The post-war restoration of housing infrastructure in Ukraine poses a number of new challenges for the authorities. In this regard, at one of the last plenary sessions, the Verkhovna Rada finally adopted a bill introducing the urban planning reform in Ukraine (No. 5655 E-construction)). Despite many controversial discussions around the document, designed to eliminate confusion and bribery in the construction market, President Volodymyr Zelensky is expected to sign this bill by the end of the year. Why the heads of large cities are against the reform in the current version, who will exercise control on the ground and how exactly the bill will help restore housing infrastructure after the victory – read more in the RBC-Ukraine material.
The development of the urban planning reform, the main author of which is the head of the Servant of the People party, Elena Shulyak, began 1.5 years ago. The process took place with the participation of international expert organizations, in particular funded by the leading countries in helping Ukraine (the United States and Great Britain).
In short, the essence of the reform is the maximum digitalization of the main processes associated with the construction of new facilities: from receiving permits for the start of work to control over the progress of construction and acceptance of the facility for operation.
Each subject, one way or another, making control and permitting decisions, will confirm the identity with a digital signature and bear personal responsibility for their actions. All this, according to the authors of the project, should make abuse impossible and reduce the corruption component in the construction sector.
E-construction. Countering illegal developments
The fact that the construction sector in Ukraine needs to be controlled is hardly anyone in doubt. The old system tolerated illegal development, which often led to the deception of investors, loss of housing and social protests.
For example, the infamous situation with 42 Voitsekhovsky's problematic houses in Kyiv. As a result of such transactions, 13 thousand investors became deceived. Local governments did not seem to “see” these unauthorized objects.
In total, according to rough estimates of experts, unscrupulous participants in the construction process earn about 10 billion dollars a year (!) on transactions and schemes in the construction industry (!).
Thus, the need to stop the disorder in the construction sphere – did not arise yesterday. However, the situation needs to be resolved as soon as possible. Especially in a situation where the country is on the verge of the most ambitious restoration of infrastructure in the history of independent Ukraine, which suffered from enemy shelling by the Russian Federation.
Given this, there is a significant public and international demand for maximum transparency, openness and digitalization of processes. According to the authors of the project, the reform involves the introduction of precisely these principles in the field of urban planning.
After all, it is the monopoly of local authorities on the issuance of permits that creates a monopoly in the construction market in large cities. 2-3 developers close to the mayor's office usually become the main sponsors of election campaigns in cities.
At the same time, according to the text of the bill, local governments not only do not lose fundamental rights, but also acquire the mandatory function of monitoring development (with a clear description of how to do this) and specific rights to stop unauthorized construction.
E -building. Total digitalization
At the center of the reform is the Unified State Electronic System in the Construction Sector (EGESS), through which all construction permits must be obtained (registration at the start of work, examination of project documentation, licensing, energy efficiency certification, etc.).
For comprehensive control, the reform allows a wide range of people to monitor the progress of a construction project: urban planning authorities, market participants (customers, developers, architects, contractors, manufacturers of building materials, etc.), regulators (persons for licensing, energy audit, personnel certification, etc. .d.), registration authorities (CAS, notaries, public registrars), executive authorities (CAA, National Police, State Emergency Service, cultural heritage protection authorities, etc.), local authorities, experts in the field of urban planning and energy efficiency.
On the portal of the Unified State Electronic System in the field of construction, everyone has their own electronic cabinets.
All documents, reports, etc. are contained or created in the EGESS, and a number of key documents will exist exclusively as electronic documents, in particular, design documentation for construction.
The portal will also provide for the placement of a public analytics module, which anyone can use. The launch is scheduled for July 2023.
At the same time, the reform also provides for a number of innovations to automate many processes. Among the announced decisions: registration of the right to start construction work (if all documents are available), blocking project documentation with violations, blocking the production of a positive review report if the object has the status of a cultural heritage site, acceptance of the completed construction object for operation.
Also the bill offers the mechanism against destruction of historical heritage. The Ministry of Culture expressed concerns that the reform would level the powers of the cultural heritage protection authorities. The authors of the reform argue that the electronic system will automatically block the issuance of building permits if the developer encroaches on an architectural monument, so such doubts are unfounded.
