{
  "url": "https://openlegislation.uk/eu-decision-2013-126/annex-II/division-1/division-4",
  "json_url": "https://openlegislation.uk/eu-decision-2013-126/annex-II/division-1/division-4.json",
  "legislation": "eudn/2013/126",
  "legislation_title": "Commission Decision of 8 May 2012 on State aid SA.22668 (C 8/08 (ex NN 4/08)) (notified under document C(2012) 3025) (Only the Spanish text is authentic) (Text with EEA relevance) (2013/126/EU)",
  "legislation_url": "https://openlegislation.uk/eu-decision-2013-126",
  "path": "annex/II/division/1/division/4",
  "kind": "division",
  "number": "4",
  "heading": "The extension of the investment to hotels and office spaces",
  "text": "The assertions in this point are based on new evidence, namely six land valuation reports. As a preliminary remark, we note that this evidence is produced ex-post, and therefore was not part of the information available to a potential investor at the time. Secondly, we note that the Arthur Andersen report only mentions the possibility of developing a hotel complex (in phase III) and certain office space (in phase IV). The report contains an estimate of costs for developing hotels and offices but none of the associated revenues; hence the information to assess the profitability of developing the land is missing. Indeed, no business plan is provided for the development of phases III and IV. In the Consultia IT business plan, the reference to the hotels is made only indirectly through the mention of an area of complementary services, while offices are not even mentioned. Furthermore, these activities are not considered at all in the section on the economic and financial forecasts. In other words, at no stage would the private investors have been presented with a business plan concerning the development of the land. As such, this implies that the ex-ante assessment of the project should solely be based on the business plan concerning the film studios; indeed, all the relevant evidence indicates that land development was not part of the original business plan. In fact, the LECG submission of April 2008 explicitly stated, in section 5 (The operational value of a hotel complex and commercial area in Ciudad de la Luz) that the details of the investment in the services complex (hotels and commercial area) were not analysed in either of the two business plans because (i) the above mentioned services would in any event be built after the studio and (ii) the profitability of the studio was high enough and therefore it was not necessary to analyse at that moment the additional cash flows Ciudad de la Luz might generate.\nThe only pertinent information relevant for the assessment of the land is represented by the bids received by Ciudad de la Luz in 2005 for the construction and operation of hotels and a commercial area, which were presented in section 5 mentioned earlier. This represents an evaluation made by the market in a period contemporaneous with the investment decision, a period moreover characterised by the real estate boom. As will be explained in the next section, the Euroval valuations do not offer proper guidance regarding the value of the land plots.\nFor the purpose of calculating the NPV including this additional land development, it is possible to use the price set by the market (the fact that it is relatively low, as recognised by the Spanish, is indeed evidence that this property development did not seem to be very attractive for private investors).\nThe following table provides NPV calculations that include the property development on the basis of the bids that were actually made in 2005 (EUR 560 000 per year, adjusted for inflation, as stated by LECG). As can be readily seen, the NPV remains negative.\n2002\n2003\n2004\n2005\n2006\n2007\n2008\nCash flow\n-884\n-1 792\n-2 601\n-118 177\n-55 813\n-25 088\n4 462\nIPC hotels\n1,0\n1,021\n1,042\n1,064\nHotels\n560\n572\n584\n596\nTotal\n-884\n-1 792\n-2 601\n-117 617\n-55 241\n-24 504\n5 058\nDiscount\n1 + WACC ^2\n1 + WACC\n1\n1/ 1 + WACC\n1/ 1 + WACC ^2\n1/ 1 + WACC ^3\n1/ 1 + WACC ^4\n14,91 %\n1,3204\n1,1491\n1,0\n0,8702\n0,7573\n0,6591\n0,5735\nDCF\n-1 167,26\n-2 059,19\n-2 601,0\n-102 355,76\n-41 835,77\n-16 149,82\n2 901,01\n2009\n2010\n2011\n2012\n2013\n2014\nNPV\n5 526\n6 561\n6 842\n8 057\n8 307\n80 447\n1,087\n1,11\n1,133\n1,157\n1,181\n1,206\n609\n621\n634\n648\n661\n9 401\n6 135\n7 182\n7 476\n8 705\n8 968\n89 848\n1/ 1 + WACC ^5\n1/ 1 + WACC ^6\n1/ 1 + WACC ^7\n1/ + WACC ^8\n1/ 1+/WACC ^9\n1/ 1 + WACC ^10\n0,4991\n0,4344\n0,378\n0,329\n0,2863\n0,2491\n3 061,91\n3 119,74\n2 826,09\n2 863,46\n2 567,38\n22 383,73\n-126 445,48\nA series of land valuation reports were prepared by Euroval. These reports were commissioned by the Sociedad Proyectos Temáticos de la Comunidad Valenciana, the investor in Ciudad de la Luz (CDL). The reports purport to provide an objective valuation of the land that would be used for the construction of hotels and offices in the CDL complex. They provide a valuation for the years 2000, 2002, and 2009. For each of these years, two plots are valued: one destined for the development hotel complex, and the other for office blocks, making for a total of 6 valuation reports.\nSince the reports broadly follow the same methodologies, some of our comments are generic; whenever reference is made to specific assertions, the corresponding report is identified.\nThis memo describes the limitations of the aforementioned reports and concludes that the valuations presented therein are untrustworthy. In addition, the memo notes that the valuation report is not compatible with some of the claims found in the documents previously provided by Spanish authorities. Last, the memo indicates the kind of evidence that could have been used to obtain an estimate of the value of the land.",
  "extent": "E+W+S+N.I.",
  "status": null,
  "version": "current",
  "annotations": [
    {
      "type": "footnote",
      "label": "f1",
      "text": "The LECG report of 25 April 2008 follows the same line, as it states at the outset (beginning of section 2.1.) that the relevant question for the application of the MEIP is ‘With the information available at the time the investment was made, did the project offer enough profitability to induce a private investor also to decide to undertake this investment? […] The investment decision must be analysed from an ex-ante perspective.’"
    }
  ],
  "outstanding_effects": [],
  "provenance": {
    "source": "legislation.gov.uk",
    "source_url": "https://www.legislation.gov.uk/eudn/2013/126/annex/II/division/1/division/4",
    "retrieved_at": "2026-11-01T15:15:08.984307+00:00"
  },
  "licence": "Open Government Licence v3.0",
  "licence_url": "https://www.nationalarchives.gov.uk/doc/open-government-licence/version/3/",
  "attribution": "Contains public sector information licensed under the Open Government Licence v3.0. Source: legislation.gov.uk, The National Archives."
}