City Hall stares at losses over estate transfer

The recent transfer of Mariakani Estate to the Local Authorities Provident Fund (Lapfund) at a price below market rate has exposed City Hall to losses running into millions of shillings.

The estate was valued at Sh1.4 billion when it was transferred just before the 2013 elections to offset some of the debts owed to the pension scheme.

Nairobi county is now trying to have the property re-valued and is seeking an out-of-court settlement despite having already effected the transfer.

“The process of transfer started in 2012, but the transfer was done in early 2013 before the election,” said county chief valuer Isaac Nyoike, when he appeared before the county Public Accounts Committee.

Mr Nyoike said that a resolution was passed by the defunct City Council to have several estates transferred to pension schemes owed huge sums, but only Mariakani’s transfer took place.

Committee chairman Robert Mbatia who was a councillor then and a member of the General Purpose Committee said that he has no recollection of such a resolution.

Currently, Nairobi owes Lapfund and the Local Authorities Pension Trust (Laptrust) about Sh6.3 billion in unpaid statutory deductions.

It, however, emerged that the county government continues to collect rent from the buildings in the estate.

Committee members questioned the undervaluation of county properties which continues to expose Nairobi to possible losses.

A December valuation of several county properties was cited by the committee members who said that the amounts stated are grossly below market rates.

The 1.2 acre Nairobi fire station was for example valued at Sh300 million while the 3.7 acre Central Bus station was valued at Sh1.7 billion.

Mr Nyoike said that according to current valuations, an acre of land in the Central Business District is worth about Sh600 million.

“This was only an estimate pending a proper valuation. It’s not possible to do a valuation in one day,” Mr Nyoike said.

Other properties whose value was questioned include the 1.7-acre Sunken Car Park (Sh800 million), the eight acres on Outering Road that has county houses (Sh700 million) and the half-acre fire station land in Industrial Area valued at Sh5 million.

“This is why we need proper valuation,” said Githurai ward representative Jackson Mwangi.

County secretary Lilian Ndegwa said that if the county wishes to use any of its properties as security, it would have to be valued internally, by the national government and independent valuers.