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The Electoral Shift May Undermine Operación Chamartín

Posted by: In: Real Estate 27 May 2015 Comments: 0 Tags: , , , , , , , , , , ,
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27 May 2015 – El Mundo

The Ministry of Development fears that the electoral shift may undermine the plans for the project known as Distrito Castellana Norte, which is worth more than €6,000 million.

From June, the new municipal political map in Spain will face decisions regarding the future of dozens of urban development projects in the country’s large capital cities, worth thousands of millions of euros, many of which are still awaiting licence approvals from their respective town halls.

The largest one is Operación Chamartín, in Madrid, the largest urban development plan in the capital. The project has been in the pipeline for 20 years – four less than the Partido Popular held office for at the town hall – and was accelerated in recent months by the incumbent mayoress, Ana Botella, in an effort to obtain the final approvals.

The inability to comply with all of the procedures required for the operation, located in the North of the capital, covering 3.7 km in length and three million square metres in surface area, with plans to build 17,000 homes, as well as offices, retail areas and green spaces, forced Botella to leave the final approval (of the project) in the hands of her successors at the Town Hall. Specifically, to the resolution of around 1,800 claims and above all, to the approval of a partial plan for the extension of the Paseo de la Castellana.

Until 24 May, it was expected that a new municipal team led by the Partido Popular would continue the project, which promises to transfer the centre of the city from Puerta del Sol to the North. But the setback suffered by the Partido Popular in the capital last Sunday leaves the project in the air. The most likely option, that of a left-wing coalition between Ahora Madrid and the PSOE, is raising concerns amongst the stakeholders. The focus of the likely team, led by Manuela Carmena, would centre on social housing rather than on million-euro urban developments.

The project known as Distrito Castellana Norte is estimated to be worth more than €6,000 million; BBVA and the construction company Grupo San José are the main partners in terms of financing and development. The operation also includes municipal and regional land, but the majority is owned by the Ministry of Development, and in particular, its two largest companies: Renfe and Adif.

The urban development plan that Ana Botella was unable to finalise involves covering over the train tracks at Chamartín station. The value that the sale of this land to BBVA and San José would have for the companies owned by the Ministry of Development amounts to €1,200 million, most of which would be paid to Adif, whose debt amounts to €18,000 million this year, making it the State’s most indebted public company, behind only the FROB (Fund for the Orderly Restructuring of the Banking Sector). Given the financing needs of the conventional railway infrastructure companies and the lack of funds available for such investments, the minister Ana Pastor has publicly backed the plan. In fact, Adif was already counting on the payment of €200 million this year based on the approval of the pendingpartial Plan.

Now the deadlines are being called into question, at least the fast-track option is, which carries the support of the incumbent town hall. But the amendment, rejection or definitive approval of the largest chapter in the capital’s urban planning cannot be left on the sidelines for long.

After its launch in 1995, with the granting of land to the current BBVA, the project has survived (changes in) municipal teams, real estate bubbles and judicial processes, which have delayed its approval and halved the value that the property developers were guaranteed to generate.

In the end, last year, the grant was awarded, but BBVA and the Grupo San José extended their offer up to a maximum deadline of 2016. If there is no partial plan by the new Town Hall and the new extension expires, the Ministry of Development will see its largest urban development project die, although it is likely to be a legacy that another Government will pick up in due course.

Original story: El Mundo (by César Urrutia)

Translation: Carmel Drake

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