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Automatically translated version. May contain inaccuracies compared to the original.
LLC “Hydroinzh-Bud”, which is part of the orbit of the scandalously known developer “KSM-Group”, lost the first round of a court dispute seeking to recover 954,3 million hryvnias from the Kyiv budget.
This concerns funds the company paid about six years ago as a participation contribution for construction of part of the Crystal Springs residential complex and spent on building infrastructure near it that is currently used by the “utilities” (plus interest, inflation losses, etc.). The LLC failed to convince the court that the law at that time no longer required signing participation agreements and that it was effectively “forced” to do so. In addition, the company could not document the amount of financial resources used to equip the networks or prove that it transferred or intends to transfer them to municipal ownership. However, it is too early to close this chapter—the company Hydroinzh-Bud has already filed an appeal against the unfavorable court decision.
Soon the Northern Commercial Court of Appeal must consider the appeal of LLC “Hydroinzh-Bud” in case 910/7132/25.
The company is challenging the decision of the Commercial Court of Kyiv dated 15 July 2026, which denied its claims to invalidate two participation agreements for the creation and development of social and engineering-transport infrastructure of the capital, which were concluded with the Department of Economics and Investments of the Kyiv City State Administration (Kyiv City State Administration — KSCA) in 2020, and also denied recovery from the aforementioned department of 954,3 million hryvnias.
What the dispute is about
On 27 February and 21 September 2020 the same year, two participation agreements for the creation and development of social and engineering-transport infrastructure of Kyiv were concluded between LLC “Hydroinzh-Bud” and the Department of Economics and Investments of the KSCA. Under these agreements, the company obligated itself to pay to the city budget funds for “construction of residential buildings with integrated public premises on Metrologichna Street” — referring to the Crystal Springs residential complex (developer – “KSM-Group”), for which LLC “Hydroinzh-Bud” acted as the customer and which was being built on four plots totaling 31,77 hectares, held by the National Academy of Sciences of Ukraine (which phases of the complex these are is not currently available in open sources). According to the first agreement, the company had to pay 14 million hryvnias into the city treasury, and according to the second — 17,5 million. In theory, the city authorities were supposed to use these funds to bring utilities to the complex, repair and maintain roads, etc.
Subsequently, it appears that LLC “Hydroinzh-Bud” paid these funds into the city treasury, but the company now seeks to recover them and other amounts it spent. In connection with this, the above-mentioned lawsuit was filed with the city commercial court in the first half of 2025.
The company states that neither it nor the defendants “acted freely, and concluding such participation agreements did not correspond to their will” — asserting that the then-applicable legislation merely required it. The reference is to amendments in September 2019 to the legislation on investment activity, where the Verkhovna Rada provided that developers no longer had to conclude participation agreements with local authorities, and only agreements concluded before 1 January 2020 remained valid. That is, after that date it was not necessary to conclude and perform new agreements. At the same time, Hydroinzh-Bud emphasized that it had to sign such an agreement with the Department of Economics and Investments of the KSCA because at that time the mentioned changes were not fully harmonized with other legislative acts — claiming that without participation agreements it would have been impossible to commission construction projects.
Hydroinzh-Bud also emphasized that when carrying out residential development on the specified territory, it had the heating, water supply, gas and electric networks built on its behalf, as well as heating supply and sewer engineering networks, in some cases even outside the customer’s land plot. Currently PJSC “Kyivgaz”, PJSC “AK Kyivvodokanal”, the municipal enterprise “Kyivteploenergo” and PJSC “DTEK Kyiv Electric Networks” use the facilities built at the developer’s expense for the Crystal Springs complex. Thus, Hydroinzh-Bud’s management believes the company should be released from paying the participation contribution and, moreover, be reimbursed for the costs of constructing networks outside the development area.
Initially the company demanded recovery from the city budget of 622,3 million hryvnias. This amount included funds to be recovered following invalidation of the participation agreements and funds spent on building networks (162,6 million — principal debt, 131,9 million — inflation, 27,9 million — 3% per annum and 268,1 million hryvnias of penalty). Later, Hydroinzh-Bud filed a motion to increase the claim to about 954,3 million hryvnias — after the company recalculated how much it had spent on infrastructure construction and how much it could have lost in recent years due to currency devaluation and because these funds were held in the city council’s accounts (212,8 million — principal debt, 225,4 million — inflation, 44,5 million — 3% per annum, 436,7 million — penalty, and additional amounts of 31,7 million each for which the court rulings in this case do not include a breakdown).
However, the Kyiv commercial court did not accept the company-plaintiff’s arguments. Judge Oleksii Spychak noted that the mentioned amendments to the legislation in 2020 were de jure not yet in force. Therefore, in his view, LLC “Hydroinzh-Bud” in any case had to pay the participation contribution for the construction of the objects covered by the disputed agreements — whether those agreements had been concluded or not. Consequently, the judge concluded that the existence of the mentioned agreements in no way violated the plaintiff’s rights.
