Investment pledge relief: devil is in the detail

Work on the Polish urban planning and construction code is in progress. The proposed solutions are set to provide a considerable deregulation of the current investment process. This includes the abandonment of the legal obligation to acquire the widely unpopular decision on land development conditions for when carrying out the projects located in the areas which have no local zoning plan. The questions on whether the investor could perceive the solution as facilitation, and whether it introduces any excessive risks for the first phases of the investment process, remain open. According to the proposed legislation, the area of a borough will be determined at the early stage, when a study of conditions and directions of spatial development of a borough takes place. The land will be divided into three categories: developed land, land with limited developments and developable land. The borough will be obliged to prepare a local zoning plan only for the developable areas and for other areas mentioned in the code. Thus the development on the two remaining categories of plots will take place based on building permits. These will be issued without any earlier urban planning settlements (whether included in a zoning plan or any other decisions). Such solution might create a sense of uncertainty among investors. It is hard to believe that they would make a decision on the purchase of land or the preparation of costly architectural documentation without any urban planning document which would confirm the possibility of carrying out the work on a given property. In order to reduce the risk, the code introduces the institution of the investment pledge. Such measure will ratify the compatibility of the planned project with the area’s general spatial order. The pledge will be issued by the borough leader, mayor or mayor of a city and it will in principle be legally binding for the public administration authorities for 3 years since the issuance date. The solution in question deserves a general approval. However, the devil is - as always - in the details. The pledge will not eliminate the sense of uncertainty among investors completely: within the three-year period the borough will be allowed to pass a zoning plan or local urban planning regulations colliding the contents of the pledge regardless of their will. In such situation, the pledge will no longer be valid.