Opinion – Claudio Bernardes: Urban operations are in danger of ending

The urban operation is an important urban instrument introduced in Brazilian legislation by the City Statute in 2001. It is a mechanism to encourage the partnership between the private sector and the public power, through the flexibility of urban parameters through financial contribution from the sector. business, materialized by the sale of securities, called Cepac (Additional Construction Potential Certificate), in public auctions.

In a very simplified way, the operation of the operations can be summarized as follows: the municipality defines the development objectives and the respective interventions in a certain region of the city, calculates the amount of resources needed, and transforms these resources into an amount of Cepac, which is sold at public auction.

Companies that buy these bonds can use them as currency to acquire the flexibility of urban parameters, which will be used in the production of real estate developments or in other types of construction. The municipality, in turn, uses the funds collected by investing in the works necessary to achieve the development objectives defined in the urban operation.

Many urban planners have used this instrument in recent years, especially in larger cities, which have the capacity to absorb, with great gains for the city, such a mechanism. Successful examples of the use of this instrument in the capital of São Paulo include the Urban Operations Faria Lima and Água Espraiada.

However, for it to function properly, this partnership depends on two absolutely essential factors: attractiveness and security.

If there is no attractiveness, there will be no interest and the operation will fail. On the other hand, if there is no security, the instrument will also fail. And it must be made clear that safety in the operation of urban operations has been suffering heavy blows in recent years.

With regard to the imperative need for attractiveness and security, some examples are very clear, among them I highlight the two most important ones.

The first is from Operação Urbana Rio Verde-Jacu, established in the Strategic Master Plan of 2002, in a region lacking investment and development, and unattractive to the market. The operation had its law approved in 2004, and revoked in 2016, without a single Cepac being commercialized. The lesson to be learned in this case is that, in similar situations, the government must invest in advance to generate attractiveness and enable the operation to function properly.

The second example is the Urban Operation Água Branca, whose revision had a bill sent to the City Council in 2012. During the discussions, the councilors decided to increase the value of Cepac in such a magnitude, which ended up removing the attractiveness of the operation. As a result, since the enactment of the law in 2013, no Cepac has been sold at public auction.

Eight years later, and the lack of attractiveness of the operation having been clarified due to the high value of the certificates, it was decided to approve a new law, reducing the value of the bonds, to make the operation attractive and allow it to function.

With this issue resolved, a new law was enacted. However, even before it came into force, an action promoted by the Public Ministry led the Justice to grant an injunction suspending the effects of the law, introducing insecurity in the process, a factor that prevents the success of the operations.

And the examples don’t stop there. One of the successful operations implemented in the city of São Paulo, Operação Urbana Água Espraiada, which until then had proved to be attractive and safe, suffered heavy blows.

The TCM (Court of Accounts of the Municipality) suspended, on December 16, 2020, the auction that should have taken place on the 17th of that month, arguing that the value of Cepac should not be the one fixed in the public notice, but another proposed by the TCM. In addition, a trivial question was raised about the publication deadline of the notice.

This attitude harmed several businessmen who prepared for the auction. Many even carried out financial operations to acquire the certificates. As incredible as it may seem, this issue has been pending a solution at TCM for over a year!

After 392 days, on January 12 of this year, TCM finally authorized a new auction. Another public notice was published, and those who managed to survive the commitments assumed, due to the delay in solving the impasse created, prepared for a new auction.

Surprisingly, TCM again suspended the auction, which would take place this Tuesday (8), using the same valuation argument as Cepac, and adding one more item: the number of securities to be put up for sale. This, I believe, may have been the coup de grâce in urban operations, which are beginning to show, in the eyes of the market, no more investment security.

Without going into the issues of merit, which can have different nuances, it is very sad to follow facts like these, which occur successively, and to observe that those responsible for taking away the attractiveness and safety of operations are contributing to their definitive end and, in this way , the life of such an important urban instrument, with the potential to bring countless benefits to cities and their citizens, is over.