The City Council of Benidorm has asked the Spanish government for an eyewatering €55million (£48million) loan in a bid to starve off the risk of bankruptcy over a €350million (£303million) compensation award. The unprecedented sum of €283 million (£245million), plus interest, was awarded by the Valencian Supreme Court in May 2024 to the Murcia Puchades family for the loss of building rights in the protected Serra Gelada Natural Park.
On Friday (January 30), the family demanded the immediate execution of the huge payment, which equates to roughly two annual municipal budgets. Thus far, all legal routes taken by Benidorm council to overturn the ruling have failed. As a result, the authority has applied to the Spanish Government’s Economic Impulse Fund for help. If granted, the €55million loan would have to be repaid within 12 years at an interest rate of around 3.5%.
In a message to residents on Thursday (January 29), Benidorm’s mayor, Toni Perez, said the Serra Gelada payment « should concern us, but in the right proportion, » according to The Olive Press. Mr Perez has also informed all of the council’s political groups about the application to the fund, which helps authorities deal with financial court rulings that could affect the provision of local services.
With interest on the compensation award rising by around €50,000 (£43,300) per day, the council is still investigating how to cover the remaining €300million (£256million), including taking the issue to Spain’s Supreme Court.
The Murcia Puchades family has a prominent real estate and development dynasty based in Benidorm and, through their companies, including Murcia Puchades Expansión SL, they held three substantial plots of land totalling over two million square metres (494 acres) within the Serra Gelada. These landholdings had been classified as urban and suitable for development since the 1960s.
The dispute began after Benidorm City Council unilaterally voided urban planning agreements originally signed in 2003 to keep the Serra Gelada protected from construction. Despite these agreements being reaffirmed in 2010 and 2013, the council eventually scrapped them without providing the alternative building rights or financial offsets promised. This triggered a massive legal battle that concluded in a landmark ruling by the Valencian Supreme Court, which then ordered the council to pay the staggering €283million in compensation.
Local opposition groups, including VOX and the PSOE, have warned that the debt amounts to roughly €4,500 (£3,900) per resident. For a household of four, VOX Benidorm spokesperson Miguel San Martín estimated the indirect liability at around €18,000 (£15,600). While residents will not receive an individual bill for this amount, the party emphasised that it represents public funds diverted from essential services like infrastructure, safety and healthcare.
The threat of municipal bankruptcy could force Benidorm to slash budgets for essential holiday services, such as beach cleaning and street security, potentially tarnishing the resort’s reputation. This financial strain is particularly concerning given that Benidorm welcomes over three million visitors annually, including nearly 900,000 Brits – roughly 40% of its international market.
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