What awaits debt-riddled Rēzekne this year?

Stalled construction, delayed payments and projects not started - this will be the reality of this year in Rēzekne where the difficult financial situation means that development is not yet on the agenda, Latvian Radio reported March 6.

The municipality's priority now is to approve the budget, which is scheduled for the March 7 council meeting, because only then might it be able to get a €5 million state loan to cover last year's construction and other debts – although the deadline fo budget approval set by the state has already passed. But the accumulated debts have also come with penalties - the municipality is currently facing €80 000 in penalty interest invoices.

Only 300 meters of street repairs can be afforded

Rancāna Street in Rezekne is congested. It is one of the streets where drivers can enter the city from Rīga. At the beginning of Rancāna Street, there is a stretch of about 150 meters from Rīgas Street to Seiles Street that urgently needs repair. While one side of the street is still halfway in order, the other side is pothole after pothole, so drivers often choose to drive on the right side of the street, often causing dangerous situations. 

According to Georgijs Orlovs, Head of the Urban Environment and Development Department, the second critical street section is Strādnieku cross-street in the city's industrial district: "There we are currently preparing a work assignment related to asphalt resurfacing, utility manhole leveling and light repairs so that these sections can be operated, as the situation there is very critical."

So, in total, the city of Rezekne will only be able to afford to rehabilitate two street sections of around 300 meters this year. Other streets, including those that still have gravel, will have to wait.

Renovation of a kindergarten will not be completed

Instead of children's voices, all you hear at 'Rotaļa' kindergarten is a janitor's broom. The renovation of the kindergarten started less than two years ago. At first, the work progressed smoothly - the roof and windows were replaced, and the building was partially insulated. But last summer, work stopped because the Central Financial and Contracts Agency (CFLA) suspended payments of European funds due to a possible conflict of interest - Latgalija, the company that carried out the work, is owned by the brother of now-suspended Rēzekne mayor Aleksandrs Bartaševičs and his wife Olga. Now in its second year, the six kindergarten groups have been divided among other kindergartens in Rēzekne and parents' dissatisfaction is growing. But it is not clear if and when the project can be completed. 

Recreation center completed but debt-riddled

The new recreation center on the shores of Lake Kovši is just as quiet as the kindergarten. But unlike the kindergarten, the spa is complete - all the necessary approvals have been received and it will be put into operation soon, the municipality promises. 

This week's council meeting will also consider the issue of another auction, at least the tenth, for the lease of the spa center. However, for the first time, the auction will not be for a construction site with a project sketch, but for a completed facility that potential investors will be able to see in person.

The total debt dragging over from last year is €4.3 million, most of which, or more than €3 million, is owed to the construction company Arčers Ltd for the recreation and spa center. The company also sent a letter last week informing of the penalties. Since the facility was not handed over on time, the municipality also plans to file claims and recover fines from the builder.

Penalties – EUR 80 000

Overall, the city has outstanding financial obligations for 28 services against 18 companies and providers. The municipality owes less than EUR 100,000 to Rezekne House Manager and EUR 88,000 to Rezekne Traffic for compensating fares.

If municipal capital companies have not imposed penalty interest for non-payment of payments, then private companies do.

The total sanction on the shoulders of the municipality is currently EUR 80,000, not including the recreation center.

The biggest penalty sanctions originated from SIA “ACBR” for street repairs, where the amount of punishment reaches 40,000 euros and SIA “Latgalia” for renovating the kindergarten “Rotaļa”. The municipality owes EUR 250,000 to the company “Latgalia” of Bartaševics' brother and wife for carrying out the work, plus a fine of EUR 26,000.

Two weeks later than the law stipulates, Rēzekne city council promises to approve the local government budget at the Council meeting on Thursday. If a no-deficit budget is passed, the municipality will again be able to claim a €5 million loan from the Treasury and begin paying off last year's debts.

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