Czech Republic: Urban Planning & Real Estate Development - Formality Or Deal Breaker?

05.04.2016

Prior to the fall of the Communist regime in the Czech Republic in 1989, urban planning was almost completely administrated by the government according to national economic goals and objectives. Spatial planning and investment under the central government focused mainly on the construction of grand projects (focused either on exploitation of energy and mineral resources, chemical manufacturing and heavy industries or on multi-storey apartment buildings), i.e. not on “consumer” needs or the protection of local environment.

Despite having been amended many times since 1989, the Building Act from 1976 was finally replaced with a new Building Act which came into effect in 2007. The new Act transferred most urban planning powers from the state level to municipal and regional authorities. After the new Building Act came into effect, it emerged that its practical application might be a bit problematic because of the ambiguous regulation it encompassed and insufficient experience of the authorities.

Although the Building Act continues to present certain problems, it has significantly improved the quality of territorial planning in the Czech Republic. The Czech territorial planning has moved towards the requirements of European legislation, even though, there are still some weak points in the regulation.

In the following paragraphs, we would like to offer you a brief insight into the process of territorial planning focusing on its main characteristics, from the very general governmental instruments of territorial planning to specific legal instruments used at municipal level.

Territorial planning (in Czech “územní plánování”) is a tool used by the public administration consisting in continuous activities carried out in order to set the conditions for construction and sustainable land development. Sustainable development provided for in the Building Act reflects a number of international obligations of the Czech Republic. Sustainable development is understood as the balanced relationship between the following factors:

  • healthy environment,
  • economic development,

  • social cohesion between inhabitants of a particular area.

The primary instruments of territorial planning of interest for investors developing real estate projects are as follows:

  • Spatial Planning Records (in Czech “územně plánovací podklady”) – consisting of territorial analytical records (mandatorily issued and updated by municipalities and regions) territorial studies (optional unbinding documents dealing with the technical, urbanistic and architectonic conditions of the use of an area).
  • Spatial Development Policy (in Czech “politika územního rozvoje”) – designed for the whole territory of the Czech Republic, where the national priorities of territorial planning are laid down (issued in the form of a governmental resolution).
  • Spatial planning documentation (in Czech “územně plánovací dokumentace”) – which consists of:
    • Principles of spatial development (in Czech “zásady územního rozvoje”) created on a regional level on the basis of comments received from the state authorities and the Ministry of Environment. The Act does not provide for any specific deadline within which the region is obliged to make the principles of spatial development comply with the Spatial Development Policy, however, it may be concluded that this will be during the first update of the principles. It is necessary to update or redraft the existing principles as soon as a discrepancy with the existing Spatial Development Policy emerges or if a new Spatial Development Policy has been adopted and the principles fail to comply with it.
    • Zoning plan (in Czech “územní plán”). A zoning plan is the basic instrument of territorial planning on a municipal level used by municipalities to structure their territories and introduce the direction of their development and its limits. The adoption of a zoning plan is entirely within the discretion of a municipal council. Each municipality is obliged to adopt a zoning plan before the end of 2020. Should a municipality fail to adopt a zoning plan within this time limit, it would be practically impossible to place any construction on its territory outside the already built-up areas. Municipal councils decide on zoning plans, either on their own motion or following a motion of a public authority, any of their citizens or an individual or entity holding ownership or similar interests in property located in the territory of the municipality. The municipal council either (i) adopts the proposed zoning plan, if it agrees with it, (ii) rejects the zoning plan or (iii) returns the draft zoning plan to its proposer in order to be rewritten and reconsidered. The Act gives the Council no other option to deal with the proposed plan; and
    • Adjustment plan (in Czech “regulační plán”). The adjustment plan is issued for a designated area of a region or a municipality.
  • Zoning decisions – for example decisions on the placing of buildings, on change of territory use or on change of buildings.

The first thing the Building Authority sets out to do after receiving an application for a zoning decision is to make a preliminary assessment whether the application meets all statutory requirements and contains all annexes, in particular whether the application contains information on the possible need to carry out the environmental impact assessment (EIA) of the planned construction. Authorities concerned attach their opinions to the application, parties to the administrative proceedings (owners of adjoining land or the municipality) may raise their objections to the application and the public may comment on the application. The outcome of the zoning proceedings is a decision issued by the Building Authority. If the application is materially and formally flawless and the Building Authority arrives at the conclusion that the intention of the application is in compliance with the principles of the Building Act, or, as the case may be, that such compliance may be achieved by meeting certain conditions, the Building Authority issues a zoning decision. The zoning decision generally expires in 2 years, which is also the time frame in which the application for a construction permit must be filed. The validity of the zoning decision may be extended upon request.

As outlined above, the Building Act provides for a hierarchical relationship between the individual instruments of territorial planning. This hierarchy reflects not only the fact that a lower level instrument is bound by a higher level instrument (Spatial Development Policy is binding on the regions deciding on and adopting principles of spatial development, which are binding on municipalities drafting and adopting zoning plans), but also the size of the area regulated by each planning instrument (the Spatial Development Policy is binding for the whole territory of the Czech Republic, principles of spatial development are binding for individual regions and the zoning decision for individual municipalities), the relationship between the general and the specific, but also, logically, the relationship between the essential and the marginal. It is therefore only natural that the most important goals, principles and intentions, essential for viable and sustainable development of the territory of the whole country, or even other countries, and commonly arising out of the implementation of international or cross-border spatial planning obligations, must be provided for on the highest national level, i.e. in the Spatial Development Policy.