Towards More Efficient Construction Permitting

Doing Business Report – Efficiency of Construction Permits 2

Number of Construction Permits Issued by Months Number of construction permits in 2012 is 25% less than in Increase in 2012 over 2011 was only 2%. 3

Root Causes of Inefficiency in Construction Permits Unresolved ownership issues Lack, or poor quality, of planning documents Poor state of registries of available infrastructure Too many authorized bodies, too little responsibility Capacities of the public sector System of control over the work of licensed engineers 4

Approach to the Reforms Without radical changes – avoid revolutionary changes and rely whenever possible on existing basis Changes to regulations are not enough – thorough control of implementation and improvements in capacities of public sector are needed Introduction of the construction permitting IT platform might be most important element of our proposal 5

Key Elements of the New Concept Simplified planning Change of the role of public enterprises (system operators) Property ownership postulated as a starting point for the construction process and land regulation Differentiation of public sector involvement and control by the complexity and risk level of the project Transferring responsibilities to licensed engineers with increased level of their professional liability (with simultaneous shift of focus of public bodies from prior control to compliance control) 6

Spatial and Zoning Plans Decision on preparation of a planning document and adoption of the concept of a planning document to be merged in a single step Secure an adequate public input in the planning process Redefine deadlines for adoption of plans Provide resources to support local governments who need resources to prepare plans Consider sanctions against local governments that fail to adopt legally required plans Apply general urban planning parameters and higher level plans when required plans are not adopted 7

Elaborate for Construction Designing Contains elements needed for construction designing currently provided on case-by-case basis Adopted and adjusted in a simple procedure Its existence makes the location permit unnecessary for vast majority of projects It simplifies content of planning documents System operators’ conditions for project designs are required only for more complex and specifically defined projects 8

Pracelization Parcelization procedure must not depend on existence of detailed zoning plans – smallest allowed size of a land parcel should be defined in the Republic-wide general urban planning parameters, by specific categories of projects allowed. A zoning plan can provide for a smallest allowed size of a land parcel to be smaller than provided in the general urban planning parameters. 9

Risk Based Control Categorization of projects in accordance with the level of risks associated with their construction and use (probably 5-6 categories) Required content of the project designs and level of control during constructions will be determined by the project’s risk categorization 10

One Stop Shop – for More Transparency and Efficiency OSS is even now a rule, but a rule that was in practice made an exception We propose making the One Stop Shop a mandatory Obligation of the local government to initiate procedure against system operators who do not respect legally defined deadlines and other obligations Mandatory use of the permitting IT platform Mandatory publishing on the Internet of all relevant documents – generally applicable as well as case-specific ones 11

Construction Commission as an Expert Arbiter If a public authority finds a project design flawed, the Construction Commission has to determine and publish who is responsible for that – licensed engineer or the public authority Commission is authorized to review complaints about the content of the Elaborate 12

Professional Indemnity Insurance Mechanism for licensing of planning, project design and other firms Mandatory Professional Indemnity Insurance Improve control and oversight of the work of licensed engineers Mandatory publishing of data on projects that engineers were engaged on Introduce the legal category of main engineer when more than one licensed engineer is engaged at a same project 13

Principles of Regulatory reform This is not about changing a law, it is about changing the system and making it more efficient The Law on Planning and Construction (LPC) should be „deregulated“ by moving number of its provision into bylaws The Public discussion should encompass the package contain changes to the LPC, sectoral laws and most important bylaws Without a political commitment to implement reforms, it is better not to engage in significant changes to the current system 14

Land Management Scarce resources for development of zoning plans, infrastructure development etc. should be focused on areas with biggest potential to attract investments State owned land that is not in productive use should be transferred to local governments to prepare plans, provide infrastructure and make it available for investors Redefinition of the land development charge should be considered 15

Final Recommendation As with many key public sector issues, the key challenge is not content of a law but harmonization of different laws and regulations Another key challenge is implementation of laws on regulations An effective way to deal with these challenges would be to form a high level inter-ministerial political body to coordinate changes of required laws and bylaws and their implementation 16

Thank you for your attention