REALWorld Law

Planning / zoning

Statutory agreements

As well as obtaining a permission, is it possible or necessary to enter into agreements with local or governmental authorities or agencies or with utility suppliers in order to facilitate the carrying out of development?

Angola

Angola

Yes, some forms of development will require that the developer and the local or governmental authorities enter into an agreement under which the developer undertakes in particular to pay or to execute some public facilities that are necessary for the project.

Australia

Australia

Each state has its own regime for the making of agreements with local or governmental authorities and utility suppliers. In some cases these agreements are recognised by legislation and may be registered on title as a form of covenant.

Agreements frequently deal with financial matters and the carrying out of off-site works. It is not necessary to have an agreement as part of an approval. Agreements are generally used for more complex matters where there is the need to impose detailed obligations in addition to permit conditions.

Belgium

Belgium

It is not necessary in any of the three regions (Flemish, Brussels Capital or Walloon) to enter into agreements with local or governmental authorities or agencies or with utility suppliers in order to facilitate the carrying out of a development.

It is possible to develop infrastructure projects as public-private partnerships (PPPs). In such cases, a private party, the project developer, contracts with an authority to jointly develop a project. In the Flanders region, this form of co-operation is encouraged and a special decree has been made to govern this: the Decree of 18 July 2003 regarding public private partnership. This decree contains the framework within which these partnerships are constructed.

In the Walloon and Brussels Capital Region, there is no special legislation regarding PPPs, but such partnerships or forms of co-operation are however used in these regions.

Bosnia-Herzegovina

Bosnia-Herzegovina

Agreements must be entered into with all utility suppliers (gas, electricity, telecoms, water, sewerage, etc.) Agreements with local authorities are not usually required, unless the land on which development is to be carried out is state-owned. In such cases, the developer must enter into an agreement with the authorities regulating use of the land for development and the payment of requisite fees.

Canada

Canada

Each province has its own regime for the making of agreements with local authorities and utility providers. Some forms of development will require the entering into of an agreement under which the developer agrees to do certain things or make specified payments to mitigate the effects of the development. Other agreements may relate to the provision of utility services and the installation of utility and/or transportation infrastructure. The type and form of agreement will depend upon the particular local practice and applicable provincial laws. In some cases these agreements are recognized by legislation and may be registered on title as a form of covenant.

China

China

Yes, the developer must hire an authorized supervision agency to oversee the development. Contractors to the development project must also obtain their contracts with the developers through public tendering or bidding under law. Other agreements include those relating to water and sewage connection made with the municipal water bureau, and telephone and electricity connection made with utility suppliers.

Croatia

Croatia

Usually, investors agree with the local authorities to construct roads or other communal infrastructure which are necessary in accordance with the applicable planning regulation. This investment is then set-off against their communal fee payment obligation, which can be high. By such agreements, investors secure that such communal infrastructure is being constructed in a timely fashion (as construction by the local authorities can be rather slow) and the set-off of the communal fee duty with the amount of investment into the communal infrastructure is often easier for the investors than to provide cash to the local authority.

Czech Republic

Czech Republic

The building authority may enter into a public law contract with the applicant, which will cover the location of the building, the change in use of the site and the impact of the new use of the structure on the area. This then replaces the planning permission.

Similarly, the relevant authorities may enter into a public law contract at the point of actual development of the building or landscape works. This then replaces building permission.

Other contracts may be made covering:

  • environmental protection
  • new drainage infrastructure, or
  • surface communications

If a public law contract is not entered into, conditions and duties are imposed in the relevant decision itself.

Utility suppliers may require easements relating to their utility pipelines.

Denmark

Denmark

As an applicant, you can be asked to provide information and material necessary for the relevant applications, for example, declarations from a surveyor, biologist or civil engineer.

France

France

Some forms of development will require that the developer and the municipality enter into an agreement under which the developer undertakes in particular to pay for some public facilities that are necessary for the project.

For instance, for construction projects located in a Zone d’Aménagement Concertée area, it is often necessary to purchase construction rights in addition to the land.

The owner (maître d'ouvrage) may have to make a financial contribution to the infrastructure in order to support new development.

Germany

Germany

Arrangements known as urban development contracts (städtebaulicher Vertrag) can be entered into between building owners or developers and the relevant municipality. In such contracts, the municipality undertakes to support the building owner or developer in realizing its project (ie by granting the necessary permits); in return, the building owner or developer undertakes to support the municipality in its planning goals.

Hong Kong, SAR

Hong Kong, SAR

Yes, some utilities that may need agreements are:

  • the electricity supply with either Hong Kong Electric Company Limited or CLP Power Hong Kong Limited;
  • the gas supply from Hong Kong and China Gas Co., Ltd or a potential LPG (liquefied petroleum gas) supplier;
  • the water supply, which requires an application to be made to the Water Supplies Department; and
  • public drainage services provided by the Drainage Services Department.
Hungary

Hungary

It has become rather common in recent years for developers to sign a community development agreement with the local municipality, in which the developer undertakes to finance the re-zoning costs of the development area, to carry out certain public works, such as landscaping or the construction of roads, public parking spaces or pavements. The works and structures so constructed would thereafter be handed over to the local municipality free of charge.

