Vol. XVIII No.4
September 2013



Following years of economic boom, when the development of real estate projects were the engine of the Romanian economy, the Romanians had to face the fact that too many times, the public interest and community wellbeing were being sacrificed for the immediate interests of various real estate developers. Many of our country’s localities actually underwent a negative process of internal transformation which, in most cases, meant random construction and the disappearance of green areas, thus triggering environmental damage and potential litigation in the courts of law. In February 2011, the Romanian Government adopted Emergency Ordinance no. 7/2011 (“GEO 7”) amending Law no. 350/2001 regarding territory planning and urbanism (the “Urbanism Law”) in an attempt to strengthen the role of public authorities and reduce “urbanism at random”. Then, in July 2013, the Romanian Parliament adopted Law no. 190 (“Law 190”), i.e. the law approving GEO 7. Law 190 came into being two years after the adoption of GEO 7, and brought significant amendments to the latter.

The adoption of GEO 7 intended to strengthen the role of public authorities as the main issuers of the requisite urbanism documentation, and to eliminate the possibility for investors to request and finance amendments to the Zoning Urbanism Plan, except in cases involving big projects. For more details on the provisions put in place by GEO 7, please visit our Digest Archive at http://www.hr.ro/digest/201106-07-08/digest.htm  (“New Zoning Rules for Construction”).

Two years later, the Parliament adopted the law approving GEO 7 with significant amendments, one of which is the possibility for investors to initiate Zoning Urbanism Plans and finance such amended plans in exempt from the General Urbanism Plan. The respective amendments brought by Law 190 - published in the Official Journal of Romania on July 10, 2013 - generated huge criticism from non-governmental organizations, as well as from the architects’ union for bringing lack of coherence to the urbanism system. However, even though the initial draft of Law 190 was rejected by the President in March 2013 and resent to the Parliament for re-examination, the Parliament eventually adopted Law 190 in its same initial form, thus bringing significant changes to GEO 7.
Review of the Main Documents Required in the Urbanism Field

The starting point in any construction project is obtaining the urbanism certificate. This document provides the applicant with information on the legal, economic, and technical regime applicable to the project’s property.

Should the intended project not comply with the existing urbanism parameters, or should the existing urbanism parameters not provide enough information required for the development of the respective project, the urbanism certificate may require the amendment of the existing urbanism parameters. Such an amendment must be done through a Zoning Urbanism Plan (“PUZ”) for larger areas and through the Detail Urbanism Plan (“PUD”) for smaller areas. These urbanism documents should be prepared by specialists and then approved by the local council of the area where the project is going to be developed.

The final goal of the applicant is to obtain the construction permit, the document authorizing the commencement of construction. For further information on the procedure applicable to obtain a building permit, see the provisions of Law no. 50/1991 authorizing construction.

As outlined above, when the project to be developed does not comply with the existing approved urban parameters, or when the respective parameters do not provide enough information required for the development of the project, the amendment of the existing PUZ would be required. Whether the amendment of the existing PUZ is an exclusive prerogative of public authorities or if this prerogative may be shared with interested persons or legal entities - this is the main issue that differs between the Urbanism Law, GEO 7, and Law 190.

Main Amendments Brought by Law 190

Cases when the urbanism documentation is drafted at the exclusive initiative of the local public authority

As noted above, according to GEO 7 – which significantly amended the Urbanism Law – the initiative for drafting the PUZ became an exclusive prerogative of the local public administration. Therefore, GEO 7/2011 brought more coherence to the urbanism procedure and stopped the arbitrary changes of PUZs, previously put in place by the Urbanism Law. According to the provisions of GEO 7, the amendment of a PUZ could have been requested by the investor and elaborated at the investor’s expense for big projects only. Big projects were defined as the 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 intended to invest in any of the projects listed above were entitled to request the amendment of the PUZ and to pay for amendments. Any other potential investors who were interested in developing different types of projects, other than the ones outlined above, were banned from asking for the amendment of the PUZ, even if they had the possibility to finance such change. Therefore, the possibility for interested  investors – either natural persons or legal entities – to ask for the amendment of the existing PUZ and perform such change, at their expense, was only an exception strictly limited by the provisions of GEO 7, having as a target the creation of a coherent urbanism system.

