The Canary Islands Government has already paid out 275.1 million of the 316 million euros agreed with tourism developers to compensate them for the tourism moratorium, according to a statement made on Thursday before a parliamentary committee by the Regional Minister for Territorial Policy, Manuel Miranda, who specified that payments have been made under 27 of the 36 agreements reached.
These compensation payments stem from the Canary Islands Law on Urgent Measures of 2009, which allowed owners of certain undeveloped plots of land zoned for tourism, which had remained undeveloped due to the moratorium, to apply for their reclassification as rural land and to receive compensation for their building rights.
Following appeals by the property owners, the courts ordered the Government to process the applications, without setting the amount of compensation, and Nueva Canarias has asked Miranda to explain why the developers retain their planning rights and how the figure of 316 million agreed by the Government was arrived at, a figure which, according to its MP Esther González, is double the highest valuation given in the technical reports from 2020 and 2021.
Tourism moratorium: Nueva Canarias demands proof of the 316 million
The Nueva Canarias MP has pointed out that the head of the Regional Ministry’s Valuation Service drew up 36 reports in 2020 and 2021 in which he calculated compensation based on different criteria, and has asked the Regional Minister who decided to deviate from those valuations, which report supported that decision, and how it has come about that the landowners have retained both the land and the possibility of developing it.
Esther González has also questioned the Government’s calculation of the savings achieved through this agreement based on the developers‘ claims, which amounted to 652 million euros in compensation, to which, according to Miranda, a further 337 million in interest had to be added.
«Acknowledging an obligation does not mean accepting just any amount,» said González, who called for clarification on what risk the Government had assessed in order to finalise the agreement at 316 million euros, and why it concluded that this was the most appropriate option in the public interest.
González has criticised the minister for the fact that, despite having requested the full documentation, his group received 31 of the 36 agreements without their annexes, and has demanded access to the technical, legal and financial reports underpinning the agreed amounts, because the Government has a duty to account for «every last euro».
Canary Islands Government defends its calculation of lost profits
Miranda has undertaken to forward the files to the parliamentary groups and has assured them that MPs will be able to examine the various options that were considered before the agreements were signed.
The minister maintained that the valuations were carried out by civil servants from the autonomous community and that the agreements had been endorsed by the legal departments of both the regional ministry and the Government.
As he explained, the experts calculated the compensation by applying the statutory rate of interest to the value of the development rights between 13 November 2009, the deadline for submitting applications, and 31 January 2025.
By applying this criterion, they sought to compensate property owners for the ‚opportunity cost‘ of failing to earn a return on another investment, without paying them the full value of the development rights.
Compensation: Courts uphold 32 out of 36 settlements
Of the 36 agreements, 32 have now been approved by the courts following the receipt of the final ruling on Wednesday, Miranda said.
The first payment, made on 14 August, totalled 261.2 million euros and related to 25 agreements, whilst the second payment, on 26 October, amounted to 13.9 million, with interest included in both cases.
Of the nine agreements awaiting payment, five have already been approved by the courts and four are still awaiting a court ruling, explained the minister, who emphasised that judicial approval provides the Government with a guarantee that the terms of the agreement comply with the law and safeguard the public interest.
Legal disputes would have cost 800,000 euros a month
Miranda has argued that, had there been no agreement, the autonomous community would have faced 36 legal cases with an uncertain outcome, involving much larger sums, at an additional cost of around 800,000 euros a month, which would have continued to mount up whilst the cases were being resolved.
He warned that if the legal proceedings had dragged on and the courts had ruled in favour of the developers, the compensation and accrued interest could have reached a sum that would be «unaffordable» for the regional coffers.
Leaving that decision to the courts would have meant, for this Government and those that follow, «a sword of Damocles that would be very difficult to manage» and could have led to «a real catastrophe», he argued.
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