A completely new old town

Urban sprawl, which results in both the need to build up infrastructure and lengthier travel times to work and school, is a damaging phenomenon that not only increases real estate investment costs but also has a negative impact on the quality of life. When both users and investors lose interest in some types of commercial space, quite often in older office buildings and shopping centres, the growing gap in the residential market and the lack of new development sites could force investors to turn to changing the usage of existing buildings. One example of this is the conversion of the office building at ul. Solec 22 in Warsaw into a student residence, while another is the conversion of the TVP television tower in Szczecin into an apartment block.

Occasionally, a change of usage can require existing buildings to be demolished, while historic industrial buildings can also be converted to new usages. Re-using these buildings and plots in such ways has many advantages, including what is often a superb location and excellent transport access. It also allows the carbon footprint to be reduced through the use of sustainable construction methods and partial recycling. That is why the laws governing changing the usage of buildings should include provisions to make it easier for developers to take this approach.

Changing a building’s usage

To change the usage of a building when there is no need for construction work only requires the relevant local authority to be informed of the change. However, in most cases the usage change also requires the modernisation of the building and the construction work necessary for this – and this in turn requires obtaining permits. In each case, the change in usage has to comply with the urban spatial plan (MPZP).

Last year, work began on a bill to allow buildings to be converted into residential properties. Under this bill, the construction of dividing walls inside an office building or shopping centre to convert it into residential use would no longer require a building permit nor would the local authority even have to be informed of the change of usage. The tabling of the bill was a quick response to the influx of refugees from Ukraine, while the proposed new rules would significantly simplify the procedures for converting buildings into apartments; but, alas, the subsequent work on the bill has not kept up its initial pace.

The limitations of spatial plans

Whenever an MPZP is not in agreement with an investor’s intentions, this becomes a serious problem. The process for changing a plan takes a long time and in large cities it can even take many years. It is also quite expensive, which means that local authorities are slow to adopt them. An alternative way of developing residential projects in areas assigned different usages is by using a special bye-law colloquially known as ‘Lex Developer’. These rules allow for the development of residential projects even when such projects are not permitted by the MPZP and even when it is forbidden by the conditions study. Since May 2023, residential projects can be developed on land designated by the study for large format stores or in buildings assigned as offices.

When an investor makes an application, the council can agree to the development of such a project once a host of requirements have been fulfilled, including access to public facilities, such as schools, and provided that an appropriate amount of land is left biologically active and that there will be an adequate number of parking places.

As well as residential buildings, accompanying facilities can also be developed, including roads, public buildings, sewerage and electricity. Theoretically, the biggest advantage this procedure offers is its speed, as in principle the council has 60 days in which to approve the development. However, it is not easy to prepare such a proposal and this is the stage that takes up the most time.

Systemic changes to replace the special residential bye-law

The residential bye-law was intended to be only a temporary bill that was to remain in force until systemic changes were made. The amendment signed off by the President on July 24th of this year to the bill on planning and space management states that it will remain in force until January 1st 2026. Until this time, new motions can be adopted and changed; however, if a council introduces a general plan to replace the amendment of the study, the new motions will have to be in complete agreement with it.

Among the new tools that the bill introduces is the possibility of passing an Integrated Investment Plan (ZPI) that will include land that was previously not covered by an urban plan or by plans that specify usages other than those intended by an investor – such as residential developments and projects of other types.

The plans of the investor or investors would form the main basis of a ZPI, since the amendment allows for the involvement of many different companies and for the entire procedure to be based on their activities. Once a council has given its approval for the procedure, an urban contract can be drawn up between the executive of the council and the investor. This would regulate the particular decisions regarding the project, including the development of other necessary infrastructure (such as roads and other facilities), while also covering the costs of the investor in preparing planning documents or waiving the planning fees. The contract would become valid when the council votes on passing the ZPI.

Do the changes represent a simplification?

Even though a ZPI might seem to be a similar measure to the special residential bye-law described earlier, it includes a number of crucial differences. Firstly, a ZPI would not only be a regulation for investors who apply for one, but it would also require the passing of a new MPZP. In other words, it would come into general force in agreement with the general plan as well as the standards for access to social infrastructure. Another difference (which is less beneficial to the investor) is that the council would not have a strict deadline for adopting a new ZPI, which, as mentioned before in the case of the special residential bye-law, is 60 days.

Although an urban contract itself should result in the investment better suiting the needs of the local community, it could also result in the investor taking on huge costs as well as a host of other responsibilities. The rules do not lay down any mechanism for establishing the responsibilities of each side. The catalogue of investor responsibilities would be left open by the statute, so the contract could include payment to the council to cover responsibilities that the council alone should be responsible for. Weighing private and public interests can be time-consuming and thus the drawing up of an urban contract and the subsequent passing of a ZPI might not be so simple.