Parliament gives City Hall 3 months to pay Lapfund Sh65m rent

Parliament has directed City Hall to pay the Local Authorities Pension Fund (Lapfund) Sh64.8 million in rent it collected from Mariakani residential estate.

The National Assembly has given the County Government of Nairobi three months to remit the amount of rent it recieved prior to the High Court ruling in favour of Lapfund.

Lapfund acquired the Mariakani Estate through a debt swap agreement it entered into with the now defunct City Council of Nairobi in 2012.

The county government transferred the estate to the fund in March 2013 to offset the outstanding debt of Sh2 billion.

A report of the Special Funds Accounts Committee (SFAC) tabled in Parliament shows that the County Government of Nairobi had collected a sum of Sh64.8 million as rent before the April, 30, 2020 court ruling in favour of Lapfund to collect rent.

The committee, which scrutinised the report of the Auditor-General on Lapfund’s books of accounts, said the rent collected had not been transferred to Lapfund to date.

“The committee recommends that the County Government of Nairobi pays the amount of Sh64.8 million collected as rent prior to the High Court ruling in favour of Lapfund within three months of adoption of this report by the House,” said Kathuri Murungi, who chairs SFAC.

Lapfund took control of the half-century-old estate sitting on a 10.13-acre land, located in Nairobi’s South B and has 30 blocks of eight flats, after the debt swap deal.

The property consists of 240 units and the monthly rent is Sh10,000 per unit. Due to protracted court battles, tenants did not have a clear direction on whom to pay rent.

The committee said the number of tenants paying rent to Lapfund had increased to 53 as at end of May 2020.

Lapfund has written to all tenants to remit rent to it failing which rent distress would be raised.

The committee said the Mariakani property was valued at Sh1.95 billion at the time of transfer in 2013 and is currently valued at Sh2.6 billion.

City Hall reneged on the agreement and moved to court in 2018 seeking to stop the takeover but the suit flopped in August 2020 paving the way for Lapfund to take full control and management of Mariakani residential estate.

While some tenants of Mariakani Estate were paying rent to the County Government of Nairobi, others were making payments to Lapfund before the High Court ruling on April 30, 2020 in favour of Lapfund to collect the rent.

The case started in 2018 when the County Speaker Benson Mutura and the estate residents moved to court seeking answers on how the estate was transferred to the provident fund to settle a Sh2 billion debt owed to the pension scheme by the defunct City Council.