Enforced Collection of Mortgaged Property

Markian M. Malskyy, Yuliya O. Peleh

The new On City Construction Activities Act of Ukraine, adopted in February 2011 (though the majority of its provisions came into force on 12 March 2011) pursues a positive and democratic approach to deregulation and debureaucratization of the construction branch, as many Ukrainian laws purport to do.

This article provides a short overview of the regulations introduced by the New Construction Act and a critical analysis of them.

Zoning

One of the fundamental additions introduced by the New Construction Act is elaboration of zoning provisions. The Act describes zoning as a city planning document, reflecting city planning restrictions and limitations within a certain zone. A zoning plan can be prepared together with the master city plan or as a separate document. At the same time, a zoning plan can be developed only based on the city master plan, effectively rendering any provisions on zoning obsolete (even major Ukrainian cities have no fully developed and finally approved city master plans).

As to function, the purpose of a zoning plan is to add further design to the city master plan. Based on the logic of the New Construction Act, the zoning plan will combine aspects of both the master city plan and the detailed plan, which shall specify the city design restrictions and limitations of a land plot in detail; however, it is not clear what the difference between the zoning plan and detailed plan will be. The alleged difference is also obscured by the fact that the state or municipal land may be leased out or privatized either in accordance with the zoning, or the detailed plan. This same afflicts the basic output data (city planning restrictions and limitations, as well as technical utility conditions), which may be provided by the authority either based on the zoning or detailed plan.

Detailed plan

Similarly as the zoning plan, a detailed plan is aimed at elaborating on the city master plan. However, a detailed plan should take into account the zoning plan, in cases where the latter is developed. Accordingly, the detailed plan is the lowest on the city planning document totem pole in terms of hierarchical value, below the city master plan and the zoning plan, respectively. As a result, a detailed plan can be changed only upon introduction of changes to the aforesaid plans. This should be complicated by the fact that according to the New Construction Act, city master plans may be changed only once every five years.

A detailed plan must set out the city planning restrictions and limitations in case there is no zoning plan, or it may specify the restrictions and limitations, which are already provided for in the zoning plan. Hence, a detailed plan constitutes a sufficient city planning document for land allocation and construction purposes.

Given that no zoning is necessarily required, it should be expected that in practice, mostly detailed plans will be developed and zoning plans will remain rather as a theoretical document, only “foreseen by the new law”.

The old and new provisions

A comparison of the new and old terms of the Construction Act may permit a conclusion that zoning most closely corresponds to what was before the detailed plan of a territory and the detailed plan — to what was called city planning justification.

Judging from the content of New Construction Act, it remains difficult to discern a reasonable difference between the old and new terms, except for the difference in name. A city planning justification had to be developed under the old law in such cases where there were no city master plans or local construction rules. As a result, a city planning justification always required development, since even Kiev has no final city master plan (the master plan of Kiev includes only the graphic part and misses the legally required description). Under the New Construction Act, city planning restrictions and limitations, which are necessary for designing and construction, can also be issued only based upon either zoning, or a detailed plan; i.e. a detailed plan will continue to be required just as the city planning justification had to be always prepared before.

In sum, no construction under the New Construction Act will be feasible if the following construction matrix is missing: city master plan — zoning or detailed plan — city planning restrictions and limitations.

Contrary to the old law, city planning restrictions and limitations may now contain requirements relating to architectural and engineering solutions. It can only be hoped that such a new right of the local authorities will not be misused by requesting unreasonable architectural or engineering solutions.

New and positive

Despite the mentioned novelties, which in essence represent new names for old ideas, there are also positive changes which should simplify and expedite the construction processes. The New Construction Act introduces simplified procedures for obtaining a construction permit. From now on, only projects of the fourth and fifth complexity category (e.g. high-rise buildings, industrial objects) require an application for a construction permit, whereas other projects can be constructed just based on a declaration filed by the principal. Even projects where a construction permit is required, construction may commence after the principal files a complaint with the supervising authority, emphasizing the non-issuance or non-response to the construction permit application (the silent approval principle). Further, the construction works may continue during a period in which a new permit is being reissued if the project (land) was sold to a new owner.

Positive changes also improve the permitting procedure itself. Design project documentation will no longer need to be approved by the state bodies, local bodies or legal entities established by them. In addition, only construction projects of the fourth and fifth complexity category are to undergo a check by state experts.

The public hearing procedure has likewise been simplified;

it is to take place only during approval of city planning documentation at all levels (city master plan, zoning plan and detailed plan). Individual design projects will no longer require public hearings.

Summary

The New Construction Act is in any case a positive step towards constructing more transparent and simplified construction procedures in Ukraine.

The implementation, however, of the new ideas leaves much to be desired. Real improvements could have been easily implemented under those laws which already exist, which would have better accelerated the transition period and not have had the negative (freezing) effect caused by the new law due to introduction of new terms without detailed regulations.

The actual effect of the New Construction Act will have to be evaluated not earlier than 2013.