A change in procedures

In August 2018, the regulation known as Lex Developer came into force in Poland. This law was designed to ease the development of new apartments by providing a mechanism by which residential blocks could be built when a spatial plan is not in place. The Integrated Investment Plan is essentially an extension of this regulation, by broadening it and extending it to other types of development projects. “The spatial planning reforms that came into force in September 2023 have introduced many new concepts and planning tools. However, many of them have been delayed until January 2026. One of the new tools created by the law that will come into force at the beginning of 2026 is the Integrated Investment Plan (ZPI),” reveals Karolina Furmańska, an associate and residential expert at Cushman & Wakefield. With a ZPI, a developer can approach a local council with their plans for a project even when the urban spatial plan does not allow this kind of development. After negotiating an urban agreement with the local council, a miniature spatial plan can be ratified to replace the plan that previously covered the area in question.

“A ZPI is a particular form of urban spatial plan that is ratified by a local council following a request from an investor and, after the completion of negotiations, this agreement specifies the terms and conditions of the development and the responsibilities of both parties. It will also be possible to ratify a ZPI for a site that was previously covered by an urban plan – and in such a situation the urban plan will be replaced by the ZPI,” explains Piotr Jarzyński, a lawyer at the Jarzyński & Wspólnicy law office and an expert advisor to the real estate committee of the Polish Chamber of Commerce. A ZPI also covers many additional facilities built to serve the main project. These are broadly defined by the new Act and include roads, schools, stores and sporting facilities as well as many other structures. However, Jakub Lewkowicz, a partner and the business development director of Kuryłowicz & Associates, points out that a ZPI has to comply with the general plan or – if such a plan has not been ratified – with the current land study: “A key moment is when the local council takes the decision to ratify the ZPI. In other words, the request submitted has to be at that time in agreement with the general plan or the current land study if no such general plan has been ratified. It’s worth noting that ZPIs are not limited to just multi-family residential developments but can also be applied to other usages, including offices, large format buildings and mixed-use projects. Kuryłowicz & Associates is at the moment preparing a landmark project that will very likely be the first one in Warsaw to make use of the innovative Integrated Investment Plan procedure.”

Not so easily done

But since this is a new and untested procedure, many questions remain to be answered and thus ZPIs entail unquantified risks. “ZPIs need to begin with the negotiation of a contract between the local authority and the investor, while a study of the environmental effects needs to be drawn up, and at the end the plan has to be ratified. In the meantime, the local authority can pull out at any stage, from as early as the negotiations, and this could be discouraging for many investors – particularly when the planned changes need to be prepared in the form of a complete project plan from the outset of the negotiations. This means that the costs actually need to be borne upfront without knowing how the eventual negotiations will proceed – let alone whether the ratification of the ZPI actually takes place many months later,” explains Wojciech Przybylak, a senior leasing and land specialist at Cushman & Wakefield. And he’s not the only one to draw attention to the risks and preliminary costs for investors of having to attach an urban plan to their proposals. “Such a document has to comply with the same requirements that govern an urban spatial plan, in terms of both the text and graphics as well as the justification. As a result, the investor bears the cost of the initial preparation of the contract by experts, such as urban planners,” admits Piotr Jarzyński.

If such a project interests the local authority, negotiations can then begin with the city mayor and a representative of the local council, with the final contract taking the form of a notary act setting out the responsibilities of both the local authorities and the investor. “In the urban agreement, the investor takes on the responsibility of developing the secondary infrastructure for the local council. In particular, the investor can take on the responsibility to hand over the real estate that is part of the main investment, to cover all or some of the costs of developing the secondary infrastructure (including paying the price of the real estate to a third party), and covering some or all of the costs borne by the local authority in ratifying the ZPI (including the costs of planning disputes). Additionally, if the investor is the owner or the usufruct holder of the property where the secondary infrastructure is planned, they can take on the responsibility of selling it to the council, while the council can take on the responsibility to develop the secondary infrastructure if it falls within its own purview and to release the investor in part or in full from the planning fees,” explains Piotr Jarzyński.

