The sell-off of public land and property of Greece as part of the adjustment programme for the repayment of the public debt
The Hellenic Republic Asset Development Fund (TAIPED) was established on 1st July 2011 (Law 3986/2011), under the meddle-term fiscal strategy that was imposed by the Troika and adopted by the Greek government. It constitutes the agency responsible for implementing the privatization program of Greece with the sole purpose of using its revenues for paying up the country’s public debt. TAIPED is a “societe anonyme”, whose sole shareholder is the Hellenic Republic with a share capital of €30 million. The Fund is not a public entity and is governed by laws pertaining to private economy. Full ownership, possession and occupation of all ‘state owned assets’ (land, infrastructure and public companies) that are to be privatized are transferred to TAIPED with the provision that these assets cannot be transferred back to the Greek state.
TAIPED is supported by a crew of specialists on real-estate speculation and privatisation processes (as well as experts in technical, legal and urban design matters), the enormous fees of which are covered by the money collected from the privatization of public assets. At the same time, in order to safeguard the viability of the investments through the facilitation of the sell-off and subsequent development of all state owned property, the Implementation Law which established TAIPED, included a unified planning framework providing land use and density regulations for the development of all state owned real estate property. This framework which promotes the intensive development of mostly tourist and vacation-home enclaves may by-pass statutory land use and environmental regulations and plans, as well as existing procedures and official bodies. Therefore, a key element of the decision making process of the entire privatization program is lack of democratic participatory processes and, of course, transparency.
Today, the portfolio of TAIPED includes around 10.000 plots of land (http://www.hradf.com/en/portfolio) all over the country a substantial portion of which includes environmentally sensitive and/or protected areas. Since 2011 TAIPED has launched 23 calls for the privatization of land assets, while 8 clearances have been completed. The destructive work of TAIPED is ongoing, as the privatization programme consists of the main mechanism for debt repayment. This year TAIPED presented to Troika a list of ‘mature’ projects for privatization raising the target for revenues for 2014 at 3,5 billion euros.
Overall our accusation towards the Hellenic Republic Asset Development Fund is grounded on the following reasons:
– TAIPED is a state company whose function damages the public good.
– TAIPED is the vehicle for a massive land dispossession and land-grabbing process in Greece that sells-off public property (real estate, infrastructures and companies) of vital importance for both the present and future of local societies, with the sole purpose to contribute to the repayment of a commonly acknowledged non-sustainable debt.
– TAIPED contributes to the further impoverishment of the Greek state and local societies / communities, depriving them of common goods that are essential for their future social and economic recovery, promoting private investment and speculation, while displacing social and collective uses and excluding large parts of the population.
– TAIPED executes a huge asset clearance programme, with limited profitability exchanging the country’s future recovery for immediate liquidity to the Greek government in order to comply with the fiscal targets of the adjustment programmes.
– TAIPED is providing important ‘investment incentives’ by by-passing existing environmental, developmental and other regulations promoting intensive development schemes (touristic, logistic etc) with harmful societal and environmental consequences.
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Information about selected privatization cases in Athens
Former Hellinikon airport area and coastal front
The property of Hellinikon, a 620 Ha site which includes the former airport of Hellinikon and the Agios Kosmas beachfront area in Athens, constitutes the peak of the privatization program that is currently underway in the country and involves the concession of the property to private investors who are going to develop and operate it for the next 99 years.
The process of tender submission for the development of the site was completed in February 27, 2014 with only one contestant – the real-estate company “Lamda Development”, member of Latsis Group – submitting a final offer to TAIPED. According to information leaking to the press, «Lamda Development» is planning to build malls, a casino, hotels, luxury homes etc. with a total area of 1,7 mil. sq. meters, thus, creating an enclave of wealth and luxury for selected few.
The creation of ‘tens of thousands of jobs’ is used by both the government and TAIPED as a basic argument in order to acquire a consensus for the promoted urban development model while they are trying to hide that these are mainly temporary, precarious and low-paying jobs and deceiving the hundreds of thousands of unemployed people in our country. At the same time, it is projected that the concession price for the Hellinikon property will not exceed 0,5 billion euros which will be paid in the next 15 years in yearly installments. Essentially, this is considered to be a free concession, since the state is obliged to cover the cost of a number of necessary infrastructure works along with the moving cost of several public agencies that are currently located on site, thus making the accrued cost much higher than the offered price.
In direct opposition to the government’s and TAIPED’s plan, lies the timely demand posed by local governments, the academic and research community, local movements and political parties for the creation on site of a public metropolitan park that will meet the real needs of the community for recreation, sports and culture and improve the environment and climate conditions of Athens.
Vouliagmeni peninsula and Asteras touristic complex
This peninsula and beach-front property – owned by both the Greek state and the National Bank of Greece – has a total area of approximately 30 Ha (50 Ha including the beach) and has signified, with the three hotels and the marina located on the site, an icon of the tourism sector in Greece. The property value is estimated at approximately 2,5 billion euro (based on pre-crisis property tax valuation). Past attempts to fully privatize and intensify the development of the site had consistently failed due to constitutional provisions and the opposition of local movements. In fact, statutory local land use plans and regulations provide for the renovation of the existing hotels only, while a major portion of the property that includes forested areas and archeological sites has been designated as a protection area.
