Madrid, 31 January. Given the information recently published about the private contract between Adif and other railway companies and Distrito Castellana Norte (DCN), the Company would like to clarify the following aspects:

The documents that set out DCN’s rights and obligations as executor of the urban development project on the old railway land in northern Madrid, owned by Adif, the so-called Operación Chamartín, now Madrid Nuevo Norte, comply fully with the law and do not contain any irregularity.

None of the terms and conditions contained in these documents causes impairment of State assets, nor seeks to benefit the private developer at the expense of the public interest.

The updating of rights and obligations testifies to both parties’ desire to promote this strategic project for Madrid, solve the problem of isolation of northern Madrid due to the rail tracks, and improve the rail service with the renovation of Chamartín train station, under the terms of the public tender awarded to DCN in 1993.

These updates have been guided by the common intention to strike the necessary balance between public interest and legal certainty in this action, and secure profitability to safeguard the high private investment that this project requires, in strict compliance with the National Land Law, which requires, as an essential precondition, that urban planning should be economically viable.

These modifications have always received favourable reports on legal grounds from the State Attorney’s Office, and economic and financial grounds from Adif’s Audit Office. According to the State Attorney’s Office, which has spoken out in favour of each renovation, these updates never affected the essential conditions of the original contract; therefore, a new public tender was not deemed necessary.

It should be recalled that the purpose of the contract, as understood in the 1993 public tender, was very broad, as it referred to unspecified, future urban developments; hence, the surface area, price and terms of payment of the land have been set forth over time. All these variables are consistent with the general interest of the project, market reality, project implementation deadlines, and technical and legal complexity.

The claim that DCN is buying public assets at half price is unfounded, as it is based on cost per square metre, ignoring the reality. The assumption adopted for estimation is wrong; therefore, the conclusions are also false, as Adif explained in the press release published on 27 December 2018.

These estimations do not take into account essential circumstances for price discovery of transferable land, including total surface area, lengthy project implementation timelines, high development fees and risks associated with multiple and complicated administrative procedures for consolidation of building rights.

Neither is it possible to compare the price of these railway lands, which require a lengthy and complicated urban-planning procedure, with the assignment price of land zoned for urban development, where construction can begin immediately.

The price, far from being low, was set when it was higher than it is now. Indeed, the amount has not changed subsequently, not even during the last contract renewal, despite the significant reduction in the land transferred and the total buildable area referred to in the Modification of the General Plan.

The payment scheme agreed between Adif and DCN has moved from the railway operator being paid a percentage of the final profits of the operation to a fixed fee during twenty (20) years. This formula does not mean that the public entity is forsaking its profits, but rather, on the contrary, they are securing them.

Following the unsuccessful experiences of many Railway Integration Societies involved in other urban projects, this formula was chosen to prevent a public company from taking on the multiple risks associated with real estate development, which will fall solely on the private operator.

Adif did not suffer economic loss on account of the changes in the payment scheme, as evidenced in various Reports on Comparable Benefits submitted by the railway operator’s audit office.

Having clarified these aspects, DCN reiterates its determination to continue promoting the urban regeneration project in northern Madrid, true to its commitment to the citizens of Madrid and public institutions.