Municipal councils refuse to share revenues from vacant buildings with the Portuguese federal government

July 11, 2017

The federal government wants to transfer control of properties that have been in disuse for at least three years, but it insists on receiving 30% of generated revenues. Mayors do not want to give a cent.

The Government wants to transfer management of public buildings that have been unoccupied for at least three consecutive years to municipal councils. The Executive branch would like to devolve responsibility for management to the municipalities, as reported by the Jornal de Negócios. However, a statement by the National Association of Municipalities (ANMP) raises a series of reservations regarding the statute, and declare that they will refuse to share any revenues generated by the ceded real estate.

The Executive has decreed that public entities and bodies must prepare, within four months, a list of properties that have been abandoned for at least three years. If they are interested in taking control any of these buildings, the chambers will have to communicate it to the Ministry of Finance, to whom they must present a “heritage valuation project.” This is where they will have to identify the property they intend to manage, indicate its intended use, the timeframe in which they intend to do it and demonstrate that they have sufficient funding to execute their plans.

“When the ceded real estate assets result in an economic benefit for the municipality, revenues must go entirely to the municipality.”  The Portuguese National Association of Municipalities

The statute decrees that if a municipality wants to place the property in the rental market or earn money from “other real estate operations”, it will have to cede 30% of this revenue to the “titular authority” of the property, with revenues only being granted in full if investments have been made to rehabilitate the property – and only up to an amount where the investment has been fully recouped. Negócios had access to the statement on the statute, where Association “disputes” the division.

“It is important to bear in mind that the municipalities will be required to invest in extraneous properties” and, therefore, “it is essential to reformulate the statute under analysis”. “When the concession results in an economic benefit for the municipality, any generated revenues must fully revert to the municipalities. There is no room for any revenue sharing, as any future dividends we be needed to offset maintenance and conservation expenses that the statute cedes to the municipalities, “said ANMP, which will approve the opinion at a meeting on Tuesday.

Price should reflect investments

The mayors want the statute to go even further, and demand to have a “preferential municipal right to the acquisition of ceded properties.” Any payable amounts would be deducted from the “investment made in the recovery, rehabilitation, maintenance and conservation of the property.”

The statement from the ANMP also says that the law does not specify whether the real estate of the autonomous regions are also covered and says that it is important to “clarify” which entities should draw up the real estate listings.

Original Story: Jornal de Negócios – Bruno Simões

Photo Credit: Miguel Baltazar

Translation: Richard Turner