The mayor of Madrid, José Luis Martínez Almeida, confirmed on Monday that the calculation error detected in the economic report on the reclassification of Real Madrid's land in Valdebebas is "material", but that it does not affect the operation or the finances of the city council. The ruling, which raised the expected annual profit from 1.46 million to 98.6 million euros, was due to an incorrect coefficient applied to the tax on economic activities (IAE) in the estimation of municipal income.
Almeida explained that the error does not imply a real economic loss, since the city council always charges according to the percentage and the current tax rate, not according to the erroneous value in the report. “The 98 million were not going to be collected,” he stated, adding that the rectification does not frustrate the operation, which he considers beneficial for the city. The mayor assured that the council will follow the necessary procedures to correct the report and comply with the legal requirements.
The economic study, commissioned by the city council from the consulting firm Savills, evaluated the viability of the urban planning operation that involves the reclassification of some 1.2 million square meters of the Real Madrid sports city in Valdebebas. The club plans to develop a complex there with offices, hotels, a private hospital, student residences, educational centers and shops. The reclassification, approved by the municipal Government Board this summer, aims to optimize fiscal management and the usefulness of the project for the community.
The error manifested itself in the incorrect application of the IAE percentage to future rentals, which caused the estimated annual collection to go from approximately 980,000 euros to nearly 98 million. By correcting the calculation, the annual profit for the city council was reduced to 1.46 million euros after deducting expenses. Almeida assured that, although some critics will point out the error, it will not have a material impact on the municipal accounts, since the actual amount that will be charged will be the correct one.
With the rectification underway, the city council maintains the operation as an opportunity for urban development and the generation of sustainable income. It is expected that the authorities will continue with the relevant procedures and that the project will progress as planned, benefiting both Real Madrid and the city of Madrid.