to meet the wrecking ball.

The Moskva redevelopment, planned to be completed in 2006, has already been delayed by a year. How the project will be financed is not publicly known.

"It is wonderful that the mayor is following the suggestions of professionals," said Alexei Klimenko, chairman of the Russian Artists' Union Commission on the Preservation of Historical and Cultural Heritage.

Several members of the city's architectural community, including Moscow's chief architect, Alexander Kuzmin, have already proposed that the location could be used for a smaller building that would not obstruct the view of the Kremlin.

"As long as it was demolished, why not restore the historic 19th-century building to complete the architectural ensemble of Teatralnaya Ploshchad?" Klimenko said.

"What could be better than a large public square in front of the symbol of your country?" asked Scott Antel, partner at Ernst & Young. "This city desperately needs more green space."

This far into the project, however, changing the development plan makes little economic sense and could hurt Moscow's investment attractiveness.

Over $10 million has already been spent on the project, said a market expert involved in the development.

"A garden ... makes more sense for the Rossiya Hotel [location], since no time or money had been invested into its redevelopment yet," Antel said. "Commercial space generates money, but green space generates expense."

"Making such announcements half-way into the project sends a negative message to both national and international investors," said Michael Lange, managing director of Jones Lang LaSalle, which is involved in the Moskva redevelopment as a consultant. "Completion of a large real estate project such as this is beneficial for the city, while there is no economic reason to let the land lie empty."

There was little agreement among experts as to Luzhkov's motives for announcing the possible change of plans.

According to a source close to project developer Decmos, the statement took the firm by surprise."There were no instructions issued to stop the development," the source said.

Decmos is a joint-venture between the city government and Decorum, an obscure U.S.-registered company used as a front for a group of local investors, whose names are kept secret.

One reason for the mayor's announcement could lie in longstanding property disputes between City Hall and the federal government, as well as the Kremlin's increasing irritation with Luzhkov's policies, experts said.

On Wednesday, a State Duma deputy submitted a request to the Industry, Construction and Technology Committee to determine the "advisability" of developing the Moskva site. Ministers have routinely charged City Hall with seizing federal property and monopolizing the city's construction market.

"Luzhkov's position is extremely unstable now, and the [Kremlin's] search for his possible replacement is on," said Alexei Mukhin, director of the Center for Political Information. "You can consider [the announcement] an act of goodwill, a political gesture meant to demonstrate his willingness to negotiate."

"It looks like Luzhkov wants to put this site on hold for a period of time, so as not to irritate anyone. They have cleared the spot but have not decided what to do with it just yet," said Marina Smirnova, deputy general director at Hotel Consulting & Development Group.

Another real estate expert, who requested anonymity, said Luzhkov's announcement amounted to blackmail. "He is basically sending a message to investors: Don't mess with me, I can do whatever I want," the expert said.

The hotel market is rife with rumors that the Moskva site is having difficulties attracting investment, but they are impossible to verify because of the nontransparent nature of the project.

Luzhkov did not say when he would make a final decision. "If there is a strong opinion among Muscovites and specialists to turn it into a square -- and if investors who have already put their money into the project have a similar suggestion -- I will consider it," he said.

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