NEW ZONING RULES FOR CONSTRUCTION |
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Introduction
In the past few years, Romania has experienced a vibrant level of real
property development. The construction of grand houses, office buildings
and residential units along with the growth in the number of small
neighborhoods all help to color this flourishing image. However,
questions concerning the propriety of the procedures used to perform
these development projects and the undesirable secondary effects that
have surfaced as a result of them, somewhat pollute the image of the
changes taking place in Romania’s cities.
The construction of any building, regardless of its purpose, is
performed pursuant to what is known and regulated by law in Romania as
the “Urbanism Procedure”. This procedure states that certain government
issued documents are required prior to erecting a building in order to
regulate and control the development of localities and supervise
individual construction sites as part of an integrated and coherent
system. Therefore, construction sites should not be viewed as separate
units unrelated to one another, but should instead be viewed as part of
a network that grows and develops in a coherent manner.
The Romanian authorities have now faced the fact that much of the
urbanism activity throughout the country is carried out at random and,
furthermore, that there is a void in any real or effective management
system to supervise urban growth. Often, investors obtain approvals for
their real estate projects by way of exceptions to applicable laws.
Others, despite their sound expertise and commitment to developing
projects in compliance with law, are blocked by various other issues
including the inability of authorities to smooth out bureaucratic
procedures or provide the qualified personnel required for the
implementation of such procedures. Moreover, many projects have been
developed in ignorance of recent environmental legislation, which has
since triggered severe consequences for the developers involved often
affecting the legal status of the investments themselves.
In the aftermath of these troubles, the Romanian Government decided that
urbanism projects must be integrated into the life of the particular
city involved, and should have a long lasting and positive impact on the
cities in which they take place. Urbanism operations are not singular or
independent from one another. They are also not independent of other
operations, including environmental procedures. Instead, urbanism
operations must be viewed as part of a coherent system, which will be
controlled by an authority capable of coordinating it. The disturbing
discrepancies in urban planning seen in so many Romanian cities and
towns are a reflection of the past years’ failed urbanism operations.
Such discrepancies negatively affect not only the image of the
respective communities, but also the wellbeing of the citizens living
there.
In reaction to these problems, in February 2011, the Romanian Government
adopted an Emergency Ordinance to amend Law 350/2001 regarding the
planning of territory and urbanism. This is seen as an attempt to
strengthen the role of public authorities and reduce “urbanism at
random,” bringing more clarity to the entire urbanism procedure. |
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Brief Legislative Framework Applicable in
the Urbanism Field |
There are a striking number of regulations applicable to urbanism and
construction. However, the purpose of this article is not to explore the
details. The main law that investors have to deal with is Law 350/2001,
which regulates territorial planning and urbanism operations. Because of
its importance, this law has been amended on many occasions. This year’s
amendment, by way of Government Emergency Ordinance no. 7/2011 (“GEO
7/2011”), attempts to completely rework the management of the entire
urbanism procedure. Furthermore, Law 50/1991, which details the
conditions in which construction may be undertaken, is also currently
under debate for amendments, but thus far nothing of consequence has
emerged. |
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Main Documents Required in the Urbanism
Field |
The permit authorizing the commencement of construction or any changes
to existing construction sites is known as the Building Authorization.
Obtaining the Building Authorization is the final step in a long
bureaucratic process in which some impatient investors lose interest
along the way. In reaction to the slow progression of the process in the
past, many builders have begun retaining specialized legal and urbanism
counselors in order to find a successful end to this cumbersome
procedure.
The building authorization is valid for a period of 12 months after the
date of issuance, and the applicant must commence construction within
that time. If the applicant successfully begins construction within the
valid period designated by the building authorization, then the validity
period will extend for the entire time necessary for the full completion
of the construction project. In case the developer is unable to commence
the construction project during the 12-month validity period of the
building authorization, then that period may be extended only once and
only for a period of 12 months. The investor is obliged by law to
communicate to the issuer of the building authorization, as well as to
the territorial inspectorate for construction, the date upon which the
construction will commence.
