Introduction

On October 8th 2016, the General Communiqué
on National Estate No. 373 (“Communiqué”) has been published on the Official
Gazette. The Communiqué governs principles regarding easement right and/or right
of usage to be granted to financers for them to construct marinas, landing
stages, piers and berths on state-owned or treasury lands.

The Communiqué brings an in-depth roundup for coastal
investments, extending from the principles as to the tender process for
granting the easement right, to the liabilities of the financers. To that end,
there is no doubt that the Communiqué will draw the attention of investors
contemplating to invest in coastal structures.

Roadmap of investor applications

Firstly, as specified under Article 4 of the Communiqué,
financers who are willing to invest in treasury lands should apply to the Ministry
of Transport, Maritime Affairs and Communication (“MoTMAC”) with their preliminary
project and prefeasibility report. Once they obtain MoTMAC’s approval, they
should then submit the zoning plan proposal to the Provincial Directorate of
Environment and Urbanization.

Required content of the prefeasibility report is
listed under Article 5 of the Communiqué, which groups the required content
under four main titles:

(i) General information on the project (e.g. the location of the project, its
definition, purpose and areas of service, capacity, transportation),

(ii) Justification of the project (e.g. the developments in Turkish and global
financial landscape, current yacht traffic in the area.),

(iii) Financing of the project (e.g. the amount of investment, termination plan, method of
investment) and

(iv) Analyses of the project (e.g. direct and indirect impact of the project on a regional scale and other social impacts of the project)

Tender process for the easement right/right of usage

General principles on negotiated tendering under the State
Procurement Law No. 2886 will apply to tender process for granting the easement
right and/or right of usage, as per Article 6 of the Communiqué. In this
respect tender process will be conducted in accordance with Article 51 (g) of
the State Procurement Law No. 2886[1].

That said, financers who are owners, lessees or right
holders of neighbor lands located behind the state-owned and/or treasury land
subject to the investment will benefit from an exception under the Communiqué. These
investors, provided that they possess the net equity amount equivalent to at
least 20 % of the investment amount and on the condition that the neighbor land
is integral with the plan and the project subject to investment and it is
established that they should be used jointly, can be directly granted with the
easement right or the right of usage without the issuance of a tender notice[2].

Preliminary permission

The Ministry of Finance (“Ministry”) can grant the
financer a preliminary permission if deemed necessary for completion of the bureaucratic
stage[3].
Validity period of the preliminary permission is limited to one year unless extended
by the Ministry. In order to obtain an extension, the financier should (i) make
the required payment for the extension and (ii) prove that the bureaucratic
stage cannot be completed due to advenient reasons. In any case, validity
period cannot exceed four years. [4]

The Ministry can refrain from extending the
preliminary permission period if it decides to utilize the land for other
purposes, in which case the remaining period of a current preliminary
permission will be cancelled by refunding the deposited payment pro rata and the investor would not be
able to set forth any claims for the absence of an additional extension.
Similarly,  in case it is apparent that
the bureaucratic stage cannot be completed in due time, without the fault of
the investor, the agreement will be terminated upon the notification of the
investor and if deposited in advance, the amount for the extension period and
the security payment will be returned to the financer.

Renouncement of the financer from its commitments before
the end of the agreement will result in the termination of the agreement by the
administration. In such a case, the financer’s security payment will be
registered as treasury revenue and the amount for the extension period will not
be returned.

Obtaining, assigning and terminating the easement
right/right of usage

Provided that the financer completes the bureaucratic
stage in due time, an easement right or right of usage will be established in
favor of the financer. The period of the easement right or the right of usage,
in any case, cannot exceed thirty years but can be suspended by the Ministry in
accordance with the provisions under Article 8 of the Communiqué[5].

Article 8 of the Communiqué obliges the financer to
start the construction in six months as of the delivery of the property and to
complete it in two years. The two-year term can be extended to a maximum of
five years.

The Communiqué also grants the financer the right to
assign its easement right/right of usage on Ministry’s own initiative and
approval[6].

As per Article 11, the easement right/the right of
usage will be terminated once the agreement is expired. Upon the audit to be
conducted in accordance with Article 10, if the Ministry detects any error or
deviancy, it will request from the financer to recover those irregularities.
Non-recovery of the irregularities in due time will give the Ministry the right
to terminate the agreement and to demand a compensation payment equivalent to
25 % of the easement right/the right of usage amount in the current year. In
this case, the financer’s security payment will also be registered as treasury
revenue.

Upon the termination or expiration of the agreement,
all immovable properties constructed on state-owned or treasury lands by the
financer will be inherited by the treasury.

Monitoring of the investors

The Financer is obliged to comply with the relevant
legislation during the construction to be conducted as per the Communiqué. In
this respect, the Ministry along with MoTMAC is authorized to audit the
financer.

Last Note

According to Article 13, the Communiqué has entered
into force on the publication date. Therefore all of the foregoing regulations have
entered into effect and gained validity in practice as of October 8th
2016.

[1] Article 51 of the State
Procurement Law No. 2886 governs the situations where negotiated tendering is
allowed. Referenced paragraph (g) reads as “renting
of, barter of and establishment of an incorporeal right on movables and
immovables privately owned by State and renting of and establishment of an
incorporeal right on the locations under the State’s disposal, which are closed
to or not suitable for open tendering due to their purpose of use, advantage to
administration or urgency”

[2]
Article 6 of the General Communiqué on National Estate No. 373

[3]
Transactions such as registration, parceling, amalgamation or preparation and
amendment of the zoning plan.

[4]
Article 7 of the General Communiqué on National Estate No. 373

[5] In circumstances such as force majeure, legal or physical impossibility
hindering the exercise of the right.

[6] Article
9 of the General Communiqué on National Estate No. 373

Authors: Gönenç Gürkaynak, Esq., Ceren Yıldız and Ecem Elver , ELIG,
Attorneys-at-Law.

First published in Mondaq on November 9, 2016.