Restarting the urban planning reform: what’s going on?

Objectively speaking, the construction sector has always been one of the most corrupt in Ukraine.

Over the decades, market participants have already got used to certain “rules”, and officials have come up with many convenient schemes.

This story could have ended successfully last year, but something went wrong. Is there another chance? Here is a little spoiler: yes.

How did it get started? 

The beginning of quarantine coincided with seemingly revolutionary changes in the field of state architectural and construction control.

In March 2020, the new government liquidated the State Architectural and Construction Inspectorate (SACI) as a well-known corrupt honeypot and proposed to create three different agencies instead.

However, the SACI continued to operate all this time, but without state supervision and control functions. The market was left on its own, corruption practices were still there, and the reform was suspended.

Later, the approach to reforming the sector was changed again: they decided to create one new agency instead of three ones. Thus, in December 2020, the Cabinet of Ministers adopted a resolution that established the State Inspectorate for Architecture and Urban Planning of Ukraine (SIAUP).

Finally, today we are at the stage of developing a quality legal framework that will ensure the full operation of the inspectorate.

Digitalizing everything

The key in fighting against corruption, in particular in the construction sector, is total digitalization.

For this purpose, in July 2020, a pilot project of the Unified State Electronic System for the Construction Sector (USESCS) designed to harmonize the construction process in Ukraine and prevent corruption risks through publicity of information was launched.

In such a way, the USESCS should implement the entire life cycle of construction of a particular object:   from obtaining urban planning conditions and restrictions and a land development certificate to its commissioning.

It is expected that most of the information and documentation required for the construction will be entered into the e-system by relevant entities.

This will centralize and standardize data from many fragmented sources of information.

This logic is enshrined in the draft laws that constitute the very basis of the urban planning reform.  Recently, parliamentarians have adopted draft laws #5655 and #5656 drafted with the participation of experts from the Better Regulation Delivery Office (BRDO) in the first reading.

The documents provide for the digitalization of administrative and other services in the urban planning sector. This will mean even more transparency, more services in the e-system, and less corruption in the construction sector.

It is also expected that the e-system will contain all the necessary information, except for state secrets. Now every investor, construction project owner or concerned citizen can check the progress of construction, the risk level, etc.

Competition saves the world

We create competition in the market. Here is the way this works today: the only agency in the whole country — the SACI — can issue permits for CC2 and CC3 objects.

Accordingly, entities from all over the country come to Kyiv to physically obtain this permit. By the way, permits only for CC1 objects (with the lowest risk option) are issued locally.

We suggest leaving this practice behind. There is no need to visit the capital to obtain a certain permit anymore, as there will be a good alternative to receive the service.

In particular, under draft law #5655, notaries, state registrars of real property rights, and SIAUP officials (only for objects covered by  Law of Ukraine “On State Secret” and for registration actions with a decision resulted from consequences of the administrative appeal) have state registration powers in the urban planning sector.

Simply put, the entities will now be able to choose who to contact to receive the service. They will be able not to pay a bribe, even if it is required.

In this case, construction project owners will have a chance to contact a notary and do everything as quickly as possible and without corruption.

Similar changes will apply to the state architectural and construction control sector. Private agencies performing this function instead of the state will also appear on the market.

At the same time, we provide significant safeguards to prevent abuse by control authorities. For this purpose, we have developed a separate draft law #5655 that establishes financial liability for such actions as a failure to impose orders on the need to eliminate violations, if any.

And if this happens again, such an official will pay a doubled fine and lose the right to carry out urban planning control for up to three years.

In turn, criminal liability is provided for forgery of documents, obtaining illegal benefits, as well as for bribery involving officials in the urban planning control sector.

The balance of interests is first and utmost

Another revolutionary innovation in the construction sector will change everything. The new draft laws to be adopted provide for the establishment of the Urban Planning Chamber at the Ministry of Regional Development.

Its purpose is to impose liability on the objects of supervision (SIAUP, officials in the urban planning control sector, executive urban planning control bodies of village, settlement, city councils, authorized urban planning and architecture agencies, expert organizations, self-regulatory organizations involved in architectural activities, contractors for types of works (services) related to the creation of architectural objects).

To hold a construction participant accountable, a person initiating an inspection should appeal to the Ministry of Regional Development, which verifies the facts submitted in the application in the exercise of supervisory functions. The term of such inspection may not exceed 20 working days.

When the inspection finds violations, the Ministry of Regional Development will prepare and send a claim for liability to the Urban Planning Chamber using the e-system.

The chamber may include SIAUP representatives, officials from the urban planning control sector, or urban planning and architecture agencies.

The chamber may also include representatives of executive urban planning control bodies of village, settlement, city councils, representatives of expert organizations, self-regulatory organizations involved in architectural activities, contractors for types of works (services) related to the creation of architectural objects, etc. The annual rotation of membership will help to avoid abuse.

Additionally, the draft law introduces a mechanism of pre-trial appeals against decisions on the refusal to grant state registration in the urban planning sector to the SIAUP.

The concerned persons who are not subject to supervision will be able to exercise this right.

The term for consideration of such an appeal may not exceed 30 calendar days, and in some cases, if it is necessary to involve the complainant or another body, it may be extended to 45 calendar days.

If a decision on state registration in the field of urban planning activities is made based on the results of the appeal, such a decision shall be executed no later than the next working day.

But no re-submission of documents for state registration and payment of administrative fees will be required for this purpose.

What comes next?

Today we are on the threshold of a new stage that can once and for all change the philosophy that has prevailed in the construction sector for years.  Without schemes and agreements — this is the main result we all expect.

To make this a reality, our experts together with MPs have drafted the laws designed to resolve problematic issues in the construction sector, as well as make it attractive to investors.

After all, the specific changes contained in the documents will help Ukraine improve its position in the World Bank’s Ease of Doing Business Ranking. The simplified procedures of receiving services, transparent market rules for all participants, and fair competition will guarantee this result. The key to this whole deal is to keep moving.

SourceEconomichna Pravda