The Italian Experience on Public Buildings’ Estate Valorization

ULI LONDON 3rd november 2013

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Summary

This ANCI - FPC presentation describes the following topics:the relationships between the State central government and Municipalities, the Italian institutional framework for public asset’s valorization and sale, in its two main aspects:

the institutional pathways leading financial investment in Italian public assetsthe official public subjects in charge of operational activities and on-going initiatives.

the specific program promoted by central State funding, named "Piano Città" to support an innovative conception of the strategic planning for urban areas: report about the experience’s positive and negative sides.

the FPC projects to design new models of programming: allocating public funds and involving private investors, within a process based upon listening auditing Municipalities’ peculiar needs.

Italy is a Country constantly structured upon urban centers

The Italian history: ancient Rome, Middle Ages, industrial revolution, modernity….

the 2001 reform changing The Title 5th of the Italian Constitution

has deep roots.

Regions, Provinces and Municipalities They are no longer structured in a hierarchical relationship, in which the State rules taking over the top decision power,

but in a ratio of equality.

Separation of powers - subjection to the same limitations.

The subsidiarity principle replaces the sovereignty principle

The Central State government and Municipalities

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The Regions:guarantors for the application of the law principles,

set by the State, to the fundamental issues of Municipalities.

The State: remains the unity and uniformity guarantor for the essential levels of services

concerning civil and social rights

The reform opens a new season of administrative and functional federation among Municipality The most interesting regional governments’ experiences identify compound subjects entrusted for essential particularly expensive administrative functions’ management

Central State government and Municipalities

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The majority of Municipalities have populations under 5.000 inhabitants;Municipalities above 60.000 inhabitants represent only the 1,2% but resides in metropolitan cities about 40% of the population.

The connection and negotiation practices among the different levels of government Institutions consist of:

The “Conferenza Stato-Regioni”

The “Conferenza Stato-citttà e autonomie locali”

The “Consiglio delle Autonomie Locali”

In this organizational framework, very important is the exchange and collaboration work taking place in the associations of Local Administrative Institutions

the most important and widespread of which concern Municipalities : ANCI.

Central State government and Municipalities

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We can distinguish three main "seasons“:

’90’s, - privatization process of large “State-owned industries” (ENI, INA, IRI, ENEL, etc.) – real estate assets spin-off

2000’s , “public securtisation operations” (SCIP1 and SCIP2) (2001 – 2002)

2010 - nowtransfer property assets from State Municipalities, disposing of the State-owned property assets to the Cassa Depositi e Prestiti

For the central government the public buildings sale is mainly used for balancing the Budget.

The public asset’s valorization and sale

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Some simple focus:

60% of the public real estate assets owned by the municipalities - value about 150 billion - spread over 8,000 towns

40% still being held by the State, makes it an institutional use

the historical and artistic heritage represents the majority of the existing building in urban centers - check with the Superintendent to dispose of new functions and properties.

the orientation of the new generation planning has raised the level of conservation and environmental protection and curbed the new buildings.

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The public asset’s valorization and sale

Two different roads characterize the sale of public assets currently:

if the reuse is in line with the existing planning instruments

if the reuse is not in line with the existing planning instruments

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The available tools to private investors : Barter (art.1552 c.c. art. 1 c.138 L. 228/2012) Contract with payment in property (d.l.. 162/2006 cod. appalti) Project finance (at 153 d.l. 163/2006 cod. contratti d.l. 70/2011) Sale (d.l. 162/2006) Granting valorization quantitative advantages (comma 6 d.l. 112/2008) Sale of right to build (L. 549/95 e s.m.) Granting of construction and management (d.l. 163/2006)

The public asset’s valorization and sale

All operations must be done through a public tender

The property mus be included in the Municipality forecast lists add to the Budget

Reuse in line

If the use it is not covered by the government of the territory planin force, is necessary change it. The Regions defines the principles The Municipalities define the strategies of government land and decide the design choices of the territory and its transformations

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The relations between the Regions and Municipality

decision-making processes - “ Consiglio delle Autonomie”; implementation of individual complex transactions -“Conferenza dei Servizi” and

authorization programs’ agreement among various involved Institutions informal consultation to assess the purposes of all the active stakeholders involved

to define the most effective process aimed at shared initiatives’ promotion through an action- table around which public Institutions negotiate with private developers.

