La valorizzazione del capitale demaniale: il caso Villa Tolomei a Firenze
Author(s)
Bertucci, Irene
Date Issued
June 24, 2016
Type
Doctoral Thesis
Abstract
The thesis focused on an innovative administrative tool for the public investments’
management: the state-owned fifty-years enhancement grant, intended to enhance the public
capital without employing the financial resources, bound by the European budget criteria and
mainly devoted to finance current expenditure. The thesis describes the first state-owned fiftyyears
enhancement grant issued in Italy: Villa Tolomei in Florence. Villa Tolomei is a XIV
century villa on the hills of Florence, which has been transformed into a Luxury hotel and fivestar
resort that offers all amenities, is 5 minutes away from the city center and 2.7 km from
Ponte Vecchio. Villa Tolomei is a Villa belonged to the prestigious Tolomei family. The Villa
has, since its origin, several buildings for about 3,500 square meters, located within 17 acres of
park that still has traces of the old farm structure.
The thesis describes the accounting policies for the preparation of the Italian State Budget and
reviews the constraints imposed by the Maastricht Treaty, the Fiscal Compact and the Two
Pack, the difficulties to match these commitments, to enhance their artistic and cultural heritage
and to proceed with the investments without which the austerity policy of the budget is
ineffective. The Italian State Budget is devoting its resources mainly, if not entirely, to fund
operating expenses and the debt repayment, neglecting capital expenditures and, in particular,
the real estate. It is therefore essential a close cooperation with the private sector, through the
so-called public-private partnerships (PPP), in which joint projects are realized with mutual
benefits and pursuing social objectives at the same time. Among them, the state-owned fiftyyears
enhancement grant plays a special role because it allows the state to promote the heritage
and to create jobs and growth, without direct financial outlays.
An early form of State grant was available in Imperial Rome where all territories belonging to
the community, called "Ager Publicus", were awarded to most valuable citizens. With the
unification of the Kingdom of Italy and the drafting of the Civil Code of 1865, it was defined
the concept of public goods (both movable and real estate) divided into state-owned (inalienable
and imprescriptible) and capital (useful in carrying out the State activities at home and abroad).
In economic literature, the analysis of any financial constraint on production and investment
(Sau, 1999) has been considered since 1950 (Meyer - Kuh, 1957; Gurley - Shaw, 1955). There
are two possible criticisms of these contributions: the theoretical motivations of these
constraints were deficient and lent themselves to ambiguity in the empirical evidence. These
facts contributed to the success of the Modigliani Miller theorem (1958). In fact, for more than
thirty years the theoretical and empirical models of investment’s decisions of a private
enterprise has been based largely on the Modigliani-Miller theorem.
The two economists faced the question of which is the cost of capital for the company whose
funding sources are used to purchase assets, whose return is highly uncertain. They formulated
three propositions, which stated that, based on certain assumptions, the market value of a firm is
independent of its capital structure, the performance of the shares is a linear increasing function
of financial leverage and the type of financial instrument used is irrelevant to the assessment of
the advantages and disadvantages of the investment.
The Modigliani Miller theorem has been applied to the State, as an economic actor who invests
as a firm, to see if its financial structure is actually irrelevant to the investment policy. Starting
from the premise that, at present, the tax revenue is mainly intended to cover the costs and only
marginally the capital expenditures, it has been looked for solutions the State could found to
invest, within the European constraints.
Increasing tax revenues could do the financing of new investments, but this solution is not
feasible because of the high tax burden; at the same time a debt is not possible because of the
European constraints. Moreover, the cut in public spending, however desirable, produces effects
only in the long term.
An alternative tool, which makes irrelevant the financial structure compared to the investment
policy, is the state-owned fifty-years enhancement grant.
By considering how to cover the needs and by inputting, as a variable, the granting of stateowned
fifty-enhancement, it has been obtained a budget constraint in which the Modigliani-
Miller theorem can hold. This tool not only removes financial resources for the maintenance and
/ or development of real property of the State, but generates an expected return through the
collection of the concession fee.
Thanks to the state-owned fifty-years enhancement grant it is possible to implement the
country's infrastructure, severely limiting the use of public financial resources. It uses private
expertise in all phases of construction, management and service delivery with a greater
involvement of stakeholders and lenders with an optimum risk transfer to the private sector. In
addition, the State raises revenues from the state-owned fifty-years enhancement grant that in
the case of Villa Tolomei, amounts to € 150,000 per year for a period of 50 years, for a total of
€ 16,869,546.001. Moreover, the State collects the new income taxes generated by the tourist
reception of Villa Tolomei.
For the private entrepreneur, the benefits of state-owned fifty-years enhancement grant consist
primarily in low investment costs (do not buy the property). In the case study, the entrepreneur
claimed only the costs of the renewal of the property, which were € 6million, funded by banks
and financial institutions without mortgage collateral. The hotel inaugurated on May 24th, 2013
and the first significant economic results were evaluated on 31/12/2014. The 2014 budget shows
revenues of € 2,105,711.20, costs of € 1,981,648.99 and a cash flow of € 124,062.21. This level
of profitability ensures the economic sustainability of the business, a fair return on capital, and
is in line with the business plan presented in the notice of the state-owned fifty-years
enhancement grant. It confirms that the entrepreneur has been able to pay the concession fee and
also to generate a positive EBITDA after the first year of operation.
For the Region of Tuscany, the benefit is the enhancement of the area, which was in a state of
deterioration and the collection of IRAP and additional regional tax.
For the City of Florence, the state-owned fifty-years enhancement grant generates an increase in
employment2, and revenue for the coffers of the City consisting of local taxes (tourist tax,
municipal surcharge, etc.).
Finally, it generates an increase in the tourist figures and an increase in the volume of trade with
local companies (suppliers of goods and services), estimated worth € 1,285,024.89.
The analysis shows that the state-owned fifty-years enhancement grant is a juridical tool
functional to local development, to enhance the cultural heritage and for its protection, despite
the financial constraints on public finances imposed by the European Union.
1 Obtained by calculating an annual concession fee of € 75,000.00 indexed at 2% per annum for five years
and an annual concession fee of € 150,000.00, indexed at 2% per annum for a further term of 45 years.
2 Currently Villa Tolomei has about 50 employees divided between direct and indirect labor relations.
Additional information
Dottorato di ricerca in Economia e territorio
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