Conversion Rates: Town halls and hotels

The marathon of consultation and proposed amendments to the new tourism law in the Balearics is about to enter the stadium and take the last lap prior to its final presentation to the regional parliament at the end of this month. Since the start of December, every self-interested party and ones that are more altruistic have had their say, whether officially or unofficially.

The most significant movement by minister Carlos Delgado has concerned the say-so of local authorities - the island councils and the town halls - when it comes to proposed changes of use to existing hotel stock. The local authorities got into a fair old lather when they realised that a major reason for their existence - the approval or rejection of urban planning requests - was threatened by a government inclined to do the signing-off themselves.

The reasons for the local authorities having become so exercised about this possibility were obvious. They do have responsibilities for planning and they do, or so they would argue, have a better understanding as to what a change of use, be it to residential or co-participation (i.e. condohotels), would have on local areas.

A fear has been that the government, were planning left to it alone, would unleash a free-for-all of virtual deregulation, hence the objections of organisations such as the architects college in the Balearics and opposition political parties that this new urban planning would send the islands back to the bad old days of the sixties. Has this fear been overstated? Despite the go-ahead for new projects in Capdepera, Campos and Magalluf (all in theory earmarked for some years), the government has made it clear that it does not envisage massive new coastal construction; work under the provisions of the new law would be confined to conversion and this alone. Or would it?

Ultimately though, the objections of the town halls have been founded on their own self-interests, ones that do not, at first glance, appear to help in stripping out the sorts of delays and bureaucracy in planning requests that the government was hoping would be a consequence of centralised decision-making. The government has bowed to local authority pressure because on this issue it matters to town halls, many with Partido Popular mayors, that they hold onto their power. The government may otherwise have found itself with a real revolt on its hands from the party membership.

The law, as it now appears to be drafted, will give town halls the final say as to plans for hotel conversion. So will this mean that such plans are likely to be blocked  or delayed by unco-operative local authorities? Not necessarily. Indeed, the government has been pretty crafty. Any conversion work is going to come with a 5% tax and this tax will end up in town hall coffers. A nice little earner for cash-strapped municipalities, and one that will have them salivating at the prospect and making pretty damn sure that the stamps have adequate rubber and are immediately to hand. Badly needed tax revenues can speed up even the most lethargic of public bodies.

There is, however, an unknown in the provision for conversion of use. It may become clearer once the bill is finally published, but changing a hotel to residential use means a loss of tourism offer. This much is obvious, but it has a planning dimension, namely that within municipalities there is a set amount of land that is designated as being for this tourism offer, i.e. it is accommodation or some other facility expressly with tourism in mind. Take some of this accommodation away, make it residential and what happens to that percentage which can be for tourism?

This is one reason why the government's insistence that it is not contemplating new hotel construction over and above the projects that are known about might not be all it seems. It is not as though it hasn't been, how can one put it, relaxed about other planning matters, such as regularising urbanisations previously considered illegal or giving the green light to projects that had been blocked, albeit that to have kept them blocked would have meant shelling out a whole load of compensation.

The furore over the hotel development near Es Trenc has given rise to further fears of coastal building deregulation, but the Es Trenc project is a specific case, one that will benefit an area of Mallorca underdeveloped in tourism terms. If the government does in fact end up permitting new construction within existing tourism centres, would this be such a bad thing? But it will still depend on whether local authorities agree. What's the tax revenue from new construction?


Any comments to andrew@thealcudiaguide.com please.