Contractual Preconditions Regarding the Commencement of the Development of Hellinikon
According to the Contract, the development of Hellinikon (Metropolitan Pole of Hellinikon-Agios Kosmas), will commence once the Hellenic Republic Asset Development Fund (HRADF) transfers the shares in HELLINIKON S.A., which has the right to develop the Metropolitan Pole, to the Investors. This transfer, however, depends on a series of conditions which, once met, will in effect mark the point in time when the Pole will be ‘ready’ for development, and the Project will start without any further delays or setbacks. These conditions are as follows:
- The Ratification of the Contract by the Hellenic Parliament
Ratification of the Contract by the Hellenic Parliament ensures and confirms that this very important development has the approval and consent of not just the executive authority or the government in power, but of the legislature and politicians in general.
The Contract was in fact ratified by the Parliament in September 2016 with a broad majority (with more than 260 Deputies voting in favour of it) and acquired the force of law. The ratifying law (Law 4422/2016) was published in the Government Gazette 181/A/27.9.2016, thereby providing the project with greater transparency and offering the public more comprehensive information.
- The Approval of the Integrated Development Plan by Presidential Decree
An issue of vital importance for enabling works to begin is the urban-planning maturity of the Property, so that both the development potential and the restrictions on development are all known from the outset.
The first step to achieve that is the approval of the Integrated Development Plan (IDP) by means of a Presidential Decree, which will first undergo examination by the Council of State. Among the documents accompanying that Plan is the Strategic Environmental Impact Study, which the law requires to be published and submitted for public consultation. At the same time, the Special Committee of Experts of Law 4062/2012 is responsible for submitting an opinion about the Plan and the Central Management Council for the Development of Public Property, consisting of the General Secretaries of the involved Ministries is suggesting the draft Presidential Degree to the involved Ministers.
Therefore, approval of the IDP is preceded by extensive scrutiny of all parameters by both the public administration and the judiciary administration. Nonetheless, it should be noted that the Contract requires that for transfer to be completed, the IDP that will in fact be approved must not contain substantial differences from the Investors’ Master Plan, since otherwise it will not be in line with the Business Plan.
The Investor’s Master Plan was actually submitted to HRADF and was approved during the tender process. However, after the Contract was signed, the Greek State requested for specific points, and specific issues relating to urban planning law to be amended. So, after the Amended Agreement was signed in July 2016, a partial re-planning was required. The IDP was submitted to HRADF to be checked for completeness in December 2016 and was re-approved in February 2017. However, final submission could not be made before the administrative issues which still existed at that time were resolved. To accelerate the process, even though the specific issues had not been resolved -which is very likely to impact the overall ability to implement the development plan-, the IDP was submitted for approval in June 2017. The law requires that it must be approved within 6 months of the submission date.
Since then, the public consultation on the Strategic Environmental Impact Study has been completed as well as the sessions of the competent body (Central Administration Council for the Exploitation of Public Property) and the draft Presidential Degree has been signed by the competent ministers and is under examination by the Council of State. Approval of the urban planning studies by means of Joint Ministerial decisions
In effect this is the second crucial step in achieving urban-planning maturity for the Property. Once the urban planning studies are approved, the building blocks will have been worked out and issues affecting the development and restrictions on development will be known. For example, the design of the Park (green areas, parklands, water elements, network of pavements and cycle lanes, etc.) will be finalised in the urban planning studies, communal use and public benefit areas will be marked out, the building blocks will be designated, as will the road network, and all urban planning arrangements for them will be made.
The law requires this stage to be completed within 6 months of the relevant studies being submitted, and clearly that cannot commence if the IDP has not been approved in accordance with the points above.
- Distribution of the right of ownership among joint owners
This condition is one of the two steps for the ownership maturity of the Metropolitan Pole. Currently the site belongs to the Greek State and HELLINIKON S.A. has only the right to use, manage, administer and exploit the site.
According to the tender process, the State undertook to transfer full “ab indiviso” ownership of 30% of the Metropolitan Pole to HRADF (excluding the seashore and the beach) so that it could then be distributed between the indivisible joint owners, so that that ab indiviso 30% share could be ‘converted’ into a full right of ownership of the relevant part of the Metropolitan Pole, around 1,575 stremmas at the Former Airport and 227 stremmas on the Coastal Zone (excluding the seashore and the beach).
It should be stressed that the Contract requires the distribution to be made based on a diagram agreed by the Investors and HRADF and the Greek State, after urban planning maturity of the project has been achieved in the manner outlined above.
- Transfer of rights in rem in the Property to HELLINIKON S.A.
This is the second stage of the Metropolitan Pole’s ownership maturity. As previously mentioned, the Greek State has undertaken to transfer a surface right in the entire Metropolitan Pole to HRADF in agreement with the Investors. Once this is done, HRADF must in turn transfer all rights in rem which it holds (namely the surface right in the Metropolitan Pole and the right of full ownership in accordance with para. 4 above) to HELLINIKON S.A.