For how long is a permission for development or the carrying on of a designated use valid?

As a rule, the building works must start within four years from the date when the building permit became final and binding. The works must be completed in a 'ready-for-occupancy' condition within six years of commencing construction works. Such deadlines cannot not be extended. If the construction is not started within four years of the issuance of the building permit or if the construction is not finished within six years then the building permit becomes ineffective and a new building permit must be obtained.

The occupancy permit is valid for an indefinite period of time.

 

Ireland

Ireland

A grant of planning permission will frequently contain a requirement requiring the developer to pay an overall financial contribution to the local authority for the improvement of infrastructural facilities in the locality such as roads and drainage.

Further financial contributions may also have been paid to the local authority, depending on the nature of the development, for connections to utilities.

A developer may also have to enter into agreements with private facility suppliers, for example in relation to telecoms and electricity.

Italy

Italy

Yes, some forms of development will require the developer to enter into an agreement under which it agrees to perform certain activities or take on certain obligations or make specified payments to, for example, mitigate the effects of the development.

Japan

Japan

Yes. The relevant local government sometimes requires a developer to enter into an agreement.  For example, some local governments in Tokyo require, for certain constructions, a contractor to execute several agreements with the local government before starting construction of a building in order to ensure that the contractor complies with the local government's guidelines for town development.

Netherlands

Netherlands

Yes, some forms of development will require the developer to enter into an agreement under which it agrees to perform certain activities or take on certain obligations or make specified payments to, for example, mitigate the effects of the development. Where such agreements are not entered into, public authorities are required to adopt so-called exploitatieplannen to recover public costs associated with a particular planning permission. Since the zoning plan only allows and not obliges, these activities are contingent liabilities for approval of the designated use. 

Nigeria

Nigeria

The property owner has the discretion to engage with the local or governmental authorities or agencies or with utility suppliers to facilitate the carrying out of the development. There are, however, no regulations that impose obligations on the owner of property to enter into agreements to facilitate the carrying out of developments.

In cases where the development or provision of utilities ancillary to the development may significantly impact the general public or adjoining land owners, the local or governmental authorities or agencies will encourage any agreement that will facilitate the enterprise. It may be necessary for the developer to undertake the provision of ancillary amenities to mitigate or serve as a palliative to any adverse effect on the development. Agreements with utility services providers may also be necessary for the actualization of the development.

The Nigerian authorities at all levels are exploring developments through public-private partnership collaborations and are encouraging discussions and agreements of mutual benefit to the developer, the general public and government. The government will grant concessions for any morally beneficial agreements.

Norway

Norway

It is possible for the landowner or the developer to enter into a ‘development agreement’ with the municipality in relation to the development of an area. Neither the municipality or the landowner/developer has a right to demand such an agreement, but for larger projects it is seen almost as a  prerequisite. This is due to often comprehensive zoning regulations demanding roads,  water, sewage, parks, schools etc. before the actual buildings can be constructed. Development agreements can be used to divide the costs between separate developers and/or between the developer and the municipality.

Poland

Poland

This depends on the nature of the development and can only be determined on a case-by-case basis. Generally, the agreements are entered into between a local planning authority and/or utility suppliers regarding the provision of services and connection of new infrastructure, such as new roads, water, sewage, gas, electricity installations, waste disposal.

The costs of services and infrastructure on public land are met by local authorities and utility suppliers. In general, the cost of infrastructure on private land to be connected to public infrastructure system is met by the owner of the land.

Portugal

Portugal

Agreements between the developer and the Municipality may be agreed to between the parties or imposed unilaterally.

For example:

  • planning agreements aimed at the elaboration of a draft plan, its amendment or its revision, as well as their respective executions, may be entered into; and
  • urbanisation contracts must be entered into (contracts for the execution of infrastructure by the developer) in certain cases.
Romania

Romania

Development agreements with the Romanian public authorities may be concluded according to the applicable legislation regulating public procurement, provision of services and concessions (ie Law no. 98/2016 regarding public procurement, Law no. 99/2016 regarding the sectorial procurement, Law no. 100/2016 regarding the award of public works and services concession agreements, Law no. 101/2016 on remedies and appeals, Emergency Government Ordinance no. 57/2018 regarding the Administrative Code).

Furthermore, please note that agreements with the utilities suppliers must be concluded during the construction works as well as after the construction works are finished.

