In nearly all countries, municipalities own or control substantial amounts of real estate, but few municipal governments think of their holdings as a “portfolio” whose composition might be modified to better serve public purposes. Economists therefore propose that legal and institutional frameworks should be set up in order to enable efficient real property asset management on the local level. However, there are good reasons why municipalities may only participate in economic life in exceptional cases. One reason arises from private law: local authority economic enterprises should not be in competition with the private sector in the free market economy. Another reason is derived from public law: activity and involvement in competition are associated with risks for the municipality. Those risks local authorities should not expose themselves to.
Table of Contents
I. Introduction
II. Scope of the Paper
III. Municipal Property in Germany
1. Restrictions to the determination of municipal economic activity
a) Municipal Triad of Restrictions to the Establishment of Economic Enterprises
aa) Public Wellbeing
bb) Capability
cc) Subsidiarity
b) Setting Up, Taking Over or Essentially Expanding Economic Enterprises
c) Extraterritorial Municipal Economic Activity
2. Example: Economic Activity in the Sphere of Banking
a) Service of General Economic Interest
b) Regional Principle
c) Saving Banks and European Union Law
aa) Art. 86 EC-Treaty
bb) Art. 87 EC-Treaty
IV. Municipal Property in Bulgaria
1. Public and Private Municipal Property
a) Public Municipal Property
b) Private Municipal Property
2. Management of Municipal Property
3. Municipal Enterprises
Objectives and Topics
This paper aims to assist in developing proposals for the optimum structure of municipal property by analyzing the regulatory frameworks in Germany and Bulgaria, with a specific focus on constitutional and economic limitations at both the national and European level.
- Legal regulation of municipal economic activities in Germany and Bulgaria.
- Constitutional principles and limits governing municipal property ownership.
- Economic and material restrictions on the establishment of municipal enterprises.
- The impact of European Union competition law on municipal services and public banking.
Excerpt from the Book
a) Scope of Economic Activity: The Municipal Triad of Restrictions to the Establishment of Economic Enterprises
Not only in Bavaria, but also in other local government laws in Germany the establishment of economic enterprises is restricted. A municipal triad of restrictions (kommunalrechtlicher Schrankentrias) has developed during the last 70 years after a common standard of restrictions originally was introduced as § 67 of the Deutsche Gemeindeordnung (German Local Government Law) during a time of total unity of German municipal law in 1936.
aa) Public Wellbeing
The first restriction to the establishment of economic enterprises is that the economic activity must be required by the public wellbeing (öffentlicher Zweck) of the municipality. It shall assure that the municipality performs primarily its services of general economic interest (Daseinsvorsorge), as for instance in the spheres of health care and public transport. Economic activity must be necessary to fulfill these tasks. Although the realisation of profits could be a contribution to the municipal budget in general, this does not justify economic action in order to serve to the public wellbeing. Economic activity itself may not be the public purpose, it must be seen as means to fulfill this. Anyhow, the scope of potential public wellbeing is quite wide, as it can be reached with regard to social aspects (creation of jobs) or ecological needs (guarantee of an efficient waste water disposal).
bb) Capability
Furthermore the size and type of the company must be in relation to the capacity of the municipality and its probable need (Art. 89 paragraph 1 no 2 Bay GO). This restriction serves to the protection against overburden. Some municipal laws – as for instance § 107 Gemeindeordnung Nordrhein-Westfalen (Local Government Law of the Federal State of Nordrhein-Westfalen) – foresee the realisation of a market analyses before a certain economic measurement is taken.
Summary of Chapters
I. Introduction: Discusses the need for efficient municipal real property management and the rationale behind limiting municipal economic activity to prevent competition with the private sector.
II. Scope of the Paper: Outlines the objective of analyzing the structure of municipal property in Germany and Bulgaria under constitutional and EC-level constraints.
III. Municipal Property in Germany: Examines the legal frameworks, focusing on the material, personal, and territorial restrictions on municipal economic activities.
IV. Municipal Property in Bulgaria: Analyzes the Municipal Property Act of 1996, categorizing property into public and private types and discussing management standards.
Keywords
Municipal property, Local self-government, Economic activity, Public wellbeing, Subsidiarity, Savings banks, EC-Treaty, Privatization, Municipal enterprises, German municipal law, Bulgarian Municipal Property Act, Public assets, State aid, Competition law, Services of general economic interest.
Frequently Asked Questions
What is the core subject of this document?
The document examines the legal frameworks and limitations governing municipal property and economic activities within Germany and Bulgaria.
What are the central thematic areas?
The primary themes include municipal law, the restrictions on economic enterprises owned by local governments, and the influence of European Union law on municipal public services.
What is the primary research objective?
The objective is to provide a legal analysis that supports the development of proposals for an optimized municipal property structure, considering national constitutional limits and EU standards.
Which scientific methodology is applied?
The paper utilizes a comparative legal analysis, evaluating statutes, constitutional principles, and relevant European Commission rulings.
What is covered in the main body?
The main body details the "municipal triad of restrictions" in Germany, the regulation of public banking, and the classification and management of municipal property in Bulgaria.
Which keywords characterize this work?
Key terms include municipal property, economic activity, public wellbeing, subsidiarity, savings banks, and EC-Treaty compliance.
What is the "municipal triad of restrictions" in Germany?
It consists of three pillars: public wellbeing, capability (size/capacity of the municipality), and subsidiarity (no better alternative by another party).
How does European Union law affect German savings banks?
EU competition rules, specifically Art. 86 and 87 of the EC-Treaty, regulate state aid and the legitimacy of public liability guarantees provided by municipalities to their savings banks.
How is municipal property classified in Bulgaria?
According to the Municipal Property Act (MPA), property is classified as either public (assigned for government functions or public needs) or private.
- Quote paper
- Wolfgang Tiede (Author), 2007, Regulation of Municipal Property in European countries, Munich, GRIN Verlag, https://www.hausarbeiten.de/document/169723
