Ten million euros in unplanned renovation costs: “Private” Monalisa tunnel is expensive for the city of Linz

The Ebelsberg bypass was put into operation in 2000. The road and tunnel are owned by the “Ebelsberg Ebelsberg Bypass Road Construction Company”, a Raiffeisen Group company. With this solution, the city beautified the balance sheet, but shifted the debt burden to the next generation and “least” the street back, but also has to pay for all renovation costs. Exactly such a case is occurring now: ten million euros have to be invested in the renewal of the technical systems in the tunnel. Problem: The money was not budgeted.

As part of a PPP (public-private-partnership) model, the city took part in the Ebelsberg bypass project, which was financed and owned by the Raiffeisen Landesbank. “Under the given framework conditions, the stated cost framework can no longer be sufficient,” says an explosive letter from the municipal department for building management and civil engineering.

Comprehensive renovations
The electromechanical and security equipment must be renovated, and video surveillance will also be expanded. The existing high-pressure fogging system for firefighting must also be renewed. A total of EUR 9.8 million has been budgeted for the work. The renovation will be carried out in the summer of 2023, and the tunnel will be completely closed for three full months.

In order to largely avoid traffic jams and impairments, a “accompanying measures project” is to be implemented, for which a further 300,000 euros are earmarked. What these measures will look like is still open and should be “examined” in advance.

Comment
PPP model – sounds good, but the bottom line is that it costs more than classic financing. It is true that the current balance sheet is spoiled, but the debts of the following generations are humming along. At the end of the 20th century, the city of Linz, which was already quite ailing at the end of the 20th century, had no money for the construction of the Ebelsberg bypass, so the RLB Group jumped in and built the bypass including the Monalisa tunnel at its own expense. The city “least” the road back, so to speak, saving itself the big chunk of the overall financing for the time being.

“The type of pre-financing chosen leads to long-term commitments of budget funds with considerable financing costs,” the state audit office stated critically as early as 2002 as part of an unsolicited audit of the Ebelsberg bypass project. And the test report went on to say: “In view of the high financing costs, the LRH believes that pre-financing by private companies should be avoided as far as possible.”

As with “cheap” car leasing, the dog is in the details with PPP projects: the city has to pay for repairs and renovations that were not planned beforehand – although here too one has to ask oneself why they did not do this: every student the 1st class structural and civil engineering HTL knows that the first renovation cycle for such buildings is due after 15 to 20 years. The fact that the city nevertheless shrugs its shoulders and says “These project costs are not included in the city’s medium-term plan and will … lead to a deterioration in the city’s budgetary situation” is strong stuff.

The term ‘maintenance reserves’ seems to be a foreign word for Linz’s financial planning. The ten million euros Redevelopment costs are now a massive additional burden on the city budget – or rather, several future budgets, because the money will probably have to be raised again through loans that have to be repaid for years. But there is one winner in this whole game: the RLB.

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