Law 190 significantly amended this main concept of GEO 7, thus allowing individuals and legal entities to draw up and finance PUZs, at their expense, except for specific cases where the urbanism documentation is drafted at the exclusive initiative of public administration bodies.

According to the provisions of Law 190, public administration bodies are expressly and exclusively allowed to initiate the drafting of the following: (i) urbanism documentation; (ii) general urbanism plans (“PUG”); (iii) PUZs for central areas; (iv) PUZs for areas protected in their entirety; (v) PUZs for monument protection areas; and (vi) PUZs or detail urbanism plans (“PUD”) for the accomplishment of public interest objectives.

In all other cases besides the foregoing, the initiative for the drafting of urbanism documentation belongs both to public administration bodies, as well as to any interested natural person or legal entity, which can ask for and finance the amendment of the PUZ.

Where the initiative for drafting the urbanism documentation belongs to public administration bodies, the respective documentation shall be financed by the state or local budget, except for the PUZs and PUDs amending parts of the protected areas, which may also be financed by interested persons or legal entities.

Possibility for interested persons and/or legal entities to draw up and finance the urbanism documentation

As noted above, Law 190 entirely changed the basis of GEO 7, now allowing interested persons and/or legal entities to draw up PUZs and PUDs, irrespective of the functionality of the construction, except for cases when the authority is exclusively granted to the public administration bodies, as detailed above.

Therefore, in cases when the investor is asking, through a request for obtaining the urbanism certificate, for an amendment of the already approved urbanism documentation, or in cases where the specific characteristics of the project require it, the public authority is entitled to authorize the investment, conditioned only upon the approval of the amended PUZ. The respective amendment to the existing and already approved PUZ must be drawn up and financed by the respective investor.

Amendment of cases where the drafting of a PUZ is mandatory

Law 190 eliminates certain cases for which the Urbanism Law required the mandatory drafting of PUZs, such as residential areas, hypermarkets, commercial parks, production areas, cultural parks, sea coastal, or protection zone.

Law 190 is more precise than GEO 7 and expressly states the projects for which the drafting of a PUZ is mandatory, namely: central areas of localities; protected areas and monument protection areas; entertainment and tourism areas; industrial, technological and services areas / parks; division of land into more than three plots; transport infrastructure; urban restructuring or regeneration areas; and other areas established by local public authorities, according to law.

Amendment of PUZs for protected areas

According to the newly adopted Law 190, even though, as a rule, the PUZs for areas protected in their entirety may be amended only through plans drafted by local public authorities, there is an exception allowing the amendment of the respective PUZs only based on the documentation drawn up at the initiative of interested persons or legal entities. The only prerequisite is that the respective amendment must not change the urbanism indicators more than 20% and must not amend the general nature of the respective zone where the protected area is located.

Limitations regarding the urbanism indicators

A PUZ regulates, among other things, the construction rules, the functionality of the area, the maximum allowed height of the construction, and the land use coefficient (“CUT”). Again, even though Law 190 allows private entities or natural persons to initiate the drafting and also finance a PUZ amendment, it also imposes certain limits upon the possibilities to amend the CUT. Therefore, in such cases, the newly proposed land use coefficient cannot exceed the initially approved CUT by more than 20%, and this can be proposed only once. This limitation shall not apply, however, to the PUZs designated for areas having economic interest, namely industrial or technological parks, hypermarkets, supermarkets, commercial parks, service areas, and any other similar zone.

