EC memo questions and answers – EU policy on the buildings of the European institutions. located in Brussels, Strasbourg and Luxembourg.
Advertisement
Budget expenditure on the purchase and rent of buildings is about 8% of the EU institutions’ administrative expenditure, or EUR 532 million. The total floor area of buildings occupied by the European institutions in Brussels, Strasbourg and Luxembourg is approximately 2 million square metres.
Brussels became the seat of the Council, the Commission, the Economic and Social Committee and the Committee of the Regions under the Treaty of Amsterdam (1997) and is now second among “diplomatic” cities. The European quarter is now the city’s most important service district with ± 3.4 million square metres of office space, more than half of which is occupied by the EU and associated bodies.
Successive enlargements have increased the area occupied by the European institutions in the Quartier Leopold. We have grown from six Member States to 27 as of 1 January 2007. For the European Commission this has meant a change in scale for its buildings policy. From a handful of buildings in 1957, we now occupy 61, or about 800 000 m² of office space spread over 51 buildings plus conference facilities, logistics buildings, three nurseries and two central childcare facilities, making a total of 865 000 m². The Commission occupies these buildings as owner, holder of rights in rem (usufruct or emphyteusis) or as a tenant.
The Commission’s buildings expenditure for 2007 is EUR 207.49 million. This is made up of expenditure on rent (including rental emphyteusis, usufruct and ordinary tenancy) totalling EUR 78.1 million and property (property and emphyteusis with the option to buy) totalling EUR 129.8 million.
The Directorate-General for Personnel and Administration is responsible for defining buildings policy and monitoring its implementation. Implementation of the policy has been delegated to the Office for infrastructure and logistics in Brussels (OIB), an administrative office set up on 1 January 2003 and answerable to DG Personnel and Administration, itself subject to the authority of the Commissioner responsible for administration, Siim Kallas. The OIB is thus responsible for purchasing and renting buildings and for their operational maintenance (technical maintenance, improvements, removals, cleaning and waste management.
In general, Belgian legislation provides for three types of tax on buildings: property tax, regional tax and local authority tax. The Commission is exempt from all direct and indirect taxation, including property tax, regional tax and local tax, under the Protocol on the Privileges and Immunities of the European Communities of 8 April 1965(Articles 13 and 14). However, where taxes are payable by the owners, the contracts generally provide for their reimbursement to the landlord by the tenant. In 2006 the Commission paid EUR 3.6 million in such taxes, chiefly under this kind of contract clause.
The accession of 10 new Member States in 2004 and of Romania and Bulgaria at the beginning of this year mean that a total of 3 350 additional officials require home and office accommodation in Brussels, as well as nursery and childcare facilities. The additional office requirements between now and 2010 are estimated at 35 000 m².
The main criteria are good public transport connections with the European quarter, good architectural and technical qualities in the buildings, good integration in the urban environment, a retail presence and, of course, good value for money. The Commission also aims to acquire new buildings of sufficient size to allow its departments to be grouped in buildings better adapted to their needs. At present many departments are dispersed over several buildings.
The European Commission’s policy is to buy buildings with a view to settling in them for the long term, in accordance with the decisions of the European Council and the decision taken to choose Brussels as one of the three seats of the European institutions. The Commission chooses to buy rather than rent wherever this is possible and appropriate. However, even now rent, for standard tenancy, usufruct or rental emphyteusis, accounts for 37% of buildings expenditure and 319 000 m². The Commission is increasingly opting for the usufruct arrangement. It is as flexible as a standard tenancy and also allows the Commission to benefit from the provisions of the Protocol on privileges and immunities.
So far the European Commission is the only European institution to have decentralised some of its departments to other areas such as Beaulieu and rue de Genève in Evere.
This policy, established in 2003, takes account of the fact that concentrating the institutions’ buildings in the European quarter contributes to price increases by increasing the demand for buildings and reducing the available space in the area, particularly since the Commission moved into the Berlaymont. Although the policy of partial decentralisation in Brussels adopted by the Commission in 2003 has put a brake on price increases in the European quarter, the area is still one of the most expensive in the city. In 2007 prime rent reached EUR 295 per square metre, compared to an average rent of EUR 196 per square metre.
