Zoning Issues - how to choose real estate for investment projects

There are numerous important factors to be taken into account  when choosing a site for a new development By Anna Wyrzykowska, Lawyer at WKB Wierciński, Kwieciński, Baehr One of the key factors for determining whether real estate is suitable for a planned investment is its designation. The designation of land, and the manner and terms of its development, are generally defined in a zoning plan. The zoning plan is an act of local legislation adopted by the council of a municipality. The provisions of a zoning plan constitute binding laws applicable in the area for which it was adopted. The contemplated investment must match the provisions of the adopted zoning plan. Otherwise, it will be necessary to seek an amendment of the plan. This entails a process which is analogous to the process for initial adoption of a plan (i.e. very formal, long and expensive). In practice, even if the municipality is interested in making the amendment, the process may last more than a year. When analyzing a zoning plan, an investor should not just focus on the general designated function of an area (industrial, residential, etc.). The specific provisions of a zoning plan also often introduce significant restrictions e.g. a minimum plot size (which limits the scope for division of plots) or green area indicators (limiting the development area). If a zoning plan is not adopted, the conditions for an investment are determined in a specific zoning decision, which should be attached to the application for a building permit. The issue of a zoning decision must observe the ‘good neighborhood’ principle. Generally speaking, a particular project must be consistent with the function or dimensions of developments in the broader neighborhood, and not just those in its immediate vicinity. The application of the ‘good neighborhood’ principle is controversial in practice, and has been the subject of extensive literature and numerous judicial decisions. While selecting a spot for a new investment, an investor must also take into account that some projects of particular importance to the country (e.g. road and rail projects, airports, or nuclear power facilities) are privileged and can be implemented under the provisions of special legislation without observing the applicable zoning plans. Moreover, these projects are not required to respect other contemplated investments, including those for which building permits have already been obtained, regardless of the stage of their implementation. An investor might find that the land they plan to develop is, or becomes, subject to expropriation as a result of a decision issued on the basis of such special legislation. For that reason, it is important to check if the new investment does not collide with a privileged project.