Menold Bezler also prevails for the City of Ludwigsburg in the dispute over municipal housing at the VGH Mannheim

The city of Ludwigsburg is authorised to build and sell condominiums via its subsidiary Wohnungsbau Ludwigsburg GmbH (WBL). Following the hearing on 23 March, the Administrative Court of Mannheim dismissed the action brought by private property developers against the City of Ludwigsburg in its entirety, including the appeal, and did not allow an appeal. This brings to an end a long-running administrative court case concerning the permissibility under municipal law of WBL's commitment to the creation of affordable housing in Ludwigsburg.

The Municipal Code of Baden-Württemberg only permits municipal activities outside the provision of services of general interest if the purpose is not or could not be fulfilled just as well and economically by a private provider. Many municipal codes in other federal states contain similar provisions. One of the unresolved issues in the legal dispute, which lasted more than six years, centred on how the construction and sale of condominiums to cross-finance the core business of building rental housing for broad sections of the population should be classified.

At first instance, the Stuttgart Administrative Court dismissed the case on the grounds that WBL's municipal construction activities did not violate Section 102 (1) No. 3 GemO. The core activity was to be classified as a municipal service of general interest, the contested business activity was also partly in the area of municipal services of general interest and was otherwise to be assessed as a permissible ancillary activity to the core activity (case no. 7 K 7009/17).

However, the VGH Mannheim (case no. 1 S 2793/20) left this question - which is important for municipal housing associations newly established after 2006 - unanswered and justified the dismissal of the claim (upstream) by stating that WBL had already sold condominiums to a non-negligible extent before the new regulation and tightening of Section 102 (1) GemO on 1 January 2006. In this respect, the business had not expanded significantly from 2006 and WBL could rely on the protection of its status quo in its activities. The VGH interpreted the term "significant expansion" based on § 103a No. 2 GemO as the assumption of new tasks of particular importance within the scope of the company's purpose.

Menold Bezler comprehensively advised and represented the City of Ludwigsburg in the legal dispute, which lasted several years. The law firm frequently acts for the public sector and its companies.