Clarifications with regard to the regime of the PUD

Another significant aspect introduced by Law 190 is the increase in the regulatory power of the PUD. More specifically, the PUD is now allowed to amend the land usage percentage (known in the Romanian legislation as the “POT”). According to Romanian regulations, the CUT – land use coefficient – and the POT – land usage percentage – are two essential urban parameters. By allowing the amendment of the POT through the Detail Urbanism Plan, the PUD has been severely criticized by urbanism and architect organizations, arguing that the PUD only has the detail perspective – the plot perspective – over the land, and not the entire neighborhood perspective. This means that, if the construction of a project is allowed by amending the POT, even if the respective project complies with the existing land use coefficient established through the PUZ, then the architectural characteristics of the respective building – such as volume – may greatly differ from the image envisaged through the already approved PUZ. Allowing the possibility for the land usage percentage to be amended through the PUD may trigger the development of various construction projects that, from an urbanism and architectural perspective, do not comply with the parameters initially put in place by the General Urbanism Plan and/or Zoning Urbanism Plan.

Changes with regard to the content of the Urbanism Certificate

Law 190 introduced another significant amendment in relation to the content of the Urbanism Certificate. As mentioned above, obtaining the Urbanism Certificate is the first step in the development of any construction project. According to newly adopted Law 190, this document must now also indicate the rules according to which the amendment or update of the existing urbanism documentation and/or local regulations is possible.

Therefore, when the new intended project does not comply with the technical parameters set by the already approved urbanism documentation, the applicant must be informed, through the Urbanism Certificate, of the following: (i) the impossibility to amend the provisions of the already approved urbanism documentation; (ii) the necessity to obtain an opportunity note (in Romanian, aviz de oportunitate) according to the provisions of the Urbanism Law; and (iii) the possibility to draft an amending urbanism documentation, without the necessity of obtaining an opportunity note, also in accordance with the provisions of the Urbanism Law.

The investor will therefore know, at the initial stage of its project, namely when obtaining the Urbanism Certificate, whether it is possible or not to amend the existing urbanism documentation and, if so, the manner in which such amendment may be performed.

Extension of term for approval / rejection of the territory planning urbanism and documentation

The territory planning and urbanism documentation is to be approved or rejected by the appropriate local authority, namely the local or county council. The local authority is obligated to issue its decision to either approve or reject the respective documentation after (i) the finalization of the public debate on the documentation; and after (ii) the local authority has received a document from the mayor or the president of the county council mentioning the grounds to either approve or reject the documentation, as well as the special report drafted by the chief architect.

Therefore, the local or county council with the authority to approve or reject the territory planning and urbanism documentation needs to consider, prior to making its decision, not only all the grounds and conclusions of the mayor or the president of the county council, but also of the chief architect of the institution.

The term in which the local authority must render its ruling has been extended by Law 190 from 30 days to 45 days – thus allowing more time for the local authority to properly analyze the documentation.

Requirement to obtain the approval of the Environment and Climate Change Ministry

The newly adopted Law 190 also requires investors trying to develop projects with a focus on tourism to obtain the approval of the Environment and Climate Change Ministry. This approval is required for the following categories of urbanism documentations: regional zoning plans, and PUZs regarding or related to areas of tourism having national interest, such as mountain or coastal zones. The main purpose in introducing this requirement is to be able to ensure sustainable development and maintain the local identity of those particular areas.

Other provisions
Status of documentations elaborated according to prior legal provisions

Law 190 includes certain transitory provisions according to which the approval of the urbanism documentation drafted before February 1st, 2012, and not yet approved on July 13th, 2013, must be performed according to the provisions of the Urbanism Law, as amended through Law 190, in consideration of the documentation already drafted and the notices / approvals already obtained as part of the process.

Methodological norms

The Ministry for Regional Development and Public Administration must draft the methodological norms for the implementation of Law 190, as well as the urbanism documentation, within a 90-day term from the effective date of Law 190 (July 13, 2013).

Allowing investors to request and finance amendments to the Zoning Urbanism Plan may lead to the development of small and medium size real estate projects which may stimulate the revival of the real estate sector. However, developing real estate projects cannot be seen exclusively from an economic perspective. The negative effect of “urbanism at random” can be easily observed in most, if not all of, Romania’s localities. The appearance of Romania’s communities – which should benefit from open spaces and green areas – is also an indicator of their wellbeing. Local authorities welcome new real estate projects, but it is yet to be seen how the newly adopted provisions of Law 190 are to be implemented. Special attention must be given to the norms that have yet to be adopted.
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 2013 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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