Those planning to invest in the redevelopment of historic properties or in shopping centre projects are still at risk due to the ambiguities of current legal regulations.

Historical buildings – high-risk investments

It often happens that an investor or developer is interested in purchasing a run-down or even a ruined property, hoping for a commercial opportunity following its restoration. However, practice shows that investments in historical buildings require special attention in the analysis of legal aspects of an investment, and its implementation is not easy because the law in this matter is particularly vague and imprecise.

Historical buildings – between fiction and reality

The Act of 23 July 2003 on the Protection and Maintenance of Historical Monuments at some length defines what is and what is not a historical site. According to the act, monuments are real or movable property, their parts or assemblies, which are man-made or made in connection with human activity and which constitute a testimony of past times or events. Particular emphasis is put on the fact that the preservation of such things is in the public interest because of their historical, artistic or scientific value. In practice, this definition allows for a wide range of interpretations of terms such as “testimony of past times or events”, “public interest” or “historical value”. Those categories are often dependent on the knowledge, sensitivity and beliefs of the evaluator. Moreover, according to Polish law, a monument is not only an object entered into a relevant register, but also an object not listed in the register but meeting the criteria provided for in the definition quoted. Therefore, as can be presumed, the capacity of the definition and its application can carry a serious risk of various interpretations and expose the investor to additional costs.

Heritage conservator’s decisions vs. those by investors

The basis for registering a building as a monument in the register of monuments is the decision of the Voivodship Heritage Conservator. The decision is issued following administrative proceedings involving interested parties (usually the owner of the property). If the interested parties do not agree with the assessment of the conservator, it is possible to lodge an appeal against the decision to the Minister of Culture and National Heritage and then to administrative courts. However, the Voivodship Heritage Conservator may also register an object in voivodship records without having to issue the administrative decision and without the participation of the parties to the proceedings. If this is the case, the municipality is simply informed that the site has been registered. Such a decision cannot be challenged by the owner of the site, which in many cases is crucial for possible future investment plans.

Investment process at a historical site

At the initial stage of an investment, the investor must assess whether the object of their interest is a monument subject to protection. The situation is clear if the site is entered in the register of monuments maintained by the Voivodship Heritage Conservator. The law specifies the responsibilities of the owner of such an object in connection with the planned investment. They primarily include obtaining a permit for the construction work in a historical site by persons authorised to carry out conservation work and under the supervision of authorised persons. If the object is registered in the monuments records, it is not formally protected, but the conservator may decide about its protection. The most risky situation for an investor is where the site is not registered in the monuments register or in the monuments records but, according to the conservator, it meets the conditions for registration in the monuments register. In such a case, the investor is not required to obtain any permit for construction work on the site, but the conservator has the right to suspend any work already in progress and start an object-registration procedure within 14 days.

Conclusion

The laws are not sufficiently clear to the participants in the real property market. They pose a risk of acquiring an object which is not registered in the monuments register or the monuments records, but may be considered historical by the conservator, thus leading to the investment being suspended for a long time. In this case, the cost of developing the required project documentation and the cost of the work may be considerably higher than projected. The investor can therefore at no fault of its own find itself in a situation where they either have to incur significantly higher costs or to abandon the investment. The sale of a historic object may also cause a loss because the market price may be lower than the cost of acquisition. In the event of a loss due to a causative decision by a public authority, the investor can claim compensation only if such a decision was issued unlawfully. From the practical legal perspective, it seems that for the sake of historical properties and in order to increase the interest of investors consciously investing in historic monuments, the law should be amended, and clear and transparent rules of conduct regarding historical monuments should be implemented.

Shopping centres – investment-related controversies

Under the currently applicable regulations, the location of shopping centres with a sales area of over 2,000 sq. m requires that the investment be previously included in both the study of conditions and directions of spatial development, as well as in the zoning plan. One of the remaining contentious issues under the law is the possibility to build such a facility in an area for which no zoning plan has been enacted.

The root of the dispute is the ambiguous nature of the provisions of Article 15 and Article 10 of the Act of 27 March 2003 on spatial planning and development. If we assumed a strict interpretation of the provisions, it would turn out that the law does not allow for the construction of a shopping centre with a sales area exceeding 2,000 sq. m on the basis of the zoning permit (despite the fact that the general conditions for issuing such a decision referred to in Article 61 of the Act have been met). The reason for that is the statutory obligation to adopt the study and the local plan for areas on which the location of shopping centres has been planned. In connection with the obligation, no zoning permit which allows for the construction of a shopping centre with an area exceeding 2,000 sq. m could be issued  if a study were adopted after the enactment of the Act (i.e. after 10 July 2003).

However, there is an interpretation which indicates that such an understanding of the regulations is contrary to the constitutional principle of protection of property rights. According to this concept, where the law does not contain a clear and unambiguous prohibition, one should allow the opportunity to build shopping centres in areas for which local plans have not been adopted, that is on the basis of individual zoning permits (of course, subject to the fulfilment of the general conditions for issuing such a permit defined in Article 61 of the Act). Additionally, one could indirectly use the wording of Article 64 point 2 of the Act requiring that the planned commercial space be included in the application for the zoning permit. If the construction of shopping centres on the basis of zoning permits was impossible, the provision should highlight the prohibition as regards such investments and not the obligation to include the planned commercial space.

A different situation occurs if the municipality has adopted a study of the conditions and directions of spatial development taking into account the location of shopping centres with an area exceeding 2,000 sq. m. According to a recent judgement by the Supreme Administrative Court on the law on spatial development, there is a rule requiring that the zoning permits be issued in accordance with the provisions of the study. According to the argument expressed in that verdict, one should support the view that if a given area was not designated for the construction of shopping centres in the study, the construction of such a facility under the zoning permit will not be possible. On the other hand, there are still relevant arguments demonstrating that the study, as a document other than an act of local law, may not be the basis for an individual decision, such as a zoning permit.

The conclusions that the investors can draw from the judgements of the Supreme Administrative Court are interesting, as they help assess the investment risk in areas not covered by zoning plans under zoning permits or in situations where a study has not been adopted at all.