Construction Permit Irregularities Alleged In Second Medellín PriceSmart Location

The second PriceSmart (NASDAQ: PSMT) warehouse being built in Medellín has been hit with accusations of irregularities in their construction licensing; despite this, construction of the building continued through Friday as PriceSmart and the local government await a potential court order to revoke the licenses granted to the company.

A meeting with the Local Administrative Board (JAL) of El Poblado on February 6 regarding the irregularities and alleged illegality of the construction has found the government and the residents stuck as PriceSmart refused to relinquish their rights to build the warehouse and will reportedly only stop construction if the license is revoked via a court order, Vivir en el Poblado reported.

The second PriceSmart in Medellín is being constructed in a hillside residential area already known for intense traffic congestion due to winding, low capacity, mostly two-lane roads.

Juan Sebastián Rey, the President of the JAL of Comuna 14, said that “Price Smart was on very good terms with this entity and showed a conciliatory spirit with the community, without giving up its claim to move forward with this store,” and that PriceSmart has agreed to cooperate on any future explanatory hearings related to the project.

Finance Colombia has reached out to PriceSmart multiple times but to date has received no comment on the matter.

The second warehouse club being constructed in Medellín has been controversial as residents of the San Lucas neighborhood said that the warehouse will likely make it harder for them to live in the residential area, with the probability of increased traffic and noise and lesser accessibility within their community, Gente reported.

The complaints, which were highlighted during the meeting, said that the road and mobility design of the facility may not have accounted for the residential classification of the area, and that the design was not reviewed by the Planning Department despite being a special case, El Colombiano reported.

“The PriceSmart Poblado commercial project does not have correct approval of the urban design, therefore, what is being built today is not fully covered by authorizations or approval by the competent authorities,” the Undersecretariat for Urban Control said.

José Fernando Álvarez, a member of the El Poblado Environmental Board, is reportedly collecting signatures and the like to halt the project, saying about the matter”: “[This] is a predominantly residential area, it is not even half a mixture, and for that, urban environmental protocols must be complied with, that is, there must be enough parking spaces and a mobility study that does not affect the main roads.”

The Second Urban Curatorship of Medellín recently started a review process to formally revoke the licenses, with the Undersecretariat for Urban Control saying that the rules used to issue the licenses were for commercial areas and not for fully residential areas, which is where the location of the second warehouse is.