Redevelopment Long Lease
The redevelopment long lease is a public-private partnership allowing the State, following a public tender, to lease public assets for consideration to private parties over a period of 50 years.
The goal is to carry out reuse, renovation and regeneration works also aimed at introducing new uses in order to pursuit economic or service activities for citizens. In case of buildings with construction restrictions within the meaning of D.L. no. 42 of 22/01/2004, reuse, renovation and regeneration works must preserve the historical, artistic and cultural interest of the property without limiting or ruining, under any circumstances, the asset.
Art. 3 bis, D.L. no. 351 of 25/09/2001 “Development and Use of Real Estate under Concession or Lease for Economic Purposes” – Converted, after amendments, into Law no. 410 on 23/11/2001 — Urgent provisions in terms of privatisation and development of public real estate assets and development of real estate investment funds
Art. 58, D.L. no. 112 of 25/06/2008 “Recognition and Development of Regional, Municipal and other Local Bodies’ Real Estate” – Converted, after amendments, into Law no. 133 on 06/08/2008 — Urgent provisions for economic development, simplification, competitiveness, stabilisation of public finances and tax equalisation
Procedure – Redevelopment Long Lease
Publication of a Call for Tender
The private leasee of public assets owned by the State or by Local Authorities is selected through a public tender. The procedure can be applied also if the asset is listed in the Real Estate Sale and Development Plan. The call for tender shall:
- Establish long lease criteria and conditions;
- Acknowledge compensation assessed on the basis of the economic-financial plan in case of annulment of the lease;
- Provide for the possibility to sub-let the economic or service activities;
- Provide for the recognition of a preemptive right for the lessee in view of the acquisition of the property at market price once the lease expires, after verification of actual redevelopment and reconversion of the assets, if the property itself is not needed for institutional purposes;
- Specify call modalities, offers presentation and assessment, as well as the required documentation and the mandatory statements for participating to the call for tender;
- Specify costs to be borne by the lessee both during the drawing of the technical project and the lease;
- Specify the type and amount of security or bank/insurance guarantee;
- Specify the person responsible for the procedure and the office where all documents can be viewed in order to perform any due diligence on the asset;
- Contain any other element deemed necessary according to the applicable law.
Both the duration and the amount of the rent, in case of a redevelopment long lease, shall be proportionate to the economic and financial equilibrium of the operation (both during the investment and operational phases).
If not otherwise expressed in the call, the tender is valid for 180 days from the expiry date for the submission of the tender. This period is meant to safeguard the competitor, preventing any eventual lengthiness of the procedure to become detrimental. In case no contract has been signed after the expiry of such period, the competitor can waive his tender or confirm it, either tacitly (e.g. by signing the contract) or expressly, also following a request from the Contracting Authority. Once the tender is confirmed, the effectiveness of any eventual guarantee issued during the participation to the call shall be extended.
Identification of Best Tender
The call is usually won by the subject who offers the most economically advantageous tender, identified on the basis of the best value for money.
Exclusion Criteria and Proof of Compliance
With reference to the general requirements laid down in the current legislation for participating in public tenders, notwithstanding the requirement to verify any eventual provision of each specific call, it is necessary to specify that:
- Usually, by moral requirements, reference is made to those provided for in Art. 80, D.L. no.50 of 18/04/2016 “Code of Public Contracts”; the competitor shall prove to hold the aforementioned requirements when taking part in the call, to be verified by the Contracting Authority once the tender has been submitted. More specifically, public administrations may request the following documents: a certificate issued by the Criminal Records Office or, if unavailable, an equivalent document issued by the judicial or administrative authority of the Member State or of the Country of origin in which the envisaged requirements are met; appropriate certification issued by the competent fiscal authority and, as far as social security contributions are concerned, the certificate of social security compliance automatically acquired by the public administration from social security institutions pursuant to current legislation or, if unavailable, an equivalent certificate issued by competent authorities of other States.
- Economic and financial standing of the economic operator, declared upon taking part in the call, can be proved through one or more of the following: appropriate bank declarations or, if any, evidence of relevant professional risk’s indemnity insurance; the presentation of balance sheets or extracts from balance sheets, where publication of the balance sheet is required under the law of the country in which the economic operator is established; a statement of the undertaking’s overall turnover and, if any, of turnover in the area covered by the contract for a maximum of the last three financial years available, depending on the date on which the undertaking was set up or the economic operator started trading, insofar as the information of these turnovers is available. If, for any valid reason, the economic operator is unable to provide the references requested by the contracting authority, he may prove his economic and financial standing by any other document which the contracting authority considers appropriate.
- The technical capability of the economic operator, declared upon taking part in the call, can be proved, inter alia, by: a) a list of the works carried out over the past five years, with the sums, dates and recipients, whether public or private, involved; b) the indication of the technicians or technical bodies involved, whether or not belonging directly to the economic operator’s undertaking, especially those responsible for quality control; c) a description of the technical facilities and measures used by the economic operator for ensuring quality as well as the undertaking’s study and research facilities; the educational and professional qualifications of the service provider or contractor and/or those of the undertaking’s managerial staff, provided they are not evaluated as award criteria; e) a statement of the average annual manpower of the service provider or contractor and the number of managerial staff for the last three years; f) a statement of the tools, plant or technical equipment available to the service provider or contractor for carrying out the contract.
This instrument is particularly appropriate when the entity identifies a real estate portfolio that:
- Can produce income via economic management by private parties;
- Must be redeveloped, or reconverted, also by introducing new purposes of use, coherently with the needs of the Municipality and the community in which the asset is located;
- Deserves to be exploited to the highest level using private funds, although being owned by the Municipality.
The procedure for listing the assets in the local bodies’ sale plan shall take 60-90 days.
The procedure for the choice of the lessee shall take 30-45 days.
The private investor shall bear all costs related to due diligence activities to be performed on the property and to the preparation of the tender (e.g. technical and legal consultancies, inspections of the site, etc.).