The terms laid out by local authorities

“The purpose of a ZPI is to formalise and simplify the procedures for changing the urban plan at the request of the investor. However, the entire process can be quite long. According to the new legislation, initial negotiations and the drafting of agreements are to take place to specify the terms and conditions of developing the project as well as the responsibilities of both parties. This provides them with the freedom to set the terms and conditions and to develop different types of projects, but to the extent that this risks exorbitant expectations on the part of the local authority for the development of the project as well as for the fulfilment of their own obligations,” points out Karolina Furmańska. This is a worry she shares with her colleague, Wojciech Przybylak. “The legal amendment allows for the costs of ratifying the ZPI wholly or in part by the investor, including the possible costs of damages payable to a third party resulting from the ZPI ratification. This should definitely make local authorities more willing to adopt the ZPI as a tool. But the question arises as to whether the first signed contract will lead to an escalation of the expectations of local authorities, making it impossible for smaller companies to make use of ZPIs and leading to accusations of mismanagement against local authorities,” he says. And according to Piotr Jarzyński: “The new legislation contains a catalogue of responsibilities that investors can take upon themselves, which means the local authority is not limited in its negotiations to the services it expects in return. When faced with budgetary restrictions, the local authority might assume that since the investor really wants to do the construction, they will cover all of the costs, including for the secondary infrastructure, the purchase of the land, as well as the costs incurred by the local authority to ratify the ZPI, including any planning disputes.”

But in the end, Karolina Furmańska has reasons to be cheerful about how the negotiations between local authorities and investors are likely to unfold. “In theory, both sides will have the possibility to propose how much secondary development is done and how it will be financed, which covers the technical infrastructure, the roads and the community services. Nonetheless, we should expect that the investor will try to minimise secondary investment while the local authorities will try to increase it,” she believes. Piotr Jarzyński, however, does foresee problems and concerns arising if local authorities show favouritism when assessing individual projects, since no set procedures are in place to prevent this: “There have been calls to create uniform procedural standards for ZPIs so that individual investors are not treated differently. This might happen if two investors want to develop similar projects and during the negotiations the local authority demands 0.05 ha of public green space from one of them but a primary school from the other.” And his concerns don’t end there. “Another huge risk for both the local authority and the investor is the rule that if the ZPI is overturned, changed or ruled invalid within five years of it coming into effect, the two sides of the agreement can cancel the contract within six months of the ZPIs alteration or declaration of invalidity. The law does not define the consequences of this, and the two sides will have to count up the costs of the development completed thus far,” he adds.

Things can only get better

Overall, Jakub Lewkowicz is extremely optimistic about the future of this new mechanism: “Above all, ZPIs are intended to free up land for the construction of multifamily residential buildings, while the entire procedure is to be defined by a democratic and transparent agreement between the investor, the city and the local community. The new procedure is also intended to solve the problem of old urban plans that were drawn up many years ago and are no longer relevant to the current and future needs of the city and its inhabitants. Through ZPIs we will be able to add to fragments of existing MPZPs (urban spatial plans) usages that meet the current urban planning strategy of the local authority as laid out in the general plan. I believe that ZPIs will improve not only urban standards but also architectural standards and that they will also have a beneficial effect on shaping open urban space,” predicts Jakub Lewkowicz.

Karolina Furmańska, however, is rather more circumspect. “For now, we expect it to be a procedure used by large investors that have the time and money to invest and have a long-term outlook when it comes to their developments. The entire procedure is very similar to passing an urban plan, so it’s not going to be quicker. While the terms of ZPIs are being agreed, opinions and agreement will be sought and it might even be necessary to come to an agreement to repurpose the land through public consultations, and then, if changes are required to the ZPI, the negotiations and other activities are repeated until an urban agreement can be signed in the form of a notary act. Then the county council will vote to pass the entire ZPI or reject it. If just one part of the agreement is not accepted, the local authorities will not be able to make amendments and ratify the ZPI and it will just return to the negotiating table,” she explains. Nonetheless, she doesn’t take an entirely negative view of the new law. “The main reason for introducing the reform is to attempt to rein in the chaos in spatial planning across the country, the costs of which are estimated in the billions of złoty,” she claims.

But it’s Jakub Lewkowicz enthusiasm at the prospect of ZPIs that stands out. “I believe that ZPIs, in the near future, will be the dominant planning procedure used out all of those available. After 2025, with such a shortened and fast-tracked urban plan, all parties to the process – including investors, urban planners, architects and local communities – will have a real opportunity to participate in the creation of urban space,” he insists.