Praha 8 returned part of the loan to the city for the completion of the Palmovka Center

Prague – The Prague 8 council returned approximately 55.2 million crowns to the magistrate as a payment from a loan of 300 million crowns, which it received about three years ago for the completion of the Palmovka Center. Since the building was not completed, it must return the money. The reason for the payments is the poor financial situation of Prague 8. This follows from a document that was approved today by Prague councilors. The building was to be completed according to the agreement made at the time of the loan provision by June 30, 2019. The leadership of Prague 8 stated that it is currently resolving the issue with the city, and Mayor Ondřej Gros (ODS) did not want to comment further on the current situation. Originally, Prague 8 was supposed to return the entire amount at once last year.

The construction of the building, which was to have a new municipal office, was approved by the previous leadership of the city district in 2010. Costs were then estimated at more than one billion crowns. However, the previous municipal leadership halted the construction and subsequently entered into disputes over its ownership.

The current leadership of the municipality requested the capital city last year for the possibility to repay the debt. In January 2021, Mayor Gros (ODS) requested installments again due to a lack of funds, and submitted an installment calendar as part of the financial settlement materials for the year 2020. In March, the municipal council then sent the mentioned approximately 55.2 million to the magistrate.

"Negotiations are still ongoing between the Prague 8 municipal district and the magistrate, which should lead to resolving the entire matter. This also concerns the building and the surrounding land. I cannot comment further at this time," Gros stated.

Prague 8 was originally supposed to return the entire amount at once last year, but in March 2020, the Prague council approved an amendment to the loan agreement that allowed the money to be returned until December 31, 2020. However, according to the document approved by the Prague councilor today, the amendment was not signed by the municipal leadership. According to information from ČTK, the city district thus additionally owes the city about 80 million crowns as a penalty. The penalty continues to accrue.

The project for 1.1 billion crowns was approved in 2010, and it was intended to have a new municipal office and commercial spaces. Approximately half of the mentioned amount was spent. The previous leadership of Prague 8, after the elections in 2014, questioned the ownership of the building, and the object became the subject of legal disputes between Prague 8, the magistrate, and the construction company Metrostav. Eventually, the parties agreed that Prague 8 would complete the building. However, that eventually fell through, among other things due to disputes with the builder, who terminated the contract with the municipality. At that time, the company justified its action by the inactivity of the municipality. The current leadership that emerged from the 2018 elections is looking for what to do with the shell of the building; one of the options is to sell it.