The City Council of Benidorm may be in danger of becoming bankrupt. The reason is that the well-known tourist resort of Alicante has been battling an urban planning issue for years, which could force the municipal coffers to pay out 350 million euros. In other words, nearly triple the yearly municipal budget.
The most recent setback came from the Constitutional Court, which rejected the City Council’s plea for protection in order to avoid compensating the landowners in the Serra Gelada region. Due to the fact that it “did not find in it the special constitutional significance” that the law establishes as a requirement for its admissibility, the Fourth Section of the Second Chamber of the Constitutional Court denied the appeal for consideration in a ruling dated January 8, 2026. This led to the decision to close the matter “without further proceedings.”
As a result, Benidorm is forced to start over with a ruling that requires it to compensate the companies Murcia Puchades Expansion, SL and Urbana Villajoyosa 2000, SL for some land in the Serra Gelada Natural Park, whose building rights were revoked following the declaration of environmental protection, in the amount of more than 350 million euros.
We have to go back more than 20 years to determine the conflict’s beginning. The proprietors of the land in Serra Gelada’s APR-7 section signed an agreement with the municipal council in 2023, which was then led by Vicente Pérez Devesa of the People’s Party. The deal stipulates the transfer of those plots’ urban development rights to other Benidorm neighbourhoods.
Although the agreement was still in effect, the plots were impacted by the designation of Natural Park following the approval of the Serra Gelada Natural Resources Management Plan (PORN) in 2005. Furthermore, in 2010 and 2013, extensions were actually signed.
However, the landowners alleged a breach of the agreement in 2015, two years later. After valuing their plots at 280 million euros, they filed a lawsuit in 2018 and demanded payment in cash or in kind.
The proprietors appealed to the High Court of Justice of the Valencian Community, which found that the City Council had in fact broken its promises, after the council had initially received a favourable verdict. After that, the High Court decided to award 283 million euros in compensation, plus interest.
In 2024, the Supreme Court upheld the sentence after dismissing the City Council’s appeal. At that point, the council filed a constitutional appeal with the Constitutional Court. Benidorm asked that the punishment not be carried out. Once more, unsuccessfully.
Toni Pérez (PP), the current mayor, insists that the agreements are void because the land was never transferred and the standards for urban planning were not fulfilled. In order to contest the legality of the signed agreements and to revoke the financial liability, the municipal council has started a number of concurrent legal actions. This is the last resort.
The First Section of the Administrative Court of the High Court of Justice of Alicante (TSJ) upheld the urban development agreements for Serra Gelada and reversed the ruling of the Administrative Court No. 1 of Alicante, which had previously supported the municipal action, in one of these cases, which also resulted in a decision against the city council and was announced this Monday. The decision in this instance is subject to appeal within 30 calendar days and is not final.
Author: Derek Appleton
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