The Commission strictly applies the Financial Regulation as regards taking up occupation of existing buildings (purchase or rent). Article 91 of the Financial Regulation (FR) and Article 126(h) of its implementing rules provide for use of the negotiated procedure.
It is worth noting that the prices negotiated by the Commission over the last two years were 32% lower than those in the period 1999-2004.
It is the procedure provided for by the Financial Regulation that makes sense for occupying existing buildings (buying or renting). In respect of buildings contracts, Directive 2004/18/EC of the European Parliament and of the Council states that: “In the context of services, contracts for the acquisition or rental of immovable property or rights to such property have particular characteristics which make the application of public procurement rules inappropriate.”
The Court’s comment on the use of negotiated procedures refers to the construction and renovation of buildings. For such works contracts (governed in the Member States by Directive 2004/18/EC), the Commission does issue invitations to tender if it owns the land. It should be stressed that so far the Commission has not engaged in any construction of buildings and its renovation works have all been carried out under contracts concluded in accordance with the relevant Directives on public procurement.
The Commission is improving existing procedures firstly by including systematic market prospecting through publication of calls for proposals and secondly by structuring and clarifying the Commission’s internal procedures. The new methodology sets out the phases of the procedure for prospecting the buildings market and negotiating for buildings. It is based on: 1. informing the market better by annual publication of an estimate of the Commission’s needs for the current year and the next four years. 2. increasing competition among market players by systematically publishingthe specific requirements for any new real estate project and by introducing the concept of systematic negotiation of financial conditions with several tenderers in parallel; 3. increasing the transparency of the procedure, in particular by systematically publishing the essential components of each project; and 4. increasing cooperation between the relevant Commission departments by setting up a multi-disciplinary Buildings Committee.
The Commission retains the right to decide to apply the negotiated procedure, in part or in whole. Using the procedure might be justified, for example, if a building has to be occupied as a matter of urgency, if an existing lease is to be extended, or in order to take up occupation of a specific building immediately adjacent to a building already occupied by the Commission. In such cases the Commission might decide to start negotiations on the basis of a negotiated procedure.
In Brussels and Luxembourg, cooperation in areas relating to buildings policy takes place in the context of specific working parties. Their main objective is to coordinate the action of the institutions with seats in these cities to achieve economies of scale where possible. Their role is also to coordinate the approach of the institutions in their dealings with the national authorities. In this context they provide an opportunity for the exchange of information on the objectives of each institution in terms of buildings, making it possible to stay ahead of market movements. They are responsible for the development of policy proposals presented to the Interinstitutional Group of Secretaries General.
The Commission promotes interinstitutional cooperation, and in its decision establishing the OIB and OIL Offices, it expressly stated its wish to develop them into interinstitutional structures.
The Court of Auditors advocates more upstream cooperation, particularly in the interests of economies of scale. So far the European institutions have expressed the desire to remain entirely free in their buildings decisions in view of their different sizes and requirements. However, the Commission is already supplying services to the other institutions, who are mostly satisfied with them. The Commission remains open to discussion of potential avenues of cooperation, in a context in which the roles, responsibilities and advantages for each institution can be clearly defined.
An EU-Belgium Task Force was set up in September 2005 to discuss all subjects of common interest to the Belgian authorities and the European Commission. It is chaired by a member of the of the Vice-President responsible for administration, works in close cooperation with the President’s and meets regularly. Belgium is represented at federal level by a representative appointed by the Prime Minister, as well as by a representative appointed by the President of the Brussels-Capital Region.
It has a great impact. Any building bought or rented by the Commission is the subject of a building permit issued in due form. The Commission fully complies with Belgian legislation and does not benefit from any derogations. The Commission is, for example, fully subject to the provisions of Belgian law on the ratio of m² of offices/parking places, and on ambient air quality.
