Filenews 12 June 2024
The imposition of an Urban Upgrade Fee on properties whose value skyrockets from their inclusion in development zones, without giving a single cent to the state for the surplus value acquired by the owners, has become a joke.
Even recently, the Local Plan of Paralimni, Ayia Napa and Deryneia reiterates the necessity of imposing a fee, namely an Urban Upgrading Fee, without it being in sight when this will happen.
It is worth noting that when the Auditor General dealt with the issue of the Towers in Limassol, he estimated that through various urban planning incentives, approximately 11,000 additional buildable development measures corresponding to approximately €37 million of added value were granted to companies.
The calculation was based on an estimated value of €3,363 for each square meter that the various investors can build additionally.
The Local Plan of Paralimni, Ayia Napa and Deryneia, which was published just recently, states that the inclusion of new land in a defined Development Zone or the upgrading of already defined development factors in the context of the preparation or modification of a Local Plan usually result in an increase in land values, which in some cases is particularly significant.
In the same text, it is added that "at the same time, these decisions create obligations for the State regarding the provision or enhancement of a wide range of infrastructures and services, so that private property that acquires surplus value automatically after the administrative decision to modify a Development Plan can be exploited according to the development possibilities attributed to it."
And while the value of property increases inexpensively, as stated in the Local Plan, "in order to finance the implementation of the above obligations, the State spends significant funds annually, while both decisions regarding urban planning regulations and investments of state resources in infrastructure and services benefit the private owner as a whole and exclusively to date".
"Consequently," it adds, "the State is entitled to seek the return of a certain part of the surplus value it creates by its decisions for the benefit of private property."
The following shall be added to the text:
"This prospect has been discussed repeatedly without any substantial result to date, but it resurfaces at times when the attribution of these surplus values to private properties is more evident.
At the same time, it is stated that "at this stage and in the context of the amendment of the Local Plan, significant in intensity and extent modifications of the Urban Planning Zones have been decided, resulting in a significant increase in values for a very large number of private properties".
Because mainly land developers have convinced politicians that the imposition of an Urban Upgrading Fee will create problems for landowners who will be required to pay a Fee whether they use their land or not, after reflection, the following proposal is submitted, which is included in the Local Plan:
"The determination of the timing of the payment of LRA is of particular importance, because it must not be allowed to perpetuate owners' debts, nor to impose a financial burden on owners, before they really benefit from the upgrading of development possibilities through urban planning decisions.
