Vol. XVI No.6
Summer Ed 2011


New Zoning Rules for Construction


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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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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