Urban plans are just not happening

The construction industry in Spain does not seem to be improving and this is bad news for employment and growth in a Andalucia where building and construction was once its main sources of income, along with tourism.

Local authorities are feeling the squeeze from the harsh drop in planning-related income. Larger municipalities had put much of their financial hopes in the new PGOU’s (urban development plans) that were designed to create more available land for construction to generate more income through planning deals. Those hopes are now fading fast as none of the four main municipalities that approved the new guidelines are showing any signs of growth.

The new development plans have been in place since 2010 but the situation in Marbella and Antequera has not changed.

In Fuengirola and Malaga the PGOUs came into effect in April and September respectively but have faced an added handicap with developers unable to deliver the  money stipulated in the agreements which were signed back in the boom years.

The town hall in both Malaga and Fuengirola place the blame for the delay in the approval of plans with the Junta de Andalucia and say the solution requires negotiating a new payment scheme with landowners that is more in line with the current market. The guidelines were drawn up in the context of a property boom but were launched in the middle of a crisis.

In Malaga there were five main planning agreements which would generate 172.4 million euros for the city, of which 126 million should have been paid already. The reality, however, is that city hall has received only 27.1 million. Furthermore, only two of the developers are up to date with their payments.

Planning councillor Diego Maldonado said that negotiations to modify other agreed payment plans were going well, especially in the case of the project to build tower blocks on the former Citesa site in Martiricos. The authority is only considering a reduction in the fees in the case of the former “Térmica” factory, on the west side of the city, where the available land for construction could be cut by the Coasts Authority who say that it invades public maritime domain. The site owners had originally agreed to pay the City Hall 58 million euros to develop the area.

Fuengirola the Town Hall are still waiting for 25.5 million euros corresponding to 28 planning agreements. After meeting with the developers, mayor Esperanza Oña said “not one of them is able to pay at the moment”.

Developers have been given the option to pay in instalments over a period of up to eight years, either by paying ten per cent a year and the rest a final payment, or postponing an initial payment of 30% until the end of the second year. The Town Hall requires a bank guarantee from developers worth more than the amount in the planning agreement.