Regarding compensation for infrastructure objects built outside the plot, the court decision notes that construction of engineering networks outside one’s own plot does allow the developer to reduce the amount of the participation contribution by the estimated cost of those networks. However, such offsetting of expenses or reimbursement for “other” objects does not occur automatically at the will of the city authorities. For that, Hydroinzh-Bud had to follow the relevant legal procedure and transfer the built objects into municipal ownership. In particular, it was necessary to sign an acceptance-transfer act for those infrastructure objects and undergo an audit of the volumes and cost of the works performed. The audit-confirmed amount excluding VAT could have formed the basis for reducing the participation contribution. Thus, as the court emphasized, the right to compensation directly depends on the developer precisely following all steps required by law, which was not done in this case.
Kyiv lawyer and human rights defender Oleksandr Dydiuk, who has been following the case, said he considers the court verdict fair. Moreover — according to the specialist, Hydroinzh-Bud has no chance of winning this court dispute given the provisions of the law, other judicial precedents and the lack of documented calculations.
“In my opinion, the court decision is lawful, especially since there are corresponding conclusions of the Supreme Court, which [in another similar case] recognized that developers were obliged to pay participation contributions under agreements concluded in 2020. [Regarding compensation for networks built outside the plot] the court pointed out that the law clearly specifies that a developer can receive funds only for those objects that are outside their plot and if they are transferred to municipal ownership. Hydroinzh-Bud provided no evidence that they are transferring or intend to transfer those networks into municipal ownership. They also did not provide the relevant calculation showing what was built there, roughly speaking, for example, 500 meters of pipe: 200 meters on the plot and 300 — outside it. And there were no calculations that the estimated cost of these networks amounts to a certain number of hryvnias. In other words, they simply stated that their networks cost a certain sum of money,” emphasized Oleksandr Dydiuk.
Context
The Crystal Springs residential complex is one of the largest residential complexes in the capital, if not the largest — both by number of buildings and by area. Construction began one and a half decades ago; the first buildings were commissioned in 2013, the most recent buildings were commissioned in 2022, and several buildings are at different stages of readiness (from design to finishing works). In total the complex will consist of more than forty buildings (according to various sources — 43 or 45).
The complex occupies an area of over 38,7 hectares. The land plots are used by the National Academy of Sciences of Ukraine and its subordinate Schmalhausen Institute of Zoology (one plot of 1,1 hectares). Three companies are the construction customers — the aforementioned LLC “Hydroinzh-Bud”, LLC “Interbud-TM” and LLC “Yug-Project” (these companies are customers on different plots, but in practice buildings have so far been constructed only on orders from the first two LLCs). They were involved under various arrangements, including contracts with the NAS of Ukraine under which developers were to transfer certain percentages of residential space to the academy.
Various scandals have repeatedly arisen around this development. For example, several years ago the KSCA tried in court to cancel the right to use one of the plots under this complex (cadastral number – 8000000000:79:122:0005, area 14,17 hectares) held by the same LLCs “Hydroinzh-Bud” and “Interbud-TM”. The city administration argued to the court that only the KSCA may dispose of plots of state property in Kyiv, not the NAS. However, the officials were unsuccessful, and in 2021 their claim was dismissed.
What is known about the developer
According to the analytical system Youcontrol, Kyiv LLC “Hydroinzh-Bud” was registered in June 2007. Its director is Svitlana Burkovska, the founder and ultimate beneficiary is Kostiantyn Stadnichenko, who is registered in the city of Vasylkiv in Kyiv region.
Youcontrol classifies this company as part of the corporate group “KSM-Group” (the developer of the Crystal Springs complex), which unites about sixty companies engaged in design and construction of residential areas, infrastructure facilities, bridges, roads, etc. The key figures in this group are Arsenii and Serhii Kopystyry, Nataliia Vozna, and the aforementioned Olha and Tetiana Chernenko.
Open sources indicate that Arsenii Kopystyra is the son-in-law of Mykhailo Verbenskyi — Colonel General of militia, current head of the State Scientific Research Institute of the Ministry of Internal Affairs (MIA) of Ukraine, former head of the MIA General Staff (in 2005–2007 and 2014–2015) and former member of the Central Election Commission (2018). It is also known that Arsenii Kopystyra taught at the Kyiv National University named after T. H. Shevchenko at least until 2020.
Equally interesting is the personality of his brother Serhii. The latter is one of the accused in a case concerning an offer of improper benefit to the now ex-Minister of Infrastructure Oleksandr Kubrakov (who was also Vice Prime Minister for Ukraine’s recovery) in exchange for “help” in developing land on Tyraspilska Street, 43 in Kyiv.
The National Anti-Corruption Bureau (NABU) has established that Serhii Kopystyra, who called himself the actual owner of LLC “CityGazService” (the potential developer of that land), asked the official for not only not terminating the contract for construction of the residential complex at that address in exchange for apartments, but also for some other “services.” In particular, Kopystyra reportedly hoped the minister would help him transfer adjacent land plots for development, secure state budget funds for modernization of their electrical networks, obtain design permits for construction that the relevant KSCA department refused to grant, etc. At the same time, Kubrakov was allegedly promised an increased bribe — in addition to 15 apartments that had already been “re-registered” to his “trusted person.”
