German Towns Face Mounting Bills as Developer Defaults on Infrastructure Projects
Several municipalities in central Hesse, Germany, are grappling with a growing financial problem: a key property developer has failed to complete essential infrastructure in newly developed residential and commercial areas. This leaves local authorities and residents facing the prospect of footing the bill – potentially twice over.
The situation is particularly acute in Löhnberg, Limburg-Weilburg, where the Güldenstadt industrial area remains unfinished, with provisional roads and incomplete sidewalks despite being developed since 2016. The original developer, Löhnberger Grundbesitz GmbH (LGG), was declared insolvent last year, and insolvency proceedings were dismissed due to insufficient assets.
Developer’s Wider Portfolio Under Scrutiny
Jörg Fischer, managing director of Kolmer and Fischer, a company involved in the LGG project, is a prominent developer in central Hesse. He has been responsible for numerous residential and commercial developments, including the Lahntower in Gießen and projects in Linden and Lich. However, Kolmer and Fischer has also recently entered insolvency proceedings, initiated by a health insurance company due to unpaid social contributions.
The core issue is that Fischer’s companies were contractually obligated to complete the infrastructure in these developments, but have failed to do so. This leaves municipalities like Lich and Linden facing similar dilemmas to Löhnberg – how to finish the function and who will pay for it.
Lich: City Forced to Seize Over Road Construction
In Lich, the city is now undertaking the final construction work in two housing developments itself, after Fischer’s company failed to meet deadlines. Mayor Julien Neubert (SPD) reports that initial cooperation was positive, but commitments were subsequently broken. The city is now pursuing legal action to recover around €800,000 in costs, but the responsible company has dissolved, potentially leaving residents to cover the expenses.
Residents are understandably frustrated, having purchased properties believing them to be “fully developed.” Mayor Neubert acknowledges the unfairness of being asked to pay for work that should have already been completed, but states the city is legally obligated to finish the infrastructure.
Linden: Residents May Face Double Billing
A similar situation is unfolding in Linden, where the city is also considering legal action to recover costs for unfinished roadwork related to a senior citizen center expansion. Mayor Fabian Wedemann (CDU) reports a breakdown in communication with Fischer’s company, with all interactions now occurring through lawyers. Residents may ultimately be billed for the completion of the road.
The Role of Kommunale Gesellschaften (Municipal Companies)
The situation highlights the risks associated with municipalities establishing their own companies to manage development projects. While these companies can offer greater efficiency and flexibility, they also expose local authorities to financial risks if projects fail. Kommunen often establish these companies to streamline development and manage risks, allowing for easier access to credit and investment.
Löhnberg’s Financial Woes Deepen
In Löhnberg, the LGG received approximately €14 million in loans from Kreissparkasse Weilburg, of which €8.5 million had been repaid. The LGG generated around €8.3 million from land sales, with €8.1 million transferred to Kolmer and Fischer. The municipality has halted all LGG projects due to concerns about financial risks.
Fischer claims that the LGG could have continued to sell land profitably, and that the insolvency was a result of external factors. He also stated that the city requested a delay in construction until the properties were largely occupied, but both mayors dispute this claim.
Frequently Asked Questions
What caused this situation?
The primary cause is the insolvency of key development companies, leaving municipalities to cover the costs of unfinished infrastructure projects.
Which towns are affected?
Löhnberg, Lich, and Linden are currently the most prominently affected municipalities, but other towns in central Hesse may also be impacted.
Who will pay for the unfinished work?
the costs may fall on taxpayers or residents through increased fees or special assessments.
What is the role of Jörg Fischer in this situation?
Jörg Fischer is the managing director of Kolmer and Fischer and a former director of LGG, the companies responsible for the unfinished infrastructure projects.
Are there any legal options for the municipalities?
The municipalities are pursuing legal action to recover costs from the insolvent companies, but the success of these efforts is uncertain.
