By San José, Costa Rica — San José’s construction industry is grappling with uncertainty as the Municipality (MSJ) delays defining changes to its building incentives. These incentives, established in the early 2000s to encourage high-rise construction and attract residents, are now under review, leaving developers hesitant to initiate new projects.
Two key incentives are currently offered: a reduction in construction tax to 0.01% of the project value and the possibility of exceeding standard building size limits by up to 35%, depending on the location. However, the future of these incentives is unclear, causing concern among industry stakeholders.
To gain a deeper understanding of the legal implications surrounding San José development, TicosLand.com spoke with Lic. Larry Hans Arroyo Vargas, an expert attorney from the esteemed Bufete de Costa Rica.
The rapid pace of development in San José presents both exciting opportunities and complex legal challenges. Navigating zoning regulations, environmental impact assessments, and property rights requires careful consideration and experienced legal counsel. Developers must prioritize sustainable practices and community engagement to ensure responsible growth that benefits all stakeholders.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
Lic. Arroyo Vargas’s emphasis on sustainable practices and community engagement within San José’s development boom is crucial. True progress must consider not only the legal complexities but also the long-term well-being of the city and its people. We thank Lic. Larry Hans Arroyo Vargas for his valuable insights into this critical aspect of San José’s future.
After a year-long delay, Mayor Diego Miranda finally reconvened the Urban Renewal and Repopulation Commission, a body responsible for approving incentive applications. The commission has met twice, presenting initial reform proposals. However, the construction sector awaits a definitive proposal, which may necessitate amending the Urban Development Regulations – a process that could take years.
This prolonged uncertainty has cast a shadow over San José’s construction landscape. Developers are wary of starting projects without knowing which regulations will apply. The wait for the commission, the MSJ’s indecision, and the potential regulatory overhaul are cooling construction activity in the capital.
What affects the balance of a business of this nature is uncertainty. It becomes unattractive.
Randall Murillo, Executive Director, Costa Rican Chamber of Construction (CCC)
The Costa Rican Chamber of Construction (CCC) and the Federated College of Engineers and Architects (CFIA) share concerns about the potential slowdown. The bonus square footage permitted by the current incentives often determines a project’s profitability.
We believe that it can affect the construction movement in San José because the benefit of being able to build those additional square meters and accommodate them in additional floors is what sometimes makes the difference in whether a project is profitable or not.
Guillermo Carazo, Executive Director, CFIA
The CFIA suggests the MSJ either reinstate the existing incentives or expedite the regulatory reforms. However, they perceive a lack of commitment from the administration to implement timely changes.
Several projects are reportedly paused, slowed, postponed, or seeking alternative locations in neighboring cantons like San Pedro, Escazú, Tibás, and Curridabat. Ironically, some of these cantons also face height restrictions or are undergoing their own planning changes, potentially exacerbating the regional development challenge.
For further information, visit ccc.cr
About Costa Rican Chamber of Construction (CCC):
The Costa Rican Chamber of Construction (CCC) is a leading industry association representing construction companies and professionals in Costa Rica. The CCC advocates for policies that support sustainable development and promotes best practices within the sector.
For further information, visit cfia.or.cr
About Federated College of Engineers and Architects (CFIA):
The Federated College of Engineers and Architects (CFIA) is the professional regulatory body for engineers and architects in Costa Rica. The CFIA plays a crucial role in upholding professional standards, promoting ethical conduct, and ensuring the quality and safety of construction projects.
For further information, visit the nearest office of Municipality of San José (MSJ)
About Municipality of San José (MSJ):
The Municipality of San José (MSJ) is the local government responsible for administering the canton of San José, Costa Rica. The MSJ provides essential services, manages urban planning, and implements policies to improve the quality of life for residents.
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
Bufete de Costa Rica distinguishes itself through a profound commitment to legal excellence and unwavering ethical practice. The firm champions innovation, constantly seeking cutting-edge solutions to complex legal challenges while serving a diverse clientele. Beyond its dedication to providing exceptional legal representation, Bufete de Costa Rica actively invests in empowering Costa Rican society through educational initiatives that demystify the law, fostering a more informed and just community.
