Abstract
In the European Union, real estate initiatives involving public–private partnerships (PPPs) are characterized by the payment of a charge, which is generally used for public purposes (and works). In Italy, since the 1990s, PPPs have also been used to start negotiated initiatives giving the possibility of modifying town planning forecasts. Such initiatives are aimed at increasing the value of private properties and, through the charge, financing public works. This charge was regulated only in 2014 with the change of Article 16, paragraph 4, point d-ter of the Presidential Decree 380/2001 (Consolidated building law) and was named the “extraordinary urbanization contribution” (or simply the “extraordinary contribution”). The extraordinary contribution makes it possible to finance public works with private monetary resources. The amount of the extraordinary contribution is not less than 50% of the capital gain that is produced by real estate initiatives concerning modifications to town planning forecasts. A crucial issue of the this kind of PPPs has always been the appraisal of the capital gain of real estate initiatives due to changes in town planning forecasts. The factors to be considered while evaluating the extraordinary contribution, the appraisal tools and procedures to be used in assessing the capital gain are not indicated at regulatory level. However, an over 20 years’ practice has been consolidating the use of an analytical procedure for the appraisal of the transformation value to be used in evaluating the extraordinary contribution. In this procedure, the evaluation of the profitability index of real estate initiatives appears critical: in fact, the capital gain depends upon this element. At the same time, this topic is substantially neglected by the scientific debate. In this paper, a methodology has been defined, which is structured on the Build-Up Method and allows the profitability index (or rate of return) of a real estate initiative to be evaluated. Through a test, the developed methodology has been used in a case study: the appraisal of the extraordinary contribution in three integrated intervention programs in the city of Rome.
Highlights
IntroductionThe definition of action strategies to address the problems regarding the “urban dimension” has been a major topic in the scientific debates (both European and Italian) starting from the 1990s with a considerable increase in the latest economic downturn (2008–2019)
The definition of action strategies to address the problems regarding the “urban dimension” has been a major topic in the scientific debates starting from the 1990s with a considerable increase in the latest economic downturn (2008–2019).The subject of such debates has been the definition of new procedures able to generate growth, competitiveness and physical renewal of the territory through urban redevelopment and limited use of public resources [1,2,3]
A local authorities (LAs) as part of its territorial governance can resort to models of partnership-based negotiation where they can, at their discretion, give the go ahead for real estate initiatives which differ to the GRP even if they are private proposals [2], provided that they comply with the provisions of article 16, paragraph 4, point d-ter of Presidential Decree 380/2001
Summary
The definition of action strategies to address the problems regarding the “urban dimension” has been a major topic in the scientific debates (both European and Italian) starting from the 1990s with a considerable increase in the latest economic downturn (2008–2019). The subject of such debates has been the definition of new procedures able to generate growth, competitiveness and physical renewal of the territory through urban redevelopment and limited use of public resources [1,2,3]. Since the 1990s the European Union has introduced instruments that have been implemented by the member states and provide for recourse to PPPs both to activate wider negotiation-type real estate initiatives for territorial redevelopment (NPPPs) (e.g., in Europe: Urban Pilot Projects Urban I (1994–1999) and Urban II (2000–2006)) and to undertake traditional public-interest works (TPPPs) (e.g., in Europe: Design Build Finance Transfer, Service Contracts, Management Contracts, Build Lease Transfer, Design Build Finance Operate, Concession, and Build Operate Own; in Italy: Project Financing, Leasing in Costruendo, Building and Management Concessions); some European Union countries welcomed the PPPs experience and issued standards and new instruments within their regulations to put in force NPPPs and TPPPs.
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