Failure to finance Tallinn Hospital hinders film industry hub construction

Film industry hub.
Film industry hub. Source: Novarc

Gren Noormets, head of Tallinn Film Wonderland studios, told to ERR that the government's decision not to allocate EU funding for the development of the planned new major Tallinn Hospital has also thrown a wrench into negotiations regarding the development of a new film industry hub in the Estonian capital as well.

Gren Noormets, director of Tallinn Film Wonderland studios (TFW), said that no new agreement has yet been reached with the City of Tallinn, which offered to bridge finance the development of the film industry hub in its initial stage of construction, so that funding from the Cultural Endowment of Estonia could be used to pay back the loan later on.

"We have had extensive talks with the City of Tallinn after the Riigikogu's decision [to support the film hub project]," Noormets explained. "However, dramatic events have taken place since then — energy prices have hiked sharply, which Tallinn needs to account for when drafting its budget, the war in Ukraine began, and there is now confusion about the financing of the new major Tallinn Hospital."

This means that Tallinn is not going to commit to any early decisions about funding for the new film hub until next year's budget is approved.

"We are currently discussing the earliest deadline in the next film hub's budget. What happens next to Tallinn hospital's funding is a critical factor for us. The financing of the large hospital and the bridge-financing of the film hub are direclty linked," Noormets said.

The city administration has informed the head of the film hub development project that the Tallinn budget for next year may be released in August or September.

"This is what we are waiting for: to clarify what is and is not included in the budget," Noormets said. "The crucial question is whether or not the new Tallinn Hospital will be financed and, if so, to what extent. This (government) decision [to withdraw Tallinn Hospital financing] wreaked havoc in our planning, and it also prompted us to look for alternative sponsors."

The issue with possible sponsors would be similar to that which the company has with the Tallinn city administration: they would insist on assurances that Tallinn Film Wonderland — the film hub's promoter — receives adequate support from the Cultural Endowment. The hub is currently fifth on the list of priority cultural projects, however, and the timing of its financing is dependent upon the completion of the first four: the planned Downtown Cultural Center (SÜKU) in Tartu, Kreenholm Cultural Quarter "Manufaktuur" in Narva, the Arvo Pärt Music House in Rakvere, and an extension to the National Opera building in Tallinn.

"It is now obvious that more concrete commitments are necessary — in addition to the Riigikogu decision to include the project on that list — to hunt for alternative funding," Noormets said. "We are working out now what kind of precision and clarity the government can offer in addition to the aforementioned decision. It has also become clear that no one can guarantee a definitive timeline; this depends on two factors — first, the price of construction in line ahead of ours, and second, the rate at which lottery funds are made available."

New hub a priority project for Tallinn's administration

Tallinn Deputy Mayor Joosep Vimm (SDE) told ERR that the film hub's promoters, the Ministry of Culture and the Cultural Endowment of Estonia have explored options for expediting the construction of the film industry hub. However, no agreement has been reached thus far, as many technical and legal issues remain yet unresolved.

Vimm also said that the film industry hub is one of the city's most important projects.

"The film hub is unquestionably on the city's budget plan and is a budget discussion priority," he said. "We are expecting to make this concrete sometime in late summer or early fall. Both the City of Tallinn and the Film Department of the Cultural Endowment stand by the project, and it is stipulated in the coalition agreement as well."

A state guarantee is necessary, said Vimm.

"On one hand, the Riigikogu decision to approve the development of the Tallinn film industry hub is a sufficient guarantee," the deputy mayor explained. "On the other, however, there are questions regarding how the state could secure the reimbursement of the financial costs that Tallinn incurs during the initial phase of construction. Given the fact that the Tallinn film hub is at the back of the line for funding from the Cultural Endowment of Estonia, the primary question is how the potentially lengthy interval between construction and payment will be resolved. The city's investment risk must be suitably insured."

Contractors unwilling to quote a price

Vimm is not certain whether the turmoil surrounding the construction of Tallinn Hospital would have an impact on the decision to fund the film industry hub.

"As the film hub and the new city hospital are not the only investments that should be penned in, it is difficult to see how things will resolve," he said. "Trends in the construction market as well as the extremely high inflation rate should not be disregarded. The budgets for the two projects are also vastly different."

When the Riigikogu approved the list of funding for nationally significant cultural objects last fall, Noormets said that the first phase of the film industry hub would cost approximately €14 million — according to calculations made in spring 2020 — and the City of Tallinn had agreed that the investment would be repaid within 17 years.

As construction costs are undergoing dramatic changes, no one is willing to provide a new price estimate, Noormets said.

"We don't have a more recent calculation," he said. "It's pointless to spend time drawing one up now. We've researched this, and the contractors have all confirmed that they won't provide a quote and prefer to keep an open budget. This doesn't help us, however, as we still need to secure these funds first."

Noormets said that the price should become clear when bids from tenderers come in. The building permit for the Põhja-Tallinn film hub property has already been secured, but the invitation to bid cannot be issued until construction funding is secured, he said.

Last August, a building permit was issued for the first phase of the film hub complex.

The new film industry hub planned for Põhja-Tallinn is slated to be home to the biggest studio complex in the Baltic Sea region as well as various local audiovisual service companies.


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Editor: Kristina Kersa

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