Abstract
This contribution is part of a larger study concerning the Cost Benefit Analysis of the Madrid-Rio Park, one of the main public works in the field of urban redevelopment in Europe over the last twenty years. The scale of the intervention and its effects on the urban arrangement of the Manzanares River area encourage reflections on some issues of the wealth redistribution in the face of such a huge investment amount; in this experimentation we try to stress some fundamental categories of them. The paper focuses on the monetary quantification of secondary benefits coming from the commercial, accommodation, spor ts and catering businesses located in the large areas made free after the burial of the stretch of the motorway once flanking the river. According to the logic of the business plan, a Discounted Cash Flow Analysis was carried out by transforming all items of the income statement into annual revenue and expenditure streams; therefore, the components of the secondary benefit generated, and their composition were analysed in terms of relevance with respect to the possible earners. At the same time, these results were compared with the data on concession fees charged by the Madrid administration and some hypotheses were made regarding the fees applicable to current and future business, by applying the residual value, as a result of risk and scenario analyses, carried out on the strategic variables of the investments. Finally, the overall result – related to all businesses comprised in the area, with regard to the differentiated concession fees applicable for each class of business – was compared with the current management costs of the park, providing one of the possible measurements of the efficiency of the current concessionary policy and indicating any other further potential.
Highlights
RENT AND THE CITYThe issue of the redistributive effects deriving from the realization of the great urban public works concerns the great questions of economic justice and, in the perspective of the estimate, aspects connected to the creationof models of allocation of territorial-urban wealth.In such prospect, this contribution deals with some economic-evaluation aspects necessary for the management of public properties characterized by significant potential for productive use, and by the possibility of generating mutual benefits.Many social responsibilities involve public decisionjournal valori e valutazioni No 27 – 2020 makers when collective assets acquire economic-real estate potential due to specific physical and functional transformations that are sometimes hardly reversible
Some considerations following the more general experience of Cost Benefit Analysis in which this experiment is framed, concern the real estate externalities generated by the construction of the park, which have not been taken into consideration since, according to the available information, no adaptation of the cadastral rates has still been applied to internalize these ubiquitous effects of urban regeneration
Any urban redevelopment action is reflected in the structure of the real estate market (Del Giudice and De Paola, 2012) whose econometric analysis (Land Price Analysis) investigates the variations in the perspective of internalising the positive ones with local tax measures
Summary
RENT AND THE CITYThe issue of the redistributive effects deriving from the realization of the great urban public works concerns the great questions of economic justice and, in the perspective of the estimate, aspects connected to the creationof models of allocation of territorial-urban wealth.In such prospect, this contribution deals with some economic-evaluation aspects necessary for the management of public properties characterized by significant potential for productive use, and by the possibility of generating mutual benefits.Many social responsibilities involve public decisionjournal valori e valutazioni No 27 – 2020 makers when collective assets acquire economic-real estate potential due to specific physical and functional transformations that are sometimes hardly reversible. The issue of the redistributive effects deriving from the realization of the great urban public works concerns the great questions of economic justice and, in the perspective of the estimate, aspects connected to the creationof models of allocation of territorial-urban wealth. In such prospect, this contribution deals with some economic-evaluation aspects necessary for the management of public properties characterized by significant potential for productive use, and by the possibility of generating mutual benefits. In the present case – given the huge economic-financial effort that was difficult to justify in the era of austerity – such surplus has enabled the Madrid administration to win the most important civic challenges, the one of the urban shape
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