Although the urban planning agreement is not a new institution on the grounds of the Law on Spatial Planning and Development, it was not until the spatial planning reform that came into force on September 24, 2023, that this instrument was given a chance to be used more widely. Before the aforementioned date, the planning agreement was functionally linked to the local revitalization plan. Therefore, the use of the urban planning agreement was marginal. Of course, municipalities entered into agreements with investors, under which investors carried out certain works in exchange for allowing them to carry out another investment, but these relationships existed on civil law grounds. There was no corresponding administrative-legal regulation that gave municipalities the authority to enter into such agreements.
Integrated Investment Plan
On the basis of current legislation, the urban planning agreement is closely linked to the Integrated Investment Plan (IIP). Its conclusion is contingent on the adoption of an integrated investment plan by the municipal council. The ZPI itself is a new institution under the provisions of the Law on Urban Planning and Development. The ZPI is enacted at the request of an investor who will submit a development project for a specific area, including the implementation of a main investment and a complementary investment. The main investment may be, for example, the construction of a housing development or an entertainment zone, which could not be implemented under the existing regulations, including the provisions of the local plan.
Complementary investment
From the point of view of the urban planning agreement, however, the more important issue is the complementary investment, which is the subject of the urban planning agreement itself. As defined in the Law on Urban Planning and Development, a complementary investment is an investment in the construction, change of use or reconstruction of land development networks, public roads, railroads, public mass transport infrastructure facilities, cultural activity facilities, child care facilities for children under 3 years of age, kindergartens, schools, day-care centers, health care facilities, facilities for social welfare activities, facilities for public benefit activities, sports and recreation facilities, public green areas, construction facilities for commercial or service activities – as long as they serve the main investment.
Urban planning agreement – content
In the content of the urban planning agreement, the investor undertakes to implement a certain complementary investment for the benefit of the municipality, in exchange for the adoption of a MIP allowing the investor to implement the main investment. It follows from the literal wording of the provisions of the Law on Urban Planning and Development that in each agreement the investor must undertake to implement the complementary investment, and only optionally may the parties agree on additional benefits of the investor, including the transfer to the municipality of real estate that is part of the main investment, covering the costs of implementing the complementary investment, or covering the costs of paying compensation to third parties in connection with the loss of value of land due to the enactment of the ZPI. However, such an interpretation seems too strict and inconsistent with the purpose of the regulation. It should be assumed that it is not in every case that the investor must carry out the complementary investment on his own, but can only cover its costs. The municipality itself or a third party can, in turn, take on the burden of carrying out the investment. It is only important that the complementary investment to be financed by the investor falls within the scope of the investments described in the statutory definition quoted above.
The urban planning agreement should be concluded in the form of a notarial deed, and several investors may be parties to it, provided that together they have applied for an integrated investment plan.
Undoubtedly, the urban planning agreement, together with the integrated investment plan, is a sanctioning of what was already present in the relations of municipalities with investors. Until the spatial planning reform came into force, municipalities entered into civil law contracts with investors, under which investors carried out, for example, the construction of sidewalks, the reconstruction of intersections, or participated in the cost of building educational facilities. The drawback, however, was the lack of statutory authorization, which inhibited some municipalities from entering into such agreements. With the introduction of MIP into the law, urbanization agreements should gain in popularity, as the procedure for enacting MIP is relatively transparent and uncomplicated, which may affect the popularity of urbanization agreements. We can already see increased investor interest in ZPIs, but a deeper assessment of this regulation has yet to be made.