The starting point in any construction project is the attainment of an
Urbanism Certificate. This document must be obtained from the city hall
that has authority over the potential development site. The Urbanism
Certificate provides the applicant with information regarding the legal,
economic and technical regime for the property designated for potential
development. In other words, the Urbanism Certificate notifies the
applicant of the main characteristics of the construction project which
may be constructed on the land, and also mentions the documents required
by the authorities prior to submitting the documentation for the
Building Authorization. Among these documents, the Urbanism Certificate
often requires the elaboration of a technical architectural study which
is prepared by a specialized entity at the investor’s expense. This
study details the exact parameters and conditions in which the project
is intended to be developed.
If the intended project does not comply with existing urbanism
parameters, or if the existing urbanism parameters do not provide enough
information necessary for the development of the intended project, then
the Urbanism Certificate may require an amendment to the existing
urbanism parameters. This is done through a Zoning Urbanism Plan which
applies to a larger area and the Detail Urbanism Plan which is
applicable to a smaller area. These are urbanism documents that should
be prepared by specialists and then approved by the local council of the
area where the project is going to be developed.
Until the adoption of GEO 7/2011, the provisions of Law 350/2001 allowed
the amendment of the Zoning Urbanism Plan, but only upon the initiative
and at the expense of the investor. This meant that anytime an intended
project did not fit in the existing urbanism parameters, the investor
had to request and pay for the amendment of the Zoning Urbanism Plan. In
practice this triggered many repeated amendments of the Zoning Urbanism
Plan and resulted in projects going forward that should not have been
allowed to do so. The provisions of Law 350/2001 before its amendment by
GEO 7/2011 allowed the possibility that those who erected or changed a
building without having a building authorization had the option of
either demolishing the existing building or “entering legality.”
Naturally many investors did not want to demolish their buildings after
finding out they did not have the proper authority to build them. Thus
many chose to “enter legality,” allowing them to construct first and
obtain the required documents later. This quickly became a standard
practice in the construction industry and made urbanism at random
possible, in turn leading to the construction of illegal buildings all
over Romania. |
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Main Amendments Introduced by GEO 7/2011 |
Strengthening
the role of local public authorities
Multiple amendments were made by GEO 7/2011, and they refer mainly to
the attributions of the authorities responsible for issuing urbanism
documents. In general, GEO 7/2011 tries to strengthen the role of the
local public authorities as issuers of urbanism documents. It seeks to
do so by detailing the components of the urbanism units within the local
city halls and county councils, and also by stating their specific
attributes. By introducing an increased level of specification by law,
applicants should find it much easier to address the responsible
authorities, while the authorities should be able to coordinate more
easily the urbanism process at the local level.
After the adoption of GEO 7/2011, many argued that strengthening the
role of the public authorities would only produce more inequalities.
They believed that if decision making was left entirely to the local
authorities, such authorities would inevitably produce biased results.
However, most believe that the implementation of the law will prove its
benefits and that, if executed correctly, such potential problems will
not arise.
Entering legality
As previously mentioned, the Building Authorization is the only urbanism
document allowing for the commencement of construction or the
implementation of changes in an already existing construction project.
However, in practice, buildings big and small are often erected without
a Building Authorization. Furthermore, even if such authorization
exists, the conditions mentioned in the original authorization are often
disregarded by builders. This issue is exemplified by a project in which
a ten story building was erected in a residential neighborhood without
any notification to local residents. As to be expected, the project
surprised and angered many residents. Such “overnight development” is an
obvious problem, for it is in blatant non-compliance with the conditions
outlined in the Building Authorization. Documents show that such issues
have also surfaced in smaller projects. Thus, small changes to buildings
will also require the attainment of a Building Authorization prior to
alteration.
The main problem with Law 350/2011 was the possibility of entering
legality after finishing the construction. However, thanks to the newly
implemented amendments, the practice of building first and attaining
legal approval afterwards will cease to exist. According to GEO 7/2011,
investors who erected buildings in non-compliance with law are still
allowed to enter legality until January 1, 2012. Afterwards, the
illegally erected buildings or other illegal construction will be
“removed”—a possibility that real estate analysts believe will
significantly affect the real estate market.
