Today, we continue our analysis of the amendment to the Spatial Planning and Development Act (the " Act "), which includes changes resulting from the Act of May 26, 2023, amending the Spatial Planning and Development Act and certain other acts (the " Draft "), adopted by the Sejm. In this article, we want to focus on the urban planning agreement , which will be a key element of the process of adopting an integrated investment plan ("IPP"). Before we get there, however, let's discuss some information regarding the legislative procedure.
First, on June 22nd, the Senate adopted the draft with 39 amendments. The very next day, June 23rd, the draft, with amendments, was referred to the Infrastructure Committee and the Local Government and Regional Policy Committee. However, no date has yet been announced for its consideration. We will discuss the Senate's amendments in more detail if they are adopted by the Sejm. However, it is worth noting now that the Senate proposed that development conditions decisions be valid for only two years, with the option of extending them for another two years, which would be a significant impediment to investment implementation for many investors. At the same time, the Senate determined that, despite the entry into force of the new regulations, development conditions will be issued regardless of the adoption of the municipal general plan until December 31st, 2028, which is three years longer than the version adopted by the Sejm.
According to another Senate amendment, "development supplementation areas" would be a mandatory element of the municipal general plan. In the version of the draft adopted by the Sejm, this element is voluntary. This would undoubtedly be a welcome change, because, as we have already informed you, obtaining a decision on development conditions will only be possible in development supplementation areas.
Since we're analyzing the ZPI, it's also worth pointing out that, according to Amendment No. 11 – "The ZPI must be consistent with the commune's general plan" – such a change may prove unfavorable for investors and more stringent than in the case of resolutions under the lex procedure, which only " may not be inconsistent with the study of the conditions and directions of spatial development of the commune and the resolution on the establishment of a cultural park." If it is passed by the Sejm, we will certainly return to this topic.
Moving on to today's issue, regulated in Article 37ed of the Draft, an urban planning agreement will be an agreement in which the investor commits to implementing a supplementary investment on behalf of the municipality . Importantly, according to the drafters, such an agreement will not qualify as a public procurement contract. It should also be recalled that a supplementary investment should be understood as an investment involving the construction, change of use, or reconstruction of a land utility network within the meaning of Article 2 point 11 of the Geodetic and Cartographic Law, public roads, railway lines, public transport infrastructure facilities, cultural activity facilities, childcare facilities for children up to 3 years of age, kindergartens, schools, day care centers, healthcare facilities, facilities in which social welfare activities are conducted, facilities serving public benefit activities, sports and recreation facilities, public green areas, buildings intended for commercial or service activities – provided they serve the main investment." As for the last criterion, as we wrote in article #157 , this definition will probably be interpreted differently by the investor and the municipality.
The draft only lists, by way of example, the rights and obligations of the parties to an urban planning agreement , so remember that the agreement may also contain other elements agreed upon by the parties. Pursuant to Art. 37ed, paragraph 2, the investor may commit to the municipality, in particular, to: (1) transfer real estate constituting part of the subject of the main investment; (2) cover all or part of the costs of implementing a supplementary investment, including the price for the real estate referred to in paragraph 5 ( concerning an agreement obligating the sale to the municipality of a third party real estate on which the supplementary investment is to be implemented ); (3) cover all or part of the costs of adopting the ZPI incurred by the municipality, including the costs of settling claims referred to in Art. 36, paragraphs 1 and 3 ( concerning claims for compensation related to the impossibility or significant limitation or reduction in the value of the real estate due to the adoption of the MPZP ). In turn, the commune may (1) undertake , in particular, to implement a supplementary investment if it falls within the scope of the commune's own tasks; (2) exempt the investor, in whole or in part, from the fee referred to in Art. 36, paragraph 4 ( concerning the planning fee, i.e. for the increase in the value of the property due to the adoption of the MPZP ).
We emphasize that, according to the Draft, if a supplementary investment is implemented on land owned by the investor (i.e., through ownership or perpetual usufruct), the investor must commit to selling it to the municipality . However, if a third party owns or holds a perpetual usufruct of the property on which the supplementary investment is to be implemented, the investor may, in particular, commit to selling the property to the municipality through an urban planning agreement . According to the drafters, covering the costs of adopting the Integrated Spatial Planning and Development Plan (ZPI), including compensation claims, is intended to encourage municipalities to adopt local plans in the form of ZPI. Hopefully, however, this will not discourage local governments from adopting MPZPs in the normal manner. Furthermore, if the urban planning agreement requires the sale of property, it should specify the terms of such sale – in this case, the Draft is not limited to real estate; it can also include movable property.
The urban planning agreement will be concluded in the form of a notarial deed , following negotiations between the investor and the municipality (in this case, the municipality will be represented by a person appointed by the municipal council or its chairman). However, separate consent from the municipal council will not be required to sign the urban planning agreement, despite it being an activity beyond the ordinary management of municipal property. The legal effects of the urban planning agreement will arise on the date the ZPI enters into force, as specified in its annex.
The agreement will therefore be concluded subject to the condition precedent of the ZPI's entry into force. A strict interpretation of this provision also implies that the ZPI should be adopted with exactly the same content as the annex to the urban planning agreement. Therefore, the Draft excludes the municipal council's right to amend the draft ZPI . If the ZPI is rejected, the municipal council may adopt an additional resolution to return it to the mayor with proposed amendments to the urban planning agreement, including its annex, the draft ZPI. In such circumstances, the investor and the municipality will be able to engage in negotiations, and if the draft ZPI is amended, the mayor will be obligated to repeat the actions referred to in Article 37ec, section 2 (specifically, points 1–3, 4 letter b, 5 letter b, and 7–9 of the Draft). Then, after the amendments are implemented, the urban planning agreement will require an annex incorporating the amended draft ZPI. In our opinion, it seems that this provision may prolong the procedure, therefore it will be worth consulting the ZPI project with the municipal councillors already at the stage of negotiating the urban planning agreement.
The regulations also stipulate that multiple investors submitting a single application can be parties to a single urban planning agreement . Furthermore, if multiple applications are submitted, the mayor may conduct a single procedure , resulting in the conclusion of a single urban planning agreement and the adoption of a single resolution regarding the ZPI. This means that even if investors do not cooperate in submitting applications, the mayor may impose such cooperation during the application review stage.
Importantly, in matters not regulated by the provisions concerning the ZPI, the provisions related to the adoption of local plans will apply to the ZPI. This also applies to the possibility of appealing it. Therefore, it is worth noting that if the ZPI is repealed , amended, or declared invalid before the expiry of five years from its effective date, withdraw from the urban planning agreement within six months of the date the amendment is repealed or the ZPI is declared invalid .
In summary, although urban planning agreements already exist in the Polish legal system, i.e., in the Revitalization Act, they are relatively rare. It seems that once the Draft comes into effect, they could be a useful tool that increases the possibility of implementing investments outside of the framework of local plans as we know them today. However, for this to be possible, municipal and city authorities must be open to utilizing these new planning tools.
In a week, the calendar will already point to July, so we will devote the next article to summarizing changes in the law in June and discussing what awaits us in July.
This article is for informational purposes only and does not constitute legal advice.
Legal status as of June 23, 2023
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