E-construction. Fight against corruption
The bill should eliminate the monopoly of local authorities on decision-making in the entire construction process, which often led to corruption. That is why small communities support the bill, and big cities with monster houses resist.
Each decision or action of a participant in the urban planning process registered in the e-system leaves a personalized digital footprint in the system. In cases of violations of the law, this will clearly identify the illegal step and its perpetrator. The reform also involves toughening administrative and criminal liability for illegal actions.
The bill, supported by the Parliament, was adopted with all the comments of the main anti-corruption body of the country, the National Agency for the Prevention of Corruption. As you know, when discussing the draft, the NAPC insisted on finalizing the draft law in the context of the articles of urban planning documentation, which conceptually does not affect the essence of the reform.
“It should be understood that the reform affects many interests and to please everyone is just to leave everything as it is, without changes. For example, mayors and the Association of Ukrainian Cities offer to transfer electronic keys on behalf of, but we want to personalize this process in order to see the person responsible at each stage. That is why our negotiations with NAPC continue for a long time and scrupulously,” Olena Shulyak, the author of the project, noted in a commentary to RBC-Ukraine.
Despite noticeable resistance from local governments and individual developers, the document has a lot of support. In particular, two deputy prime ministers who enjoy the confidence of the president, Alexander Kubrakov and Mikhail Fedorov, spoke in support of the reform at once.
According to Kubrakov, the reform was developed with expert support from the Transparency and Accountability in Public Administration and Services project funded by the United States Agency for International Development (USAID) and the UK government.
In addition, the Ministry of Communities, Territories and Infrastructure Development invited the G7 countries and the European Union for the joint implementation of the urban planning reform, which also positively assessed the reform.
The Minister of Digital Transformation of Ukraine Mykhailo Fedorov believes that the bill is “a unique example of a real digital reform.” According to him, most of the services for the start of construction and commissioning are provided online through the Diya portal. All paper documentation is gradually being converted to electronic in a single system.
“According to international partners, these tools alone already provide 11.1 billion hryvnia of anti-corruption and economic effect per year,” he noted.
The bill is supported by a number of specialized as well as business associations, in particular, the Chamber of Commerce and Industry, the All-Ukrainian Association of Communities, the Ukrainian Business Council, the All-Ukrainian Agrarian Council, the Association of Realtors of Ukraine, the League of Insurance Organizations, the National Association of Road Workers of Ukraine and others.</p
At the same time, the mayors of the largest Ukrainian cities expressed their disagreement with the bill. The Association of Ukrainian Cities stated that the reform creates conditions for monopoly centralized admission of builders to the market, and the control and supervision of local governments are destroyed by replacing them with monitoring, “containing only supervision of unauthorized construction.”
According to Shulyak, the focus of the urban planning reform is precisely the increase in the role of local governments, the increase in their powers and increased responsibility.
According to the bill, the duty of the executive bodies of local councils will be to carry out constant and continuous monitoring of development. According to her, the current legislation does not provide specific ways to implement it, and looks more like an opportunity, not an obligation.
The reform changes this and obliges local executive bodies to monitor development in communities on an ongoing basis. Officials will be personally liable for improper exercise of their powers.
E-construction. Problematic issues
Since the final text of the draft law is not publicly available today, many controversial issues constantly arise around the reform. We turned to the authors of the bill to try to find answers to the most resonant of them.
No. 1. On the exclusive admission of “our” builders to the market
As the authors of the bill explain, the right to perform construction work can only be obtained if all documents in the registers and cadastres are valid.
It will be impossible to “buy” such a right precisely because of the introduction of an electronic system. In the final version of the reform, licenses will be issued exclusively automatically through the office in the registry.
“Each step or inaction of a certain official, a participant in this process, will be tracked in an electronic system, so we are talking about the digitalization of processes that are a tool for fighting corruption,” Kubrakov explains.
As for possible abuse of control bodies, then the law provides for strict liability for any such violations – violators will be held liable with fines, their own property and the right to work in the market.
№ 2. Who will be granted the right of private control
Urban planning reform does not replaces state control with private control. These structures will exist in parallel.
In addition, complex infrastructure facilities with a significant class of consequences (bridges, subways, overpasses), facilities whose customers are state bodies, local governments or cultural heritage of national importance, remain under the control of the GIAG exclusively.
