Porto city council moves to reverse deal letting developers pay instead of affordable homes

What the council is proposing

Porto's city council will vote on Tuesday, 3 November, on a proposal to revise its own decision of 20 October that let seven developers pay compensation in place of affordable homes. The proposal was drafted after the executive met councillors from the Socialist Party (PS) and Chega on Thursday, 29 October. It asks the council to withdraw its agreement to the developers' option of paying compensation in proportion to the building rights that should have gone to affordable housing. Vice-president Catarina Araújo signed the new proposal, as she had signed the original one. Speaking on the sidelines of a Porto Metropolitan Area meeting, Mayor Pedro Duarte made the aim plain.

“Put more directly, we are going to reverse the decision that was taken.”

Seven projects and the payment

On 20 October the council approved the swap with the votes of its PSD, CDS and IL majority, while the PS and Chega voted against. Under the municipal building regulation, the seven projects (three hotels, three tourist developments and one commerce and services development) should have handed over about 3,300 square metres for affordable housing. Claiming they could not do so, the developers offered to pay the council instead, a total of about €1.4 million, or €1.39 million according to Expresso. That works out to a little over €400 per square metre.

Hotels3

Tourist developments3

Commerce and services1

Hotels

3 projects

Tourist developments

3 projects

Commerce and services

1 projects

Data from the article text

PS councillor Manuel Pizarro said the swap would give up about 40 affordable homes in the city centre in return for a sum that would, at most, let the council build four or five homes. He had called the proposal a gross illegality when it was approved, and he said the rate was roughly four to eight times below the market price, depending on the calculation.

Legal challenge and inquiry

Lawyer Joaquim Oliveira filed a criminal complaint against the council with the Public Prosecutor's Office. He alleges prevarication, abuse of power and economic participation in business, and he calls the deal financially ruinous for the municipality. Oliveira argues that the compensation was calculated under rules that produced values more than eight times below the real market price in the relevant zones of the Municipal Master Plan. Expresso reported that the Public Prosecutor's Office confirmed it had opened an inquiry after receiving the complaint.

Catarina Araújo rejects the claim that the decision was unlawful.

“We are, in fact, convinced of the legality of the processes and of the seven procedures we brought to the executive meeting.”

Araújo acknowledged political and even ideological disagreement but not an error by the council. She said the compensation followed a formula that had been applied scrupulously, and she put the Municipal Fund for Environmental and Urban Sustainability, which receives such payments, at 33 million euros. The proposal itself does not say whether the council will revoke or annul the decision. A revocation could oblige the municipality to compensate the developers, while an annulment on grounds of legal defect could remove that burden.

Timeline of the dispute

On Monday, 26 October, Duarte issued a statement admitting that revocation was possible while insisting the original decision was legal. On Thursday, 29 October, the executive met the urban planning services in the evening, a meeting journalists were not allowed to attend despite earlier assurances. Duarte also criticised the opposition for offering no alternatives at Thursday's meeting. He said the city cannot live with the suspicion that the council is not doing everything to bring housing.

“The city cannot live with a suspicion that we are not doing everything to bring housing, namely to the historic centre.”

SIC reported that the revised proposal is expected to win the support of both the PS and Chega when it comes to the vote.

Wider housing debate

On Friday, 30 October, the 17 municipalities of the Porto Metropolitan Area met in Gondomar, where housing was the most debated topic after several unanimous approvals. The area asked for more responsibilities and state funding so it could act faster, Duarte said, with a coordinated strategy among the municipalities. Matosinhos mayor Luísa Salgueiro said housing had been a priority for many municipalities for a long time, and that not all of them can borrow as much as Matosinhos. She pointed to thousands of social housing requests across the area, many arising from evictions, and criticised a new urban leases regime under debate in parliament that she said would speed up evictions and leave the municipalities to meet the needs of those evicted. Póvoa de Varzim did not attend.