The transfer of the financial district of Madrid for 40 years to be managed by private initiative will not come for free. The Almeida City Council will have to pay the concessionaire company for the maintenance and care of the privatized streets until the year 2063, according to the informative study to which this newspaper has had access and which details the operational costs of the project, some of which will fall in the consistory.
GALLERY: The project that wants to privatize AZCA for 40 years
The annual payment figure is not definitive but it is calculated at almost two million euros per year (1,944,488 euros, according to the study) if the sections that the informative study attributes to the City Council are taken into account as Availability Payment. A consideration that includes “conservation, maintenance, replacement tasks”, in addition to cleaning and gardening, details the document.
The calculations have been prepared by Renazca, the investment consortium that has proposed the project to the City Council and that admits that there could be deductions on this figure to reduce the amount of the invoice that will go to the City Council each year. Its promoters calculate total costs for maintenance, electricity, water, security and other items that will amount to a total of 2.7 million euros each year, once the renovation works are completed.
The final costs for the public administration may vary, since they will be subject “to deductions based on the availability of areas and the quality of the level of service provided”. For this, the indicators defined in the tender specifications will be taken into account, the final step before the municipal concession. The council is now calculating how much it will have to pay the concessionaire, according to Renazca sources consulted by this newspaper. They also confirm that the payment of any fee to the council for the exploitation of public space is not planned, as the first information anticipated.
The alleged free cost of the urban development operation is the main argument with which the Madrid City Council defended its plan on Monday to cede the streets of AZCA to a group of investment companies, after its intentions have been revealed exclusively by this Newspaper. “The fact that there is private investment does not mean that it will be reserved for these people,” the deputy mayor, Begoña Villacís, clarified during a visit to a market.
To questions from Somos Madrid, sources from the Works area -the council that processes the operation- defend this “public-private collaboration” that “allows the people of Madrid to see improved spaces in their city without the cost of these works having to come out out of their pockets.” Indeed, the cost of the reform, about 44 million euros, will be assumed by the concessionaire. But the consistory will have to pay the payment for the services provided for decades.
The same sources do not assess the content of the advanced feasibility study, “whose content is not definitive”, since it is “in a preparatory phase and prior to the decision to tender a work concession contract” legally admitted, they add , in addition to emphasizing that the project does not have its “closed data”. They also indicate that the study “is in the period of public information so that any citizen can make allegations”, although the City Council has not mentioned the project until it has appeared published in this newspaper and its accessibility, in a corner of the Recruitment Portal, it is very difficult for any inexperienced citizen to search for these documents.
Renazca: “It is a completely degraded area”
In the City Council they explain that AZCA “is a degraded space for years”. Renazca thinks the same, the investment group that has launched the project and has requested the transfer to the City Council for the next 40 years to undertake the works that they believe the Madrid financial center needs. Renazca is a union of companies with real estate interests in the area such as GMP, Montisa, the Alba Corporation and Merlin Properties, the latter as the main promoter of the project.
Tired of waiting for the council to fix its problems, the investment group has proposed solving it with a profound urban change while emphasizing the lack of security for its clients in the offices: “It is a completely degraded area, there is crime, homeless people ”, and the place has become “a hive of Latin gangs”. The CEO of the Socimi Merlin Properties, Ismael Clemente, assures us in a conversation with Somos Madrid: “We have to be with triple and quadruple security shifts, for a girl to go take a taxi she has to be accompanied by our staff”, he indicates.
Merlin launched the Renazca project years ago, first convincing the majority of companies in AZCA, the 14 communities of owners –Clemente assures that it was not easy–, the merchants’ associations and then taking the proposal to the Madrid City Council . The model on which it is inspired is that of the Business Improvement District (BID), areas of the city in which all management is transferred to a private entity in exchange for an initial investment that facilitates its commercial revitalization. There are BIDs in Candem (London) or in Rockefeller Center (New York), for example.
That AZCA gains interest as a business center interests them: Merlin manages almost 60,000 m² of offices there, spread over three buildings (Castellana 85, Castellana 93 and Plaza Pablo Ruiz Picasso). Although it is one of the largest owners in the area, its percentage is relatively small compared to the 470,000 m² available in this financial district, where El Corte Inglés, insurance companies, hotel companies and other companies also operate.
From Renazca they insist that its legal form will be that of a non-profit organization, which may be in deficit, “in which case the concessionaire will have to put up money.” And that if it gets more income than expenses, the profits will be available to the entity itself to reinvest in the project: “We could bring Rosalía to give a free concert there or whoever is in fashion at that time”, Ismael gives as an example Gracious.
To get to that point, at Renazca they know that there is still a long way to go: “Attempting a private initiative of a public nature like this in Spain is a rare thing,” they admit. There is still another phase of public information, the response to the allegations, the drafting of the tender –which the private company will also be in charge of, it is assumed that it will be dictated by the City Council– and the public tender for the definitive concession of the work with the aforementioned 40 years of exploitation. “This is a complex procedure that will have a second period of allegations,” they add from the City Council. “We can’t talk about dates.”