Tenants of historic buildings in the city centre of Moscow will face difficulties with prolongation of the effective contracts, because the buildings have been put under state control. However GUM (State Department Store) trade center on Red Square is likely to retain its leaseholder. Russian Agency for State Property Maintenance plans to sign a tenancy agreement with Bosco di Ciliegi Group, a company owned by Mikhail Kusnirovich. The agreement will be effective until 2059, the rent increasing 3 times.

The government of Russia has prepared a draft of the decree, according to which TD GUM public corporation obtains the rights to rent “Upper Shopping Street” premises (the GUM), 74968 square metres, until December 1, 2059. The Agency for Property Maintenance sent the draft to the Ministry of Economic Development on April, 15.   

TD GUM public corporation is a current tenant of GUM premises. The company belongs to Bosco di Ciliegi Group owned by Mikhail Kusnirovich. The effective agreement was signed between the company and Moscow’s Committee for Heritage in 2004 and could have been active until 2044. But in 2009 prime-minister Vladimir Putin signed the decree about the status of 272 historic buildings in Moscow. The decree stipulated that such objects as the Kremlin, the GUM, the large hall of the Polytechnic Museum became the property of the state, not of the city.      

Dispute between the Mayor’s office and federal government over Moscow’s historic buildings evolved in 2002 out of the law, called “On the objects of cultural heritage of Russia”. The former Mayor’s team did not want to “give away” disputable objects for fear that the federal government could terminate tenancy agreements. Indeed the Agency for State Property Maintenance is not willing to prolongate the agreement on the same terms. According to the report of the Committee for Heritage, the Agency was at suit over the rights on 750 objects of cultural heritage in the capital in 2009.  

According to the reports, federal government will raise the rent for GUM building three times. However the agreement allows for sublease without bidding and offsetting of the money the tenant invests in the maintenance and renovation of the building.

Bosco’s officials says the company is ready to pay higher price. Due to the financial crisis TD GUM public corporation has cut down the expenses. In 2009 the company decreased its maintenance costs by 11.3%, in promotion costs – by 9.6%, labour remuniration – by 13.9% and staff training costs – 10 times. Annual costs for reconstruction and maintenance of the buildings was $ 15 m, all works and budget were discussed with the city government. Mikhail Kusnirovich, Bosco’s owner, says the company has been uable to reach agreement about offsetting of the investments. “We both have paid the rent and invested in maintainance”.