Law no. 1.554 of 14 December 2023: Informing the Conseil National prior to the alienation of a property requiring its disaffection from the public domain

Law no. 1.554 of 14 December 2023 on informing the Conseil National prior to the alienation of a property requiring its disaffection from the public domain (JDM No. 8675 of 29 December 2023) stems from Bill no. 1069, tabled in Public Session on 30 November 2022 and passed on 7 December 2023 (which itself comes from parliamentary Draft Law no. 253 adopted by the National Council on 10 May 2021).

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Purpose

The public domain of the State or the Commune of Monaco is imprescriptible (cannot be "abolished" by a deadline) and unalterable (cannot be changed), unless it is disused. Thus, whenever an operation involving a public domain property is envisaged, in order to proceed with its alienation (transfer - sale -, constitutions of real and personal rights), this property must first be decommissioned by a special law, which has the effect of returning the property to the private domain of the State or the Commune (Article 1 of Law No. 124 of 15 January 1930 on the delimitation of the domain).

Law no. 1.534 aims in this context to ensure that the Conseil National (Parliament) is "better informed, in particular on the aspects relating to the real impact of decommissioning bills, with a view to better understanding, in the long term, the compensations that may be demanded in the name of an imperative to enhance the value of the land that the State is disposing of, in the service of the general interest."

It is also motivated by the preservation of "the State's financial interests (...) over the long term, in particular for large-scale real estate projects, by taking better account of the commercial developments of the operation over time" (Report on the draft law, p. 2).

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SUMMARY

The three pillars of Law no. 1.434 are as follows:

1. Listing of the information to be provided by the Government to the Conseil National as soon as it is known and before the vote on the law decommissioning the public property concerned (art. 1, 2, 3, 4, 5)

The Conseil National must be informed in advance of the following "elements, circumstances and conditions" of any project to dispose of a property that has previously been decommissioned from the public domain:

— Planning considerations:

1. the reasons behind the decision to decommission the property with a view to its disposal;
2. a plan showing the plots or areas to be decommissioned;
3. a detailed presentation of the planned real estate operation, including in particular the surface areas, their uses and the methods of calculation;
4. a plan showing the site of the proposed real estate development;
5. visual elements enabling the integration of the buildable volume of the proposed development into its surroundings to be assessed;
6. a provisional programme for carrying out the works;
7. information on the environmental impact of the construction site and the planned property development, as well as the impact on existing public service facilities and roads, taking particular account of the existence of other property developments in the planned district in which the proposed development is located and for which planning permission has been granted.

— Legal, economic and financial elements:

1. a presentation of the legal and financial package chosen;
2. the method used to estimate the value of the decommissioned property, based on assumptions about the constructability of the site and the market value of the projected real estate assets;
3. an estimate, exclusive of tax, of the cost of the planned works;
4. financial data enabling an assessment of the operation's financial balance sheet;
5. the estimated amount of the financial consideration due to the State, the method of determining it and the payment schedule;
6. the estimated pecuniary value of the non-pecuniary consideration, and how it is to be determined.

— Forecasts of all non-pecuniary consideration for the disposal of the property requiring it to be decommissioned;

— Any substantial changes to the real estate transaction that is the subject of the planned disposal, as soon as possible;

— Agreements entered into by the State for the purpose of carrying out the operation for which decommissioning is requested.

When information is protected as a business secret and confidentiality is required as part of the negotiations conducted by the State or the Commune relating to the proposed disposal, it is communicated to the Conseil National in accordance with the confidentiality rules for working documents set out in the Conseil National's Internal Regulations (article 47), so that the Conseil National can be informed under conditions and in a manner that ensure respect for secrecy and confidentiality.

2. Introduction of the obligation to include profit-sharing clause and clauses for determining compensation in contracts with private operators (art. 6, 7)

The agreements concluded by the State for the purposes of carrying out the operation for which decommissioning is requested must include the following clauses:

1. a clause providing for a share in the profits generated by the operation when these exceed the estimates initially agreed, with the additional profits then made by the private operator, either directly or through a third party, on successive resales or promises to sell over a period of 7 years from the delivery of the assets generated by the operation, to be shared between the State or the Commune and this operator, which may not be less than 50% for the benefit of the State or the Commune;
2. a clause setting the amount of the financial consideration due to the State, the method of determining it and any payment schedule;
3. a clause determining the consideration other than pecuniary and the procedures for determining their value.

3. Obligation to inform the Conseil National of any substantial change in the real estate operation after the vote on a decommissioning bill (Art. 8)

The Conseil National must be informed of any such change when the next budget bill is examined.

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