AFTER 20 years in limbo, the metaphorical gates of the abandoned Plaza Rakyat project in Kuala Lumpur will finally open as Kuala Lumpur City Hall (DBKL) has taken vacant possession of the site.
It is learnt that City Hall has finally settled the outstanding loan to the financiers after months of negotiations.
The initial loan taken was RM58mil but the amount snowballed to a whopping RM150mil since 1992.
Kuala Lumpur mayor Datuk Seri Ahmad Phesal Talib is expected to visit the site today.
The abandoned Plaza Rakyat had become derelict with pools of stagnant water and rubbish strewn all over the place, making it a paradise for mosquitoes to breed.
The original plan comprised a 79-storey office tower, 46-storey condominium, 24-storey hotel and seven-storey shopping centre.
The RM1.4bil project was 30% completed about 15 years ago when the then developer Plaza Rakyat Sdn Bhd (PRSB) ran into financial difficulties during the 1997/1998 Asian financial crisis, forcing it to abandon the project.
The Government decided to terminate PRSB’s contract in 2010, 12 years after the company abandoned the mixed-development project.
Subsequently, PRSB went into receivership and came under the administration of a consortium of lender banks.
DBKL Health and Environment Department director Dr Hayati Abdullah said a team specifically in charge of monitoring active and abandoned construction sites visited on Wednesday to make a preliminary assessment and gauge the extent of work required for the clean-up.
“It is going to be a big job and we have only been informed about it this week.
“The initial inspection will involve the basics, which means identifying what needs to be done where; we have to get our priorities right because it is a big area,” said Hayati.
She said the basement carpark area would not be touched as yet.
“It is not safe and that particular job requires some expertise,” she added.
Hayati said the department had been keeping close tabs on the construction site to ensure it did not become a breeding ground for mosquitoes.
In June, Federal Territories Minister Datuk Seri Tengku Adnan Tengku Mansor told StarMetro that three companies had shown interest in developing Plaza Rakyat but the government decided to go with Profit Consortium Sdn Bhd, which presented a better deal.
He also said the new developer would ensure the buyers were duly compensated.
The arbitrators Prof Tan Sri Visu Sinnadurai, Datuk Ghazi Ishak and Robert Lazar, who were involved in negotiations with PRSB and DBKL, confirmed in June that the local authority was lawfully entitled to terminate the agreement because of non-performance and breach by PRSB.
However, they said DBKL had to settle the RM200mil outstanding loans taken by PRSB and reimburse the company and the banks. In addition, DBKL was not allowed to enter the site until they had registered the award with the court.
The new development will include a mall, service apartments and offices, and will integrate with the Plaza Rakyat LRT station.
While relieved over the news of the Plaza Rakyat project revival, the long-suffering buyers want the Government to ensure they got the units they purchased decades ago.
“We have been waiting for years for our units, so we want the Government to ensure that we are given similar lots in this new project,” said Stephen Yong.
Yong, 70, said he had paid a 20% deposit of RM300,000 19 years ago for two units in Plaza Rakyat.
“It was a lot of money back then, a large chunk of my life savings. I want units in the new project. It is only fair that they compensate us with units for all the pain and suffering that we had been put through,” he said.
Buyer Danny G. agreed with Yong.
Danny added, “Since the previous developer failed to deliver the units at the expiry of the extension period, the vendor should pay us liquidated damages (LAD). Going by the sale and purchase agreement from November 1996, the developer was given three years plus one year extension to complete and hand over our shoplots.
“They should have handed over by year 2000, but there has been a lapse of 14 years. So the LAD would run into hundreds of thousands of ringgit.”
Another buyer, who wanted to be identified as only Lee, said she had paid 30% of RM600,000 as down payment to purchase two shoplots.
“Fortunately the bank had not released the balance 70% of the payment when the project stalled, or I would be paying the loan and interest for a property that was not completed,” she said.
There are about 200 buyers, many now in their twilight years, who have invested their life savings in the Plaza Rakyat project almost 20 years ago.
In 2011, about 20 buyers lodged police reports at the Tun H.S. Lee police station demanding compensation and refund of their downpayment for the abandoned project.
A total of 221 business lots were sold.