The Government Will Continue to Manage the Most Valuable State Properties, Smaller Ones Go to Local Communities

A draft proposal for the law on the management of real estate and movable property owned by the Republic of Croatia is currently in public discussion. Public consultation is available from September 1 to October 1, 2023, allowing interested parties to influence the proposed draft by providing opinions, suggestions, and comments.

Evaluating the current law, the proposer of the new one, the Ministry of Physical Planning, Construction and State Property, acknowledged that the procedures for managing property are overly complicated, that there is no appropriate database, and that there are not enough officials to implement the procedures covered by the law, especially engineers and lawyers, which is why it has not been as effective as it should have been. According to the latest publicly available data from the Ministry for 2023, there are 47,552 active cases that need to be resolved, with about 10,000 new cases received annually.

Is Decentralization the Solution?

The law regulates the management of real estate and movable property owned by the Republic of Croatia, as well as the management of temporarily seized property in criminal proceedings by court decision. The real estate to which the law applies has been defined, and their management has been entrusted to the Ministry, counties, cities that are county seats, large cities, the State Property Management Company, and public institutions for managing national parks or nature parks.

State-owned real estate is a first-class capital whose effective management can yield favorable economic and fiscal effects. Successful management of state properties spills over into many sectors and areas of economic and social life, therefore the legislator sees the optimization of state property management in decentralization. Consequently, the law stipulates that the authority to decide on the initiation of the procedure for managing real estate and the decision on disposal depends solely on the estimated value of the property.

Distribution by Price List

For properties whose estimated value or total amount of estimated compensation is less than or equal to EUR 130,000, the decision is made by county governors or mayors, while for amounts higher than that, up to a total of EUR 1,000,000, the relevant county assembly or city council makes the decision with prior consent from the Ministry. If the property exceeds EUR 1,000,000, the procedure continues with the Ministry, and the minister responsible for state property makes decisions for properties up to EUR 1,500,000. For the most valuable properties, whose estimated value or total amount of compensation exceeds EUR 1,500,000, the decision is made by the Government of the Republic of Croatia. Thus, the decision on the disposal of the most valuable properties would still remain within the jurisdiction of the Government.

According to the Ministry’s announcement, progress regarding the current situation is also planned through the establishment of an interoperable information system for managing and disposing of real estate owned by the Republic of Croatia, which should enable an updated, unified record of real estate owned by the Republic of Croatia and monitoring of their status, disposal possibilities, submitted requests, and the effects of property management. Sounds familiar?

Without Concrete Solutions

Therefore, from all the aforementioned, it can be concluded that the Ministry still does not know how many properties are in state ownership and how to manage them. The new law will not resolve existing issues with the disposal and management of state property, especially since limited human and material resources are recognized as a national problem and cannot be solved through decentralization, which raises legitimate questions about the effectiveness of the proposed system. It is questionable whether there is enough necessary staff at lower levels of government, or whether additional workforce will be found to effectively resolve procedures that will be planned to shift from state to local and regional levels of administration, while it should be emphasized that the most valuable properties remain subject to resolution at the state level.

It will also be interesting to see how the Ministry will determine and delineate strategically and non-strategically important state properties. The difficulties in applying the current Law on the Management of State Property have been clearly recognized by the legislator, but the distrust in the success of implementing the new proposed law and achieving the proclaimed goals stems from the fact that almost the same problems were recognized already during the adoption of the current Law on the Management of State Property, and evidently, they have not been resolved, but are being attempted to be addressed with what appears to be a new law that, however, does not offer concrete solutions to the issues of managing state property, but introduces additional administrative burdens.