Benidorm will submit to plenary session the municipal proposal for an agreement to comply with the ruling on the APR7 of Serra Gelada

Benidorm City Council will debate next Tuesday in plenary session the proposed municipal agreement to make effective the payment of the amount set by the High Court of Justice (TSJ) of the Valencian Community for the land within the APR7 Natural Park in Serra Gelada Natural Park. This agreement will allow this protected land within the Natural Park to pass from private hands to become "the heritage of the people of Benidorm, thus guaranteeing its protection for the present and future of the residents of Benidorm."

The city's mayor, Toni Pérez, explained this Friday at a press conference that, once approved by the plenary session, the proposed agreement must be accepted by the property owner and/or the courts before taking effect. He argued that it will allow the City Council to address the ruling "for the acquisition of land in Serra Gelada without going bankrupt, falling into financial ruin, or even facing intervention" and "without raising taxes or cutting public services," the "two red lines" established by the local government to address the payment of this compensation.

Pérez stated that, as has been the practice throughout this process, this proposed municipal agreement was presented late yesterday morning to all the groups within the City Council at a Spokespersons' Meeting. This was followed by a meeting of the Internal Affairs Committee, attended by the Secretary and the Municipal Auditor, where all council members were provided with any information they requested before the proposal was submitted for debate at the plenary session next Tuesday.

Regarding the proposal, the mayor explained that the City Council's obligation is 350 million euros, as established by a final judgment, including principal and applicable legal interest. He added that the proposal offers two payment options: cash and land.

As for the funds, the City Council plans an initial payment of 60 million euros before December 31, 2026, to be covered by the 55 million euro loan resulting from the municipality's adherence to the Economic Stimulus Fund and by its own resources.

A grace period for principal payments on the debt is also proposed, extending until December 31, 2030. During this period, the City Council may choose to amortise part of the principal, although annual legal interest will accrue on the outstanding principal balance, without prejudice to the grace period stipulated in the agreement.

All of this is intended to "facilitate the necessary economic restructuring of the City Council, taking into account the required initial payment" of 60 million euros. This restructuring, as the mayor has reiterated, will not entail tax increases or cuts to municipal services for citizens.

A grace period for interest payments on the debt is also proposed, meaning that from the signing of the agreement until December 31, 2026, the principal will not accrue interest.

From January 1, 2031, the mandatory amortization period for the City Council will begin, committing to amortize the principal of the debt annually, in addition to the corresponding interest, paying the owners annually, and until the total cancellation of the debt, an amount that may not be less than 8% of the ordinary current resources foreseen in the income statement of the municipal budget of each financial year from the year 2031 onwards.

Deed instead of foreclosure

Regarding payment in kind through the transfer of land, the municipal proposal contemplates two forms of payment in kind. The first is intended to cover the interest accrued up to the date of the agreement's signing, which will be mandatory for the landowners to accept and acquire. Specifically, the proposal proposes to pay a total of €67,386,655.89, to be disbursed by the City Council over a period of 5 years, through the transfer of land with directly developable urban potential, specifically urban land that qualifies as immediately buildable plots, free of any urbanisation charges.

These proposed land transfers, instead of payment, must be accepted by the owners. The City Council indicates that the land will be located within urban development areas of Sector PP2/1, Sector Murtal 2, PP Ensanche Levante, PAU 1, and/or any other land designated as buildable for multi-family residential use that is not currently included as such in the 1990 General Urban Development Plan (PGOU). The exchange value of the development rights cannot exceed the fair market value, as established by law. In other words, based on the municipal proposal, the property owners would be obligated to assume almost €70,000,000 worth of land over five years at market price (fair market value), with valuations updated at the time of the offer by the City Council, thus adhering to the real and current value of the land at any given time.

In addition to this in-kind payment of the corresponding interest amount, the municipal agreement also proposes the possibility of successive debt-for-equity swaps (principal plus interest accrued after January 1, 2027) through the agreed-upon transfer of municipally owned land. In this case, unlike the previous proposal, acceptance by the property owner will not be mandatory.

Defending the general interest

After presenting the main measures established in the proposed municipal agreement, Toni Pérez expressed his conviction that this payment plan “is perfectly manageable” for the City Council. The mayor stated that “I said from the outset that we would comply with the ruling seriously and responsibly,” and lamented that, while on one hand “many things have been said and written, we, my government, were busy and concerned, as always, with defending the general interest of Benidorm and its residents, working tirelessly on our day-to-day duties, but also exploring ways to comply with the court's mandate.”

Finally, the mayor insisted that “it is a good proposal, endorsed by the multidisciplinary technical team that participated in this process, headed by the three nationally qualified technicians in this City Hall – the secretary, the auditor, and the treasurer –” and asserted that “throughout this time there has only been one political directive from our local government, and at the moment when it was legally and technically feasible, that to reach an agreement there were two red lines: no raising taxes and no cutting services.”