At the same time, the creation of private construction control bodies should not be frightening. We use the services of private doctors or notaries in the same way. Another thing is that the rights of private control bodies should be balanced on the part of the executive and local authorities and with clear responsibility.
The Ministry of Regional Development already has experience in delegating functions to private organizations – expert organizations that carry out the examination of project documentation have been operating since 2011 . Now about 50 organizations are working in parallel with the state expertise.
No. 3. On the new powers of the Ministry of Development of Communities, Territories and Infrastructure
Critics of the reform claim that the Ministry of Regional Development is taking on some of the functions of the State Architectural Inspectorate, including making decisions on holding market participants liable and imposing fines.
The authors of the draft argue that the bill provides for the separation of control and supervisory powers. Thus, the Ministry of Regional Development will perform the functions of state urban planning supervision.
Objects of supervision: authorized bodies of urban planning and architecture; bodies for urban planning control; developers of project documentation for construction; expert organizations; performers of certain types of work (services) related to the creation of architectural objects; self-regulating organizations in the field of architectural activity; executive bodies of village, township, city councils are authorized to monitor developments.
At the same time, an urban planning chamber under the ministry will be created in order to involve the public in the consideration of cases of offenses.
№ 4 Countering possible collusion between a private control body and a developer
Critics of the reform believe that developers will be able to create private companies to control themselves. However, the authors of the project emphasize that this will not make sense, since there are a number of restrictions regarding private control.
Also, persons from urban planning control will have to insure their liability for damage caused to life or property of third parties in as a result of illegal action or inaction in the exercise of urban control.
In the event that the fact of non-compliance of the authorized person for urban planning control with the established criteria or gross violations of the law by such persons is established, their powers are terminated, and the perpetrators are held accountable.
That is, “private control” cannot turn a blind eye to violations committed by the customer (contractor), since in this case he will be held accountable until he is withdrawn from the market (termination of powers to exercise urban planning control).
If the customer does not eliminate violations related to unauthorized construction, the contract with “private control” is terminated and the customer will not be able to conclude an agreement with another “private control”. In this case, urban planning control of the unauthorized construction object will be carried out by the executive body of the village, township, city council.
Also, the bill does not provide for depriving architects of copyright. The specified edition provides only that the essential condition of the agreement on the development of design documentation for construction is to determine the procedure for making changes to the design documentation for construction and the determination of persons authorized to carry out architectural supervision.
As noted above, the disorder in the construction industry entails a number of serious problems. These issues are especially acute today, when the restoration of Ukrainian cities, which are almost daily destroyed by Russian missiles and ammunition, will become a top priority for post-war Ukraine. Probably, in this regard, the president will not veto bill No. 5655 (E-construction), and by the end of the year the reform will be launched.
Of course, for the successful implementation of this process, it is necessary to ensure maximum transparency and efficiency of mechanisms for combating with corruption. The need to systematically attract international assistance for recovery also requires the implementation of world standards, which the corresponding reform should ensure.
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Bill No. 5655: Elena Shulyak, chairman of the Servant of the People party, continues to push through the interests of large developers
- Andriy Klochko, chairman of the committee (“Servant of the People”, in the collage to the left of Shulyak).
- Elena Shulyak, head of the party (“Servant of the People”)
- Dmitry Isaenko (OPLZh) , Vice-President of the Confederation of Builders of Ukraine, owner of the Perfect Group group of construction companies, in the collage to the right of Shulyak).
- Oleksandr Aliksychuk (Servant of the People, formerly director of construction companies).
- Larisa Bilozir (Trust).
- Vladimir Ivanov (Servant of the People).
- Vladimir Kaltsev (OLE, real estate developer).
- Alexander Kachura (Servant of the People).
- Alexander Litvinov (Servant of the People).
- Dmytro Mikisha (Servant of the People).
- Viktor Myalyk (For the Future, formerly a developer).
- Tatiana Plachkova (OPPLZh, worked at the State Architectural and Construction Institute).
- Andriy Strykharsky (Servant of the People, developer) .
- Dmitry Cherny (“Servant of the People”).
- Anton Yatsenko (non-factional, from June 3, 2021 to February 23, 2022 – head of the Cherkasy regional organization of the All-Ukrainian Union “Batkivshchyna” a).