Sipoo demands 10 to 40 times more than Helsinki ready to pay for annexation

Dispute will presumably be settled in court

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The City of Helsinki is arguing with the municipality of Sipoo about the compensation to be paid for the area in the southwest of Sipoo that is to be merged with the capital city at the beginning of 2009.
      The parties do not agree even on the sum of money that Sipoo actually wants.
      According to Sipoo, the sum is EUR 100 million. However, Helsinki Mayor Jussi Pajunen says that the overall demands made by Sipoo would eventually lead to a compensation twice as high.
     
Depending on the calculation method, Sipoo actually wants from Helsinki around 10 to 40 times more than Helsinki would be willing to pay.
      First, Sipoo wants a current market value for the change of the municipal border, namely EUR 100 million. The sum would include for example compensation for losses in future tax revenue.
      In addition, Sipoo residents would like to have their share of the value increment of land in Southwestern Sipoo, which would raise the compensation to EUR 160 to 168 million.
     
On Monday, the officials of Helsinki and Sipoo completed a statutory financial report on altering the municipal boundary.
      The quotations and claims of each parties were conflicting and widely divergent, which is why the eventual amount of indemnity is likely to be decided in court.
      ”I calculated Sipoo’s claim to compensation and reached a total of EUR 195.5 million”, reports Pajunen.
      According to the Helsinki Mayor, a significant part of Sipoo’s claim is speculative and is not based on any legal grounds.
     
Helsinki and Sipoo also disagree about the size of Helsinki’s offer to Sipoo.
      Markku Luoma, the Municipal Mayor of Sipoo, claims that Helsinki has offered just EUR 4.5 million, which is based on Helsinki’s estimate of the Southwestern Sipoo residents’ share of the municipality’s debts.
      In Pajunen’s view, the capital’s actual offer is EUR 13 to 18 million. In addition to the share of the municipal debts, the sum includes the respective residents’ municipal taxes to be paid next year.
      According to the law, the municipal taxes have to be paid to the municipality in which a citizen has lived on December 31st. Southwestern Sipoo will join Helsinki on January 1st next year.
      ”Next year Helsinki will have to finance all obligations, while all municipal tax receipts will still go to Sipoo”, Pajunen points out.
      The estimates made in Helsinki indicate that next year’s municipal taxes in Southwestern Sipoo will amount to EUR 8.5 million.
      Pajunen and Luoma will meet next on Thursday in order to decide how the dispute will be handled henceforth.
      Behind the dispute is the act on municipal divisions with very scanty stipulations relating to border changes.
      ”In a case of economic settlement, the real property including all obligations serving a certain area are to be assigned to the municipality to which the area concerned will belong”, says Arto Sulonen, the Director of Municipal Development Unit at the Ministry of Finance.
      ”For example, all schools serving the pupils in the area are to be assigned to the City of Helsinki”, Sulonen added.
     
Sulonen notes further that the act stipulates no explicit obligation to compensate for losses in tax revenue or for any expected values regarding land property.
      ”Incidentally, all property, debts, and obligations are divided so that the overall effect on both parties will be equal”, Sulonen concluded.
      Currently, a committee led by Arto Sulonen is looking into a reform of the act governing municipal divisions. The report is due at the end of January 2009.
      In January 2008, the Supreme Administrative Court rejected appeals made against a government decision to authorise the change in the municipal boundaries, giving Helsinki an area of 30 square kilometres in the Itäsalmi area of Sipoo, and the so-called Västerkulla wedge as of the beginning of 2009. The number of new Helsinki residents will be around 2,000.


Previously in HS International Edition:
  Minister of Housing believes in merger of Helsinki and Vantaa (19.9.2008)
  Helsinki looks further east beyond Sipoo (16.1.2008)
  Helsinki gets go-ahead to annex southwest Sipoo (15.1.2008)
  Helsinki wants to expand to western parts of Sipoo (20.6.2006)

See also:
  Harry Harkimo plans to build up-market neighbourhood in Sipoo, east of new Helsinki border (6.3.2008)

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