Slovak Republic

Slovak Republic

This will depend on the nature and extent of the proposed development and will also depend on the negotiations with the local authorities. However, in certain instances, the zoning permit can be issued in one proceeding with the building permit. This applies to minor constructions and to structures in areas with a zoning plan.

Spain

Spain

Yes, in order to carry out some developments, specially those which comprise works of urbanization and infrastructure, it is necessary to enter into certain agreements with:

  • The owners of the plots of land included within the development through an allotment or compensation project

  • The city council, in order to define the works affecting roads and public infrastructure

  • The utilities companies

Sweden

Sweden

It may be necessary to enter into agreements with the municipality where the property is located. In most cases, the agreement will take the form of a development agreement under which the municipality will agree to assist in the planning of the infrastructure surrounding the real property.

The developer can agree in addition, for instance, to contribute both financially and in practice to the construction of certain facilities of importance to the municipality and the area where the property is located. These agreements will be negotiated on general commercial terms and so may be beneficial to the developer as they normally lead to closer collaboration with the municipality.

For how long is a permission for development or the carrying on of a designated use valid?

After a planning permission for development and/or the carrying out of a new designated use has been granted and gained legal force, the applicant must begin works or activities permitted within two years from the date when the authority's decision gained legal force and complete any works within five years from the same date.

Thailand

Thailand

Yes, but entering into an agreement with local or governmental authorities is required only for some of developer activities. For instance, a development on which there is a power or electricity business might be required to enter into an agreement with the government.

United Arab Emirates - Abu Dhabi

United Arab Emirates - Abu Dhabi

Non-binding Memoranda of Understanding are common between master developers and statutory utility suppliers. Binding agreements are common with providers of district cooling services, which are sometimes project financed. Formal agreements with local authorities are rare.

United Arab Emirates - Dubai

United Arab Emirates - Dubai

Non-binding MoUs are common between master developers and statutory utility suppliers. Binding agreements are common with providers of district cooling services, which are sometimes project financed. Formal agreements with local authorities are rare.

UK - England and Wales UK - England and Wales

UK - England and Wales

Yes, some forms of development will require the entering into of a planning obligation (also known as a 'section 106 agreement') under which the developer agrees to do certain things or make specified payments to mitigate the effects of the development.

Other agreements that may be required include:

  • section 38/278 Highways Act 1980 agreements relating to the provision of new highways or works to existing highways, and
  • section 104 Water Industry Act 1991 agreements relating to the delivery of new drainage infrastructure.

There is also a system of financial levy available to local planning authorities to obtain funds from developers upon implementation of planning permission to be applied towards local infrastructure improvements. This system ("the Community Infrastructure Levy") is being adopted by a number of planning authorities and replaces some payments made under a section 106 agreement.

UK - Scotland

UK - Scotland

Yes, some forms of development will require the entering into of a planning obligation under which the developer agrees to do certain things or make specified payments to mitigate the effects of the development. Planning obligations are most commonly secured by means of an agreement (known as a ‘section 75 agreement’) between a landowner and the planning authority but the landowner can now also execute a unilateral obligation which will be binding on subsequent owners of the land. The scope of section 75 agreements was extended by the Planning (Scotland) Act 2019 and new provisions introduced in relation to modification and discharge of obligations. Other agreements that may be required include agreements under the Water (Scotland) Act 1980 and Sewerage (Scotland) Act 1968 relating to the delivery of new water supply and drainage infrastructure. There are also various kinds of agreement that can be entered into with roads authorities. Perhaps the most common type is what is what is known as a section 96 agreement to set out responsibility for extraordinary damage to roads caused by development works. These are frequently required in relation to the delivery of wind farms components and in relation to minerals development.

Ukraine

Ukraine

Pursuant to Ukrainian law some agreements to be entered into with the local authorities or utility suppliers (eg shared participation agreements on the development of infrastructure or agreements on temporary supply of utilities during the period of construction) are mandatory. Starting from 1 January 2021 shared participation agreements on the development of infrastructure are not mandatory subject to construction works starts after 1 January 2021.

It is also possible under Ukrainian law to enter into different agreements with local/state authorities/utility suppliers which are not obligatory but which could facilitate the carrying out of development (eg investment agreements or consultation agreements). The type and scope of these agreements and their effectiveness depend on the region and type of construction.

United States

United States

Yes, some forms of development will require the entering into of an agreement under which the developer agrees to do certain things (often called “proffers”) or make specified payments to mitigate the effects/impact of its proposed use and  development. Other agreements may relate to the provision of utility services and the installation of utility and/or transportation infrastructure. The type and form of agreement will depend upon the particular, local practice and governing  state law.

Zimbabwe

Zimbabwe

It is possible to enter into agreements with local or governmental authorities in order to facilitate the carrying out of development. This is commonly known as public-private partnerships, and they have existed in Zimbabwe since 1998. It is, however, not necessary, unless the permitting authority makes it a condition of development.