Taking into account the number of parties involved in those successive transactions, their nature and their special features, as well as the property’s special features in general, it is expected that achieving maturity of the ownership regime at the property will be a particularly demanding and complex process, which may require additional steps on top of those briefly set out hereby.
- Establishment of a special body to manage and operate all communal areas
This condition ensures administrative maturity for the Property; currently management is unequally distributed between three different municipalities (Alimos, Glyfada and Hellinikon – Argyroupoli).
However, the success of such a demanding, complex and long-term project requires constant and effective coordination of all parties involved, both during the implementation stage and also during the actual development process. What is of primary importance for effective and efficient running of the Property is not just correct, rapid and prudent management and maintenance of all communal areas and infrastructure, which is self-evident, but also uniform management so that there are no individual or local differences, no discrimination and no inadequacies.
To that end, it has been agreed that a special entity with this particular objective will be set up before the transfer takes place. To address the frequent problem of lack of resources that such entities often face, there is a specific provision that one of its tasks will be the exclusive collection and management of any requiting fees and similar charges.
It is clear that only the agreement between all parties involved in that body (namely the Investors, the Greek State, HRADF and all competent local government authorities: the Attica Region, the Municipalities of Alimos, Glyfada and Hellinikon – Argyroupoli) and other relevant bodies can result in the specific venture being a success. Consequently, not only do those parties need to be actively involved, but they also need to have a deep understanding of the project’s objectives and requirements. The rights and obligations need to be shared out, and there must be a common vision of the outcomes sought.
- Operating permit for a casino on the Property
Part of the Investors’ plan is to create the first Integrated Tourist Resort in Greece, which will consist of a 5 star hotel and have infrastructure to host high standard professional tourism events (fairs, conferences, business meetings and incentives tourism in general, including a casino) to attract new visitors to Athens.
However, given that there is a special regime governing casino operating permits, a special public tender process needs to be launched in order for the permit to be granted, and completing that process is yet another condition for HELLINIKON S.A. to be transferred. To make the tender process attractive to participants and increase the chances of a positive outcome, which will also ensure the necessary international exposure and value of the tourism resort, and the compliance with the Investors’ Business Plan in general and the Metropolitan Pole’s development framework, an additional condition exists which provides for the reformation of the relevant legal framework.
It should be noted that the Greek State will collect an additional consideration for this as well as continuous significant revenues from the operation of the casino, indicatively the casino special taxes and levies, since the tender process is related to the Ministry of Finance and not to HELLINIKON S.A. or the Investors.
For the time being with Law Ν. 4446/2016, the granting of the respective license within the Pole was allowed. However, the granting of the license itself through public tender is still pending.
- Handing over the Property free
In effect, this refers to the actual maturity of the property. At the time the tender process was held, there were 69 different bodies based at the Property, 44 of which were from the public sector and 25 from the private sector. Some of them are arbitrarily occupying premises at the property. It is clear that failure to regulate that situation could in effect make it impossible for the development to go ahead.
The special legislation for the Property enacted in 2012 expressly requires that bodies located at Hellinikon were to be relocated with the assistance of a special committee which would ensure smooth relocation, but also stated that certain bodies would remain, especially those for which the legislator considered relocation would be disadvantageous (such as the tram depot, the Hellenic Civil Aviation Authority control centre). Besides, the Contract also specified that other bodies were entitled to remain on the Property after transfer, such as various associations for the disabled (with an obligation for the investors to house them), the Agios Kosmas sports facilities which were agreed to remain until the corresponding facilities within the Park were completed, the National Meteorological Service and specific departments of the Coast Guard which could remain temporarily (for a further 10 months).
Although 5 years have passed since Law 4062/2012 was enacted, and it has been almost 3 years since the Contract was signed, a number of bodies still remain on the Property, many of which occupy large areas (such as the OASA depot, the HCAA departments), and it is not known whether plans to relocate them have been drawn up, or under what conditions it will take place.
- The Property’s Judicial Maturity
One of the most important issues which affects all major projects is pending litigation which can drag on for many years. Pending litigation either significantly delays the completion of projects or prevents increased investor interest from materialising because of the risks entailed. For that reason, the tender notice specified that before the project commences:
- The Council of State must have issued judgments rejecting specific applications for annulment which were pending at the time of the tender process against decisions of the Interministerial Committee for Asset Restructuring and Privatisation, which resulted in the tender process being launched and
- There were to be no other pending applications for annulment relating to any other administrative decisions associated with the conditions in paragraphs 3 to 5 above.
In fact, in 2014 the Council of State rejected all applications for annulment which related to the said ICARP decisions. The second aspect of this condition can only be looked after the administrative decisions it refers to are issued.
- Non-detrimental change in conditions
A final condition is that by the time of the transfer no specific events should occur (such as force majeure events) which may result to a reduction by more than 5% in the area capable of being built on within the Metropolitan Pole (calculated during the urban-planning maturity stage).