The Arrecife City Council received on Thursday morning the notification of the order where the Administrative Court No. 3 of Las Palmas approves the new payment plan proposed by the mayor of Arrecife, Astrid Pérez, to pay the millionaire compensation for the expropriation of the plot in the area of the Charco de San Ginés, known as the plot next to Ginory.
The magistrate judge María Olimpia del Rosario Palenzuela signed this Wednesday, October 23, the judicial order - communicated to the Arrecife City Council - where she endorses the thesis defended by the mayor Astrid Pérez to formulate the new payment plan where it is proposed to settle the debt before the year 2032 and predictably in 2021 with a credit operation, to save on interest.
The new Government group in the Arrecife City Council proposed to the Justice a new payment plan to settle the millionaire compensation for the Ginory plot. The mayor of Arrecife, Astrid Pérez, transferred at the beginning of last September, to the head of the Administrative Court number 3 of Las Palmas de Gran Canaria, the new payment plan to settle the principal, plus interest, for the plot in the area in front of the Ginory bar, next to the Charco de San Ginés, in the capital of Lanzarote.
In this new payment plan, which has already been approved and ratified by the court, the mayor proposes an element that would bring significant savings to the capital City Council in legal and late payment interest costs. Along with the aforementioned plan, it is made clear that from 2021 the local administration would study the possibility of financing the partial or total payment of the debt through the arrangement of a loan operation.
On July 31, the aforementioned court issued a provision ordering the Arrecife City Council to "propose a reasoned payment proposal" of the amount to which it is obliged under judgment 325/2016, of July 8, 2016, issued by the second section of the Chamber of Administrative Litigation of the Superior Court of Justice of the Canary Islands in appeal 91/2013.
Faced with this provision, the mayor of Arrecife has proposed this new plan - now approved and endorsed by the Justice - to pay the amount of 31,170,596.32 euros in monthly installments until 2032, 4 years less than in the previous plan proposed by the Government group prior to the municipal elections of June 2019.
Budget Stability Plan and lower interest rates
The mayor recalls that the Arrecife City Council is currently working with the extended budgets of 2017 and last July, in the first plenary session of the new Government team, it was approved to go to a Financial and Budget Stability Plan as Arrecife failed to comply with the so-called "spending rule".
Predictably, Arrecife - approved that budget stability plan - would achieve the balance of its finances before 2021 and that loan operation could be established, achieving lower interest rates.
Currently, the banking market offers interest rates to public institutions lower than 1.5% when the interest rates that would be paid to settle the debt until 2032 for the Ginory solder are between 3.5 and 4% (as specified in the payment plan communicated to the Court).
"The previous government established until 2036"
As is known, with the previous Government a deferred payment was established until 2036 (which the justice rejected), together with the payment of 1,200,000 euros and annual installments. With the new payment plan communicated at the beginning of September, the desire to make monthly payments was transferred to the Justice, shortening the term until 2032 (4 less) and the option of partial or total early cancellation from 2021 with a loan, saving half in interest.
The principal of the compensation for this expropriation of the Ginory plot was 20,012,622.01 and in legal interest plus late payment interest, the debt yields the equivalent of almost half of the principal in interest alone.
The mayor of Arrecife together with the spokespersons that make up the Government group announced at a press conference last July the economic situation of the City Council and the nearly 47 million euros in possible compensation for judgments and invoices claimed (some of them firm and others pending judicial resolutions). At that press conference, Astrid Pérez already advanced that "the most important, by volume, was that of the Ginory plot where now in execution it is accredited that the amount is 27,049,307.05 euros, of which 1,200,000 euros have already been paid, and the capital to be divided is 25,849,307.05. The total amount of 31,170,596.34 is reflected in the table of monthly amortizations until 2032, where in interest the figure amounts to 5,321,289.29, from now until 2032".
This new payment plan has had the support of the Intervention and the legal services of the Arrecife City Council. For the Government group, with this resolution of the Justice known this Thursday, "it allows from now on to open the door to start the economic recovery of the Arrecife City Council by clearing one of its main burdens".
Along with the payment plan, -the other party that won the millionaire compensation showed its disagreement- the Arrecife City Council informed the court that the Institution is already paying other forced expropriations in execution of judgments, whose plans were approved in court.
The magistrate judge, in her order where she accepts the Arrecife payment plan, highlighted "in view of the amount pending payment and the proposal provided by the Administration, it is considered that the immediate and complete fulfillment of that should cause serious disruption to the Public Treasury, hence the acceptance of the payment proposal made". She adds in its operative part the order, "to appreciate the serious disruption that the execution of the judgment issued in this appeal may cause to its Treasury to the condemned Administration, accepting the proposed fractional payment, which must be effective, in the manner and dates indicated therein".
With this resolution, the Arrecife City Council proves that the compensation is quantified at 31 million euros. The exact amount is 27,049,307.05 euros, of which 1,200,000 euros have already been paid, and the capital to be divided is 25,849,307.05. The total amount of 31,170,596.34 is reflected in the table of monthly amortizations until 2032, where in interest the figure amounts to 5,321,289.29, from now until 2032.
Arrecife, according to what the first mayor has explained in this management stage, "wants to go to a credit operation from 2021 that allows to reduce the expenses of legal interest as current bank interest rates are well below the legal ones, in order to achieve significant savings for the Arrecife City Council".
The judicial order states "that it is made known that an appeal may be filed against this resolution, in a single effect, before the Superior Court of Justice of the Canary Islands, within fifteen days, before this court".
The Government group of Arrecife plans to convene an extraordinary plenary session for the ratification of this payment plan, endorsed from now on by the Justice.