However, the recent national legislation providing for the development of public properties allowed the bypassing of existing land use regulations and thus, the terms of the bid for the site allowed, at first, the construction of up to 8.600 sq.m. of residences. Nevertheless, these new terms were apparently deemed not profitable enough for the candidates and therefore, just before their submission of the second – phase bids, it became publicly known that new planning terms provided for the construction of luxury residences of up to 39.500 sq.m., the demolition of two of the hotels, as well as the controlled access to the beach and the archeological sites by the investor through the turning of the existing public road into a private one. In total, the new master plan for the property provides for the construction, in a forested area, of a beach front high-income enclave, catered solely to foreign investors and buyers, which apart from housing will also include shopping, restaurants, entertainment, anchorage, etc.
The total abolition of applicable planning terms which allows the intense residential development of the coastal area of Athens is not, however, contingent with any planning or public gain. Instead, the 4 candidates that have submitted a binding offer (Colony Capital Acquisitions LLC, a California based investment fund; AGC, an Arab-interest investment company; Plepi Holdings LTD, a company formed by Greek and Saudi Arabian entrepreneurs; and Lamda Development) seem to pursue buying off the property at a price that does not reflect either its real value or the surplus value it can create, since their offers are only a bit higher than the current stock value of the property which has dropped, because of the crisis, to around 270 mil. euro. In fact, the bidding price is expected not to exceed the amount of 350 mil. euro!
Even though the Greek state owns 40% of the property, it will only collect 20% of this amount, that is, around 70 mil.euro. However, this is not the net amount that will be attributed to the payment of public debt, since from this amount must be deducted all costs accrued for the payment of consulting services provided to TAIPED for the selling of the property as well as the mandatory provision by the state of any required infrastructure. Therefore, a real financial loss to the Greek state is a very plausible prospect of the sell out of this property which is further substantiated by the significant reductions in future tax revenues that will be generated by this development due to tax breaks provided by recent legislation pertaining to the attraction of strategic investors.
Eviction of Occupied Theater EMPROS
The theater EMPROS is located in downtown Athens in an historic preservation building that functioned first as a press of the former newspaper ‘EMPROS’ and then as a theater, under the same name, until 2005. Even though, the property was transferred to the state in 1950 by Law (L.1530/50), the legal status of its ownership is still in question since there is no certificate of transfer and ownership, while there is a pending lawsuit for the annulment of this transfer submitted by 6 citizens since 1951! Despite this legal uncertainty, TAIPED reassures prospective investors that there is no risk involved regarding the ownership of the property since the pending lawsuit is not valid due to the time lapsed. According to existing land use regulations, the only permitted use for the building is civic (PD, 18.3.98)
In November 2011, the building was occupied by a group of artists who are using it as a free, self-managed space for artistic and social activities. Since then, the ‘EMPROS’ theater is managed by an open assembly and a great number of cultural events, performances, concerts, discussions etc have been organized, some of them with particular intensity and density.
At the end of 2013, the property was put for sale through the electronic auction and since then, TAIPED is systematically pursuing the evacuation of the building so that it will be available to the future owners. In October 30, 2013, the police intervened in order to evacuate and seal the building and arrested two actors who were in rehearsals. A big support and solidarity was expressed against the eviction of the assembly managing the building and in favour of the cultural and political activities taking place.
Sale and lease-back of 28 public buildings
Twenty eight state owned buildings (with 320.000sqm total surface) were privatized, with the sale and lease-back method, at the price of 261 mil. euro to two recently created REIT companies: the National Pangaia* (portfolio of 14 buildings at a price of 115,5 mil. euro), and Eurobank Properties** (the rest of the buildings at a price of 145,810 mil. euro). These were civil service buildings which house five ministries (i.e., Culture, Internal Affairs, Justice, Health and Education), thirteen public tax agencies, the general laboratory of the state and police headquarters in Athens, Thessaloniki and Serres, for which the Greek state guarantees a lease-back period of 20 years (estimated at 600.000 mil. euro).
The Court of Audit has suspended the deal (until it receives further clarifications) based on the argument that there was lack of transparency and impartiality in the tendering process, since the two nominated companies are subsidiaries of the two business groups (NBG Securities SA and Eurobank Equities Investment Firm S.A, respectively) which acted as financial consultants to TAIPED for the privatization of these 28 buildings. In its decision, the Court has also expressed reservations regarding the bidding process because it is not sufficiently justified whether the concession is profitable and advantageous to the Greek state compared to other public lending options and because of binding clauses in the deal.
Both REIT companies have managed to increase significantly the value of their asset portfolio because of this deal, being actually endowed by the Greek state to boost their profitability.
– National Pangaia REIC: after this privatisation deal holds a real estate portfolio worth more than 1 billion euro, and was immediately sold (66%) to the, Israeli interest, Dutch company Invel Real Estate. In order to buy Pangaia, Invel took a loan from the National Bank of Greece corresponding to 60% of the price (580mil of which only 160 mil is own share and 418 mil. is from the loan, plus 74 mil from the transfer of asset value).
– Eurobank Properties: after the acquisition of this second ‘package’ of public buildings was sold to the Canadian fund ‘Fairfax’.
Public goods and public land are not for sale
Our future is not for sale
-Encounter Athens, Committee for a Metropolitan Park in Hellinikon, Occupied theatre Empros, Solidarity for All, Network for the protection of Saronikos bay