Madrid’s Town Hall Faces Compensation Payments of €1.6bn For Suspending Developments in SE of the Capital

16 May 2018 – El Confidencial

The suspension of the developments in the south-east of Madrid could cost the capital’s Town Hall as much as €1.6 billion, in other words, 34% of its annual budget. That is the calculation that two independent experts have performed on the basis of the execution of the Master Plan for the New Development Strategy for the Southeast of Madrid, which has led to the ‘de facto’ paralysis of all of the areas in the south of Madrid: Los Berrocales, Valdecarros, Los Cerros and Ahijones, the last large block of buildable land to the south of capital, which was destined to bring thousands of homes onto the market at affordable prices.

The report, compiled by Federico García Erviti and Gerardo Roger Fernández Fernández, experts in urban planning valuations, estimates that the indemnity payments for the Compensation Boards of Valdecarros, Berrocales and Los Cerros will amount to €1.58 billion. The Master Plan itself, compiled by the Town Hall, mentions possible compensation payments but does not quantify them.

According to this document, the number of homes will be reduced by two thirds – from 105,000 to 38,708 – ; also, the total surface area will be cut and several other modifications will be made to the plans.

Specifically, according to the report from these experts, we will be talking about a payment of more than €640 million for the Compensation Board of Los Berrocales, another €755 million for Valdecarros, whilst, in the case of Los Cerros, the indemnity payment will amount to €182 million. To all of these figures, possible additional compensation payments to each one of the owners – around one thousand – will have to be made, who may also file claims with the Town Hall of Madrid, for example, for the taxes paid over the last few years for buildable plots, whose classification is now going to change on the basis of this Master Plan.

“The Master Plan does not have any legal validity to make a modification such as the one required”, said Juan Antonio Gómez-Pintado, Chairman of the Association of Property Developers of Madrid (Asprima), who considers that “during periods of real estate activity, such as the one the sector is experiencing at the moment, the effects of these measures and the damage for the city as a whole are irreparable, given that they have paralysed the only block of buildable land with these characteristics, where homes could be built for the lower and middle classes in the capital, driving those who want to buy a home at an affordable price out of Madrid”. Moreover, he considers that “the Master Plan will lead to significant increases in the price of land, whilst the legal uncertainty will scare off investors” (…).

The (Compensation) Boards filed an appeal against the Master Plan, as well as the legality of it, with the Supreme Court of Justice (TSJM), because they consider that “a pseudo planning instrument has effectively been approved. A town hall cannot approve an urban planning instrument”, and they have requested the precautionary suspension of it. The TSJM has admitted the appeal for processing but has not ruled on the matter for the time being.

Since the arrival of the new Government in Cibeles, “developments have slowed down and there have even been written requests for their agreements to be adapted to the Master Plan”, claim sources from Asprima.

Original story: El Confidencial (by E. Sanz)

Translation: Carmel Drake

98