Metro tax’ became a buzzword last week when it was reported by Børsen that businesses and residents in the vicinity of the Metro stations in the Nordhavn district of Copenhagen would be hit with a 900 million kroner “shock bill” from the development company By og Havn in the form of a so-called supplementary purchase sum.
By og Havn is owned by Copenhagen Municipality (95 percent) and the state (5 percent). It co-financed the Metro construction project and is tasked with repaying the debt associated with this, principally through development and the sale of property.
On Monday, Carsten Koch, the chairman of By og Havn’s board, responded in an op-ed in Børsen. “There’s nothing new or secret about the supplementary purchase sum,” he said.
Koch also said that it was erroneous to talk of a Metro tax. “A company like By og Havn can’t levy a tax,” he said.
“The supplementary purchase sum is a payment term that is voluntarily signed off on by the two parties when the purchase agreement is entered into.”
But, while the purchasers may have signed off on the arrangement, Børsen reports that some of the tenants of the new properties in the area were unaware they would be faced with an extra bill from 2020.
ATP Ejendomme is one of the investors in the area. Michael Nielsen, the head of the company, said the company’s tenants had been warned that their rent will increase in 2020.
“Both we as landlords and they as tenants will have to determine whether it’s worth it,” he told Børsen.
“We’ve never come across something like that before. It’s been done according to the philosophy that the properties will rise in value when the Metro arrives.”
Capital gains justify it
Indeed, Koch confirms that capital gains are the justification for the surcharge.
“Studies show that it is at least met by the expected jump in value that the properties in Nordhavn will experience because of their proximity to the Metro,” he said.
A number of commentators, including Jacob Ravn of the business organisation Dansk Erhverv, expressed surprise at the unconventional arrangement.
“I think it’s weird that companies should pay for infrastructure right here and not in other places in Copenhagen,” he told Børsen.
More reasonable than upfront
By og Havn justifies the payment arrangement with reference to when the Metro will be commissioned.
“It falls at the time when investors in the commercial grounds and residential owners will actually get the use of the Metro,” Koch said.
“It is more reasonable than just increasing the price of building plots before the Metro is in use.”
Cost of Nordhavn
– Payable for a period of 60 years from the Metro entering into service (earliest 2020)
– Amount payable for residential properties: 37.50 kroner per sqm per year
– Amount payable for commercial properties: 75 kroner per sqm per year
– Payment will take place through owners’ associations as a common expense
By og havn
– Established in 2007
– Principal activities: land development and port operations
– Has sites in Ørestad, Sydhavn and Nordhavn
– English name is CPH City & Port Development