Amendment of the Zoning Urbanism Plan
Until the adoption of GEO 7/2011, the amendment of the Zoning Urbanism
Plan was required by the Urbanism Certificate. Only then could the
respective amendment be initiated at the investor’s request and at
his/her expense. This triggered the repeated amending of the Zoning
Urbanism Plan at the local level by builders which, in turn, created a
cycle where legality depended more on the investor’s ability to pay for
amendments to the Zoning Urbanism Plan than on the actual legality of
the project. In time, the amendment of the Zoning Urbanism Plan became
less of an exception, and more of an unwritten rule. This triggered huge
discrepancies between the urbanism plans of the localities during very
short periods of time. Much to the displeasure of locals, these issues
led to a non-unitary urbanism perspective over the respective locality
itself.
GEO 7/2011 brings more coherence to this procedure and stop such
arbitrary amendments. According to the provisions of GEO 7/2011, the
amendment of a Zoning Urbanism Plan may be requested by the investor and
elaborated at the investor’s expense for big projects only. Big projects
are defined as construction of industrial parks, technological parks,
hypermarkets, commercial parks, production areas, residential
assemblies, and the extension of the intra muros area of the
locality with at least 10,000 sq. m. for dwelling purposes or with at
least 5,000 sq. m. for services or production purposes. Therefore, those
who intend to invest in any of the projects listed above are entitled to
request the amendment of the Zoning Urbanism Plan and to pay for
amendments. Other potential investors who are not interested in
developing any of the mentioned projects no longer have the option of
requesting the amendment of the Zoning Urbanism Plan. Amendments to the
Zoning Urbanism Plan will now be decided by the local authority residing
in the area in which the project is to be developed. In the opinion of
the amendment’s supporters, this should greatly improve the manner in
which things are built.
The adoption of GEO 7/2011 was both praised and severely criticized. On
the one hand, the new legal provisions are perceived as putting an end
to the arbitrary procedure of having the Zoning Urbanism Plans amended
at random at the local level. On the other hand, there are many people
arguing that, according to the new legal provisions, the development of
medium and small projects shall no longer be allowed since local
authorities are now the only ones able to perform the amendment of the
Zoning Urbanism Plans. Further, this depends on the budget of the local
authorities which some feel will not be sufficient. In other words, many
fear that investors’ loss of the right to request and finance the
amendment of the Zoning Urbanism Plan for their own ends may actually
decrease the level of investment in local communities. |
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Conclusion |
The
amendments brought to the Territory Planning and Urbanism Law are
undoubtedly attempts to put an end to the major problem of random
urbanism in Romania. The newly introduced legal provisions try to bring
more clarity and transparency to the urbanism procedure by strengthening
the role of the local public authorities in the local urbanism
procedure. This will undoubtedly have a positive effect. However, this
must not be seen as a means for the local authorities to favor potential
investors who have more influence at the local level than others. In
addition, the investors’ inability to request and pay for the amendments
of the Zoning Urbanism Plan for smaller projects may indeed affect the
possibility of further investment in medium and small projects. This is
a potential negative consequence. Finally, the impossibility of entering
legality after January 2012 in relation to unlawfully erected
construction will leave only the possibility of having the respective
construction demolished. This situation will undoubtedly affect the real
estate market – however, the parameters of such effects remain to be
seen. |
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Editors Note: It is our policy not to mention our clients by name in
The Romanian Digest™ or discuss their business unless it is a matter of
public record and our clients approve. The information herein is correct
to the best of our knowledge and belief at press time. Specific advice
should be sought from us, however, before investment or other decisions
are made.
Copyright 2011 Rubin Meyer Doru & Trandafir, societate civila de avocati.
All rights reserved. No part of The Romanian Digest™ may be reproduced,
reused or redistributed in any form without prior written permission
from the publisher.
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