Additional funds demanded from residents, they ask: Where is the deposited money?

The residents of the building in Stjepana Lučića Street in Pale have been depositing funds to the company A.D. “Pale Stan” for the maintenance of residential buildings for the past 20 years. Despite having already deposited over 100,000 BAM to the aforementioned company, “Pale Stan” is now demanding an additional 20,000 BAM from the residents for the reconstruction of the building’s roof, writes Spin.

The building, located in the centre of Pale and over 40 years old, is in poor condition due to irregular maintenance and lack of investment. It lacks thermal insulation, has worn-out carpentry, and the roof is in urgent need of repair, as the top-floor apartments have leaks. The residents received a notification at the end of last year that the roof would finally undergo reconstruction with asbestos-cement roof covering. The project is valued at 138,668.24 BAM including VAT.

In the notification, it is stated that A.D. “Pale Stan” has entered into an agreement with the Environmental Protection and Energy Efficiency Fund, which will contribute 70% of the funds for the project, amounting to 97,067.76 BAM. The Municipality of Pale will co-finance the project with 20,000 BAM, while the remaining 20,800 BAM is being requested from the residents.

“Considering that the mentioned project includes a complete roof renovation of your building, we hereby inform you that we will soon provide contracts clearly stating the rights and obligations of the parties involved, as well as the amount of 400 BAM per property that all residents need to contribute”, the notification states.

A few days after the previous letter to the residents, the mentioned company published a Notice of Works Procurement on the Public Procurement Portal regarding the roof reconstruction. In addition to the building in Stjepana Lučića Street, the roof reconstruction of five other buildings in Pale is also planned, with an average value of approximately 27,000 BAM per entrance, excluding VAT. It is interesting to note that the notice states that the estimated value of the roof reconstruction works for the building in the centre of Pale, which is the subject of this letter, is 91,595 BAM excluding VAT, or 107,166 BAM including VAT.

Why the company “Pale-stan” informed the citizens that the estimated value is 138,668 KM, while the tender assessed a lower amount of funds, remains unknown.

Blackmailing the tenants?

A.D. “Pale-stan” offers the residents the option to pay the mentioned amount in up to four instalments. However, if they fail to do so, the company, whose founder is the Municipality of Pale, states that the funds will be redirected to other projects. The contract, like the letter, has been prepared and sent accordingly.

Dissatisfied with the extortion and questioning where the funds of over 100,000 KM that have been paid to this company have gone, the residents, angered by the communication, have addressed a letter to the acting director, Mr Davor Mandić.

“As you should be aware through the operations of your company, the residents of our building have been making payments for its maintenance for many years, and we have precise records of that, as well as you, ‘Pale stan,’ should have in your business books. This means that we have paid approximately 100,000 KM so far, and for that amount, we should have had a completely new roof, as well as a facade, instead of you now demanding additional payments from us on top of what we have already paid, just to get a roof replacement. Regarding the previous maintenance work on the building, it is not worth wasting many words; it could be summarized in the popular saying ‘all talk, no action,’ meaning almost nothing.”

The residents are asking the director how it is possible that there is no money for roof reconstruction, even though they have been making payments to the mentioned company for years. They claim that the funds are being spent non-transparently, and the majority of the payments, instead of being used for building maintenance, are going towards workers’ salaries. Additionally, the municipality also provides certain funds to this company. For example, in 2022, the Municipality of Pale subsidized “Pale stan” with 90,000 KM.

Despite the contributions from citizens and the municipality subsidy, the expenses are also significant, so “Pale-stan” barely manages to achieve an annual profit of a few thousand marks, and they will not allocate a single mark of their own funds for the mentioned project.

Director: We accommodate the users

Davor Mandić, the director of A.D. “Pale-stan,” claims to SPIN Info that the residents are not being coerced or forced to make the mentioned payments and that everything is on a voluntary basis.

We asked him how he comments on the citizens’ complaints that they have not received adequate service for the money they have paid. He says that the monthly fee they pay is for basic services and ongoing maintenance, and users themselves should provide co-financing for building investment maintenance.

“I took over the management of the company two years ago and noticed the dissatisfaction of a large number of citizens. For example, we introduced cleaning, replaced all the doors in that building, and did a lot of work. The claim that they mention one hundred thousand is unrealistic; the company is not a bank… Then I asked, if you were not satisfied with the service, why didn’t you form a housing cooperative and save money for yourselves? The answer was, they don’t want to pay, that’s your problem. They consistently received maintenance services for the common areas, but it is not the company’s primary activity to replace roofs. Personally, I have sought ways to accommodate these users and start replacing those roofs”, says Mandić.

According to the data from the Public Procurement Portal, this company has procured entrance doors worth 6,000 KM so far.

Since they did not form a Housing Cooperative (ZEV), “Pale stan,” as a legal entity, is the forced administrator in this case, which, according to lawyer Dino Tešić, only increases the level of responsibility regarding the handling of the funds collected.

“The company was required to perform maintenance on the building, primarily through construction work and improving the property, for the amount collected, and to issue invoices to the Housing Cooperative or the authorized representative of the apartment owners. This is an obligational relationship in which the company AD ‘PALE-STAN’ has a burdensome obligation that it must fulfil for the amount collected. Otherwise, the owners of the individual units in the building have the right, if nothing else, to demand a refund in accordance with Article 210 of the Law of Obligations, or due to the commission of a criminal offence by the responsible person”, says Tešić for SPIN Info. He further adds that A.D. “Pale stan” has clearly acted contrary to the Law on Obligations, that is, the principles of fairness, honesty, and good business practices in this legal matter, and has not fulfilled its legal or contractual obligations.

Our source from Pale, who is well-informed about the situation in this company, states that it is shameful for the building to be in such a poor condition despite the substantial amount of money paid by the residents. They question the source of funds for the official car.

“Playing party politics with the company and its citizens means that someone will have to be held accountable for the poor performance of the company, including those who appointed an incompetent management.”

It seems that in Pale, as in most cases, when public funds run out, citizens will have to supplement the budget.

The tender has been concluded, with a deadline of twenty days for the completion of the works, but some residents still refuse to pay the mentioned amount. The director claims that the building will be completed, even if it comes at his own expense.