Courts back Benidorm’s land acquisition deal in Serra Gelada APR7 sector

The Administrative Court No. 3 of Alicante issued an order on March 18th approving the out-of-court settlement reached between Benidorm City Council and the former landowners in Serra Gelada Protected Area (APR7) to comply with ruling 343/2024 of the High Court of Justice of the Valencian Community (TSJCV). This agreement will allow this protected area, located within the Serra Gelada Natural Park, to pass from private ownership to the heritage of the people of Benidorm, thus further strengthening its protection, as highlighted by the city's mayor, Toni Pérez, during a press conference to announce the receipt of this court order.

The mayor explained that, as soon as he became aware of the situation, and “as has been done throughout this process with the utmost transparency,” a meeting of spokespeople was convened this afternoon to inform all the groups within the municipal corporation and, subsequently, the public through the media.

During this press conference, Pérez reiterated that the document approved by the lower court “is the same one that was approved on March 17th in a plenary session and accepted in its entirety by the property owners,” and therefore, “a process is now underway, from the very beginning, to comply with this plenary agreement, and thus with the ruling of the High Court of Justice, always attentive to the technical services and reports and to what the law mandates.”

As has been reported in recent days, the agreement stipulates a payment of €350 million to be made by the City Council. This amount represents the sum established by a final court ruling as the price of the land, including the principal and corresponding legal interest, calculated from July 16, 2018. The agreement proposes two payment methods: cash and land.

The mayor explained that, during the public consultation period opened by the City Council to explore the possibility of reaching an agreement, the property owners submitted a proposal that contained some discrepancies with the municipal interest and, therefore, the general interest of the people of Benidorm. Among these discrepancies was one concerning the accrued legal interest.

Thus, he recalled that, after the last renewal of agreements, approved by socialists and liberals in 2013, eight years after it was declared a Natural Park and when it was already out of compliance with zoning regulations following the approval of the Environmental Impact Statement in 2012, “the City Council did not receive any further proposals from the landowners regarding the land. What did occur was a financial claim, exclusively monetary; specifically, on July 16, 2018, the date on which the High Court of Justice ruling is set” to establish the start of the period from which the interest established in the agreement approved and ratified by the court is calculated, and not from February 16 of that year, as proposed by the claimant companies.

“The finalised and ratified agreement is dated July 16, 2018, which is significant, even though some have tried to sow confusion, including among yourselves and the public, because we are talking about five months of dispute,” stated Toni Pérez.

The mayor continued his remarks, stating that “the High Court ruling set a price for the land, but not its value,” and argued that “the true value is that Benidorm will finally incorporate this land into the municipal patrimony of all Benidorm residents.”

“We manage the economy, and we also manage something very important, which is the soul of this town,” Toni Pérez pointed out. “I told you at the time that this required a great deal of responsibility and a clear objective; and that this matter was in the best possible hands, which was precisely with this local government of which I am mayor. And I believe that time has proven us right,” he concluded.

Content of the agreement

As has been reported in recent days, the agreement establishes a dual payment method. Regarding the cash payment, an initial payment of €60 million is planned before December 31, 2026. This amount will be covered by a €55 million loan resulting from the municipality's participation in the Economic Stimulus Fund and by the municipality's own resources. Following this, a grace period for principal payments will begin on December 31, 2030. During this period, the City Council may choose to amortise part of the principal, although legal annual interest will accrue on the outstanding principal balance, without prejudice to the grace period stipulated in the agreement.

Starting January 1, 2031, the City Council will begin its mandatory amortisation period, committing to annually amortise the principal of the debt, plus the corresponding interest, by paying the landowners an annual sum, until the debt is fully repaid. This sum will be no less than 8% of the ordinary current revenue projected in the municipal budget's revenue statement for each fiscal year.

Regarding payment through the transfer of land, the agreement also includes two forms of payment in kind. One is intended to cover the interest accrued up to the date the agreement is signed, and this option is mandatory for the landowners to accept and acquire. In other words, the proposal is to pay a sum of €67,386,655.89, to be disbursed by the City Council over a period of 5 years, through land transfers in lieu of payment. These transfers will involve land with development potential directly amenable to urban development, specifically urban land that qualifies as immediately buildable plots, free of any urbanisation charges.

These proposed transfers instead of payment must be accepted by the landowners. The City Council specifies that the land will be located within the urban development areas of Sector PP2/1, Sector Murtal 2, PP Ensanche Levante, PAU 1, and/or any other land designated as buildable plots 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 potential cannot exceed the fair market value, as established by law. In other words, based on the municipal proposal, the property owner would be obligated to pay almost €70,000,000 in land over five years at market value (fair price), 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 to reduce the debt (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 would not be mandatory.