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Italy auctions state properties to pay off debt

November 5, 2010

By Guy Dinmore, published: November 5 2010

For sale – a vast fascist-era barracks on the Ligurian coast put up for quick auction as part of efforts by Giulio Tremonti, Italy’s finance minister, to trim the country’s national debt by selling off unused state properties.

Inaugurated in 1930 by Prince Umberto, the former Piave barracks on the edge of the small north-west town of Albenga have been abandoned since 1984. Prospective buyers taken on a recent inspection picked their way through an undergrowth of brambles, fig trees and bougainvillea that have reclaimed parts of the 61,000 square metre complex.

Among the potential buyers were representatives for Moscow-based United Bank of Industrial Investments, a US real estate agency and various Italian companies drawn by Mr Tremonti’s firesale in the midst of a financial crisis.

The auction, with bids to be submitted by November 30 with a reserve price of €40m ($56.8m), is being conducted by the Demanio agency responsible for managing state-owned properties and selling what is no longer needed.

Last year the agency put on the market assets valued at €229m, making total sales of €165m, its highest annual revenues to date. That figure could be exceeded this year if it finds a buyer for the Piave barracks, its highest-priced asset so far, and the planned sale next month of a former barracks complex in the heart of Bologna for €60m.

A Napoleonic-era fort overlooking the sea at Portovenere is also going under the hammer soon for €1.8m, along with the former Scotti barracks in Bergamo for €2.4m.

As an incentive for local authorities to co-operate, the Demanio agency draws up an agreed development plan – in the case of Albenga this is a mix of residential, hotel and commercial space – and the town gets to keep 15 per cent of the sale.

Albenga’s new mayor, Rosalia Guarnieri from the rightwing Northern League, plans to use the money to build a school from another barracks to be bought from the state.

Separately, under a law passed in May, the central government plans to cede properties to local authorities to manage the sales themselves.

A draft list, to be finalised next year, has identified assets valued at some €3.6bn. About 75 per cent of the proceeds will be used to pay off local and regional debts to the state, which total about €100bn.

The Demanio agency is eager to correct erroneous reports earlier this year that the state planned to sell off its cultural jewels, including historic villas, lighthouses and the former prison island of San Stefano. Its fascist-era inmates, Altiero Spinelli and Ernesto Rossi, are known as the founding fathers of the European Union.

“We fielded a lot of calls from Russians after those false reports came out,” an agency official said.

The agency is also responsible for managing assets seized from the Mafia – running at more than €12bn so far this year.

However, the centre-right government of Silvio Berlusconi, prime minister, abandoned controversial plans to auction off such assets, which are instead allocated to local authorities to be used for social purposes.

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