The bad investment at the Triemli hospital stuck with the city of Zurich. The administrative court has now also assessed the financial trick with which the city council wanted to correct the error as illegal.
Much too expensive to run: the Triemli bed house.
It is rare when the government council of a Zurich municipality refuses to approve the bill. This is exactly what happened in the case of the City of Zurich. The reason is the way in which the city has put the much too expensive bed block at Triemli-Spital in the books. The problem with the ward block is not the construction costs – a precision landing was achieved when it was built in 2016 – but the fact that the income from the operation does not cover the costs by far. 290 million francs building costs have to be amortized over 33 years. That burdened the bill with 16.8 million francs annually.
The city council wanted to get rid of this with an accounting trick. Instead of the high annual depreciation, there should be a one-time value adjustment for the ward block in the books. The ward block should be worth 176 million francs less – retrospectively to 2019. The value will be reduced from 346 million francs to around 170 million francs. The city hospitals would have shown a deep red number in the 2019 bill once, but would have had to write off 7.6 million francs less annually, namely around 22 instead of 30 million francs.
A major blemish
The flaw is that there is no legal basis for doing this. This is the conclusion reached by the government council – and now also by the administrative court. In this case, the city council challenged the government’s decision.
The Auditing Commission of the City of Zurich Parliament (RPK) had already asked the cantonal municipal office about the legality of the financial trick, which advises municipalities on the legal interpretation of the municipal law. This then criticized the lack of a legal basis. The FDP subsequently filed a supervisory complaint against the city council.
The city is bound by municipal law when it comes to the valuation of properties. The decisive passage is that municipalities may and should reevaluate properties if there is a decrease in value. This means, for example, that a building has been damaged or that it can no longer be used in the same way as before due to spatial planning decisions.
One example is when a fire damages property. The decisive guideline is whether a building can still be used as it was intended.
The case is different with the ward block: The return is much lower than once assumed because the political guidelines have changed since the planning in the noughties. The city council’s business case no longer works.
The city council argued that one was obliged to show the real value of a property. And the municipal law leaves room for maneuver. According to this argumentation, a property does not have to be destroyed or unusable in order to adjust its value – but changed framework conditions can also be cited as the reason.
The yield is not important
The administrative court now writes, however, that a value adjustment is permissible if a permanent decrease in value has occurred. This is the case if the utility value is permanently lower. “The method used by the City of Zurich, on the other hand, is based on an income value analysis. However, this is not legally permissible when evaluating administrative assets, because administrative assets serve the general public not through income, but through their use value. ” A valuation method that is based on an income analysis is only suitable for income-oriented properties that are part of financial assets.
According to the court, the mere fact that the return on an investment in administrative assets is below expectations does not allow any value adjustment.
The city council can appeal the judgment to the federal court. If it persists, the city must revise the invoice and reverse the copy-off.
For the FDP, the decision is a satisfaction. For the second time within a short time she has successfully filed a complaint against the Zurich city council: the district council recently declared the so-called basic aid to be illegal. FDP President Severin Pflüger urges the city council to finally accept the Triemli decision. “For the FDP, the question arises whether the red-green arrogance has definitely passed its zenith today.”
The FDP was accused of coercion by red-green and the city council in connection with the appeals. This “moral leg” is terrible, says Pflüger. “Anyone who, like the city council, is ready to sound out the possibilities of the law must also be ready to get a bloody nose. But in its communication on the administrative court ruling, the city council unfortunately still sounds very opinionated. “
The city council writes in a statement that it regrets the decision. “The administrative court does not deal in depth with the reasons given by the City of Zurich for the value adjustment; in particular, the special framework conditions and requirements in the hospital sector are not taken into account. “One will examine the judgment in more depth and then decide on the next steps.
More to come.