Developers in the “KSM-Group” orbit are actively developing Kyiv lands used by the NAS of Ukraine and academy-subordinate structures. In particular, this concerns territory in the Feofaniia area (Holosiivskyi district of the capital) — where 4 of 5 residential complexes announced as developed by “KSM-Group” are currently under construction.
Implementation of these projects by the developers has been accompanied by scandals, court proceedings and public protests. Among the loudest incidents — in January 2022 companies affiliated with “KSM-Group” demolished an NAS Ukraine dormitory on Metrologichna Street (Holosiivskyi district) to build high-rises, where people were still living. During one of the protests against this development there was a violent confrontation between local residents and some people activists called “titushky”.
But the biggest recent scandals have arisen around the planned development of a plot of 5,68 hectares on Akademika Glushkov Avenue, 65 in Holosiivskyi district of the capital. The land user is the Schmalhausen Institute of Zoology of the NAS of Ukraine, which in 2018 transferred this territory to LLC “Yug-Project” (a company in the “KSM-Group” orbit) under an agreement. The capital’s public — local residents and activists — oppose construction of a mixed-use complex there (in practice likely ordinary multi-storey residential buildings) and demand the land be given protected status because it is effectively a forested tract of the Teremky tract. Law enforcement has also become involved, initiating a number of lawsuits aimed at preserving the territory.
In addition, law enforcement continues to investigate possible violations in attempts to build housing on a plot of 4,94 hectares on Vasylia Stepanchenka Street, 5 (Akademmistechko), which is used by one of the NAS of Ukraine structures and is planned to be developed by a company in the “KSM-Group” orbit. Recently the State Bureau of Investigations reported suspicions of abuse of office against two Academy officials (at least one is former), as well as the former director of LLC “Navium-2008”, which received the right to “develop” this territory and an adjacent plot of 1,97 hectares. According to the investigation, these figures caused the state damage of 2,3 million hryvnias. Detectives believe this happened due to use of the land contrary to its designated purpose — the area is effectively an industrial zone. Previously the developer in question had in court obtained permission to build up to 100 meters high on this land, although the KSCA initially “allowed” no more than 45 meters.
Also, it appears “KSM-Group” has interests in a potential residential development of six plots totaling over 6 hectares on Antonovycha Street, around which court disputes are ongoing. LLC “Invest-Proekt Budivnytstvo” is currently seeking to cancel certain points of the urban planning conditions and restrictions (UPCR) for designing that construction — the company insists it does not need to coordinate anything with cultural heritage authorities (even though a historic house where the prominent scientist Yevhen Paton lived is located there) and that buildings up to 100 meters can be erected.
The Prosecutor General’s Office, in turn, is seeking in court to cancel the urban planning permits, return this land to the state and terminate the development agreement between “Invest-Proekt Budivnytstvo” and the Electric Welding Institute of the NAS of Ukraine (apparently the agreement should have been approved by the Cabinet). Meanwhile, law enforcement recently achieved an interim success — during this court dispute judges prohibited construction work on the specified plots. As for “KSM-Group,” a company in this developer’s orbit is listed as the general contractor on the territory.
Earlier, the capital also saw multimillion court disputes arising from dubious claims by various companies against the city authorities. For example, in May 2025 the nearly seven-year litigation to recover 24,46 million US dollars (671,5 million hryvnias) from the Kyiv budget in favor of LLC “Kyiv Terminal” was concluded. That company had obtained the opportunity in 2007 to reconstruct Kharkivska Square under an investment agreement with the KSCA. The company demanded compensation for alleged losses it suffered due to termination of the agreement in 2013. The ex-investor justified such amounts partly by saying it had taken a loan to perform the work and spent money on land management works that became “useless.”
However, although the KSCA initially assisted the ex-investor, the courts sided with the community. This was primarily because the owner of “Kyiv Terminal” — businessman Tamaz Somkhishvili — has Russian citizenship, and given potential Ukrainian claims to recover funds from the aggressor country, it was decided that this company could be “let go.” It is also notable that Somkhishvili had previously been accused of working for Russia’s defense complex.
The Department of Economics and Investments of the KSCA has been headed by Nataliia Melnyk since 16 February 2018. Its activities are currently personally supervised by Vitalii Klychko.
The NAS of Ukraine has been headed by Anatolii Zahorodnii since October 2020. Previously, from 1962, the academy’s president was Yevhen Paton, who died in August 2020.
Author: Oleksandr Hlazunov
Source: KyivVlada
Document: PDF proof of the original version of the news item "Суд відмовив структурі «КСМ-Груп» у поверненні 954 мільйони гривень пайового внеску за ЖК «Кришталеві джерела»". It records the publication content at the moment of the first scan, the preservation date and the source: HAB Media.
