Old contracts commit Brno to extremely unfavourable lease agreements for Kleinův palác and Hlídka 2
The City of Brno has decided that it is necessary to solve the long-term lease agreements binding the city to unfavourable rental agreements regarding two buildings in the city center: Kleinův palác on náměstí Svobody, and Hlídka 2 in Špilberk Park. On Tuesday, July 24, the city council agreed to take steps to either settle or terminate the leases. Photo credit: Pixabay // For illustration purposes.
Brno, Jul 30 (BD) – Kleinův palác (map) was leased for 90 years to Credit Lyonnais Bank Praha, a. s. in 1994. This company no longer exists, and its liabilities are currently owned by CL Equipment and Real Estate Leasing, kom. spol. Under the contract, the tenant does not have to pay any rent to the city for 40 years because it had undertaken to invest CZK 586,592,000 into the renovation of the building. “Since 1994, however, none of the city’s representatives have asked for evidence of how much investment into this building has been made,” said the Mayor of Brno Petr Vokřál in an official press release.
Hlídka 2 (map) was leased in 2000 to UNISPO, s. R. o., for a fixed term lasting until 2038. The tenant now pays CZK 50,000 a year for the whole building. According to the contract, the tenant would invest CZK 5 million in building repairs. If the contract was terminated before 2038, the city would return 2.5% of this amount for each year remaining until 2035.
“The City of Brno wants to start negotiations with the two tenants mentioned above. If the parties do not agree to an amicable termination of the lease, the city will consider terminating these lease agreements,” the City of Brno reported in an official press release on Tuesday, July 24. “If we are to manage the property of the city with due diligence, it is necessary to solve these issues,” said Vokřál.
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