Often the consultation table is activated prior to the “Conferenza dei Servizi” and outlines the contents of the program implementation.

The public asset’s valorization and sale

ANCI, recognizing the great importance of the public real estate play this season has given life to the “Patrimonio Comune” Foundation

Reuse not in line

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Agenzia del Demanio (the State Property Agency) has progressively involved in its state-owned assets’ operations processing and marketing these stakeholders:

Municipalities, in a relationship of growing closeness,

competent Ministries - especially the “Ministero dei Beni Culturali” (the Cultural Heritage Ministry)

Regional governments mainly aiming to accelerate the implementation time,

private investors to capture specific interests and propose scenarios of desirable transformation and match with strategic brief.

The public asset’s valorization and salereading the rules

The purpose of the Agency: is to plan economically sustainable operations directed to the private market (domestic and international); operations achievable in the short term, lower-risk, after having signed the process agreements for Municipality’s commitment.

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The public asset’s valorization and sale

The purpose of the Municipality: to assume an active role in identifying the transformation scenarios and lead the range of choices aligned with its strategic planning, economic growth programs implementation according to local economy requirements.

PUV first generation and PUVAT, joint-planning procedures that focus on the real estate specific scenarios identification, upon which an action-program is articulated, primarily chosen by assessments of economic development issues for the reference area and the strategy defined by Municipality. Currently the working PUV and active PUVAT are about a dozen.

“ Dimore d’Italia” It is a State asset that Agency opened to local authorities (and perhaps in the future also to private owners) aimed at creating a pool of opportunities in the tourism sector. The distinctive characters:

high environmental value properties, gathered under a distinctive Brand, national network

The transformation may consider: sales where possible (in Italy, not every historic building may become public property), the sale to an investment fund or the granting under management agreements.

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The public asset’s valorization and sale

The private investors have two choices:

to identify and directly realize transactions that have already come to market with a good degree of administrative definition (acceptable risk)

to rely on the consulting SGRs, mediators of transformation operations, or invest in real estate funds.

The experience of the Investment Funds, however, is going through renewal with the launch of “INVIMIT”, the public SGR that will have the main task to support local Authorities in properties’ management operations.

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The public asset’s valorization and sale

FPC provide support to Municipalities for the implementation of these complex programs, and in analyzing their real estate assets opportunities related to their valorization strategic planning.

The “Piano Città” is the last Ministerial Investment Program based upon infrastructure construction as a driving force for the development of territories.

Strategic advancement: the new driver issues rely upon the redevelopment of urban centers and the control of built environment.

The quality of life becomes the new key factor of attraction for private investors.

The “Piano Città” becomes a reorganization enterprise within the existing and programmable initiatives to be implemented on urban centers.

A State driven stimulus to outline coherent and mutually advantageous operations, aimed at involving private stakeholders, with government guaranty, greater soundness for successful programs.

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The “Piano Città”

What did not work: the ‘ideological’ issues of this great value program have imposed great organization and administration difficulties.

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What worked successful: the effort for reorganization, a true support for the assertion of local autonomy

Auditing of emerged problems and negative sides of this experience, pursue a real representation of the needs of urban areas, conveyed this needs to the central State Institutions for the new phase of future programs,develop a Community to discuss and to outline innovative models of interaction between local

and central decision-making Institutions and stakeholders.

The “Piano Città”

16%

18%

19%

38%

8%

distribuzione degli investimenti

Nord-ovest

Nord-est

Centro

Sud

Isole What does FPC want to do within this context?