Shopping centres uglier than landfills?

Polish planning law is unclear on this. Some legal provisions suggest that the location of a shopping scheme with a sales area exceeding 2,000 square metres - a so-called "large-area shopping scheme" - must be expressly provided for in a local zoning plan and no planning permit may be issued for such a scheme.

Two Poles - three opinions
In practice, many Polish local authorities have refused planning permits for large-area shopping projects, but some authorities have granted such permits. Rulings by Polish administrative courts on appeals against planning permits have differed as well.
In several rulings, the Polish Supreme Administrative Court has stated that a zoning plan with explicit provisions for a large-area shopping scheme is necessary to develop such a project. Despite these rulings, some local authorities have continued their practice of granting planning permits. "Where there are two Poles there are three opinions" - to paraphrase a well-known Polish saying.
In October 2011, the Supreme Administrative Court again stepped to the fore and sustained its earlier rulings. On the face of it, the recent ruling would seem to confirm that planning permits may not be granted for large-area shopping projects, and that would seem to be the end of the matter. But is it really?
A number of shopping centres and retail parks have been developed in Poland by developers relying in good faith on planning permits. Now, some of these developers face the risk that their final planning, construction and occupancy permits might be challenged. As a result, the authorities may halt pending construction work or issue demolition orders for standing assets.

Is it a retail park or slices of salami?
Let's imagine a retail project that is so designed that, on the one hand, it may operate as a single asset but, on the other, may qualify as a complex of separate assets. If each of these assets is indeed separate with a sales area that does not exceed 2,000 sqm, it seems that each of the assets may be developed on the basis of separate planning, construction and occupancy permits if no zoning plan is in place.
However, we are not living in a perfect world, and the legislation governing this confirms the fact. Under the legislation, what might be a complex of separate shopping assets for the owner may be a single asset in the eyes of the neighbours or the authorities. Then we again risk the domino effect with the permits granted for the scheme.
There are some ways to mitigate the risks mentioned above. Firstly, although the law is not entirely clear on this point, in some cases it may be argued that even if a planning permit for a long-standing scheme is invalidated it might not negatively affect the resulting final construction and occupancy permits. Secondly, the risk might be mitigated if a new zoning plan is adopted post factum with appropriate provisions.
Needless to say, the situation is not a comfortable one for developers, their financing banks or investors. Understandably banks and investors are anxious to limit their risk. In many cases, insurers can help by providing cover for risks that affect planning, construction and occupancy permits. However, the situation is hardly likely to encourage future property development.

Where are we heading?
Why is this issue important in practice? Large parts of Poland are not covered by zoning plans. This fact is one of the main obstacles to property development. Polish planning law is ambiguous and ineffective. It has been widely criticised ever since it came into force.
A number of proposals for reform of the planning law have been put forward. Regrettably, the story of those proposals brings to mind an old joke about the Polish communist regime: "If the party says it will take something away from you - it will take it away. If it says it will give you something - then it says it will."
Another concern is that various, often contradictory solutions have been proposed. We cannot hold the view that change is always for the better. Perhaps it is time for the business community to come together and encourage the government to go in the right direction. Most importantly, the law should result in a much larger portion of the country being covered by zoning plans. Additionally, it is worth considering whether it is indeed reasonable that shopping centres cannot be developed under planning permits but landfills can.

Wojciech Szybkowski, Lidia Dziurzyńska-Leipert, partners in the Warsaw real estate and construction department of CMS Cameron McKenna