Economic and legal problems of urban planning: the scope of powers of local governments

One of the most important prerequisites for the effective socioeconomic development of the city and other populated areas is a balanced distribution of powers in the construction sector between central, regional, local government bodies and local self-government bodies, as well as their constant interaction with the aim of achieving the economic goals set and social tasks.

Therefore, today, in Ukraine, further improvement of the scientific, legal and institutional bases for expanding the scope of the powers of local self­government bodies for the purpose of developing public-private partnership and deregulation in the urban development area is actualized. Due to the fact that in the first years of the establishment of the local self-government system as an independent management system for local self-government bodies, quite broad powers in the field of construction were transferred, it became necessary to conduct a scientific search in this area.

From the economic point of view, the concept and types of powers of local self-government bodies and state authorities in the sphere of the economy, the order of their implementation, were studied by Ukrainian scientists V.K. Mamutov, V.D. Volkov, R.A. Dzhabrailov [1-3], V.S. Shcherbina, O.V. Batanov [4-5], O.P. Vikhrov, I.N. Kravets, V.V. Laptev, K.I. Apanasenko, O.M. Vinnik and others.

In the first edition of the Law of Ukraine "On Local Self-Government in Ukraine" of 21.05.1997 [6], village, township and city councils were authorized to approve city development programs, general development plans for the respective settlements and other planning documentation (paragraph 42 part 1 of the article 26 Of the Law), and the executive bodies of local councils set up a regime for the use and construction of land in the corresponding territory, coordinate the activities of the subjects of urban development in the issues of integrated settlement, issue permits in accordance with the legislation for the construction of urban development objects regardless of the form of ownership (subparagraphs 7-9 clause "a" part 1 of article 1 of the Law).

In order to strengthen the state architectural and construction control by the Law of Ukraine dated 16.06.2007 "On Amending Certain Legislative Acts of Ukraine Concerning the Implementation of State Architectural Construction Control and Favoring Investment Activity in Construction", the Verkhovna Rada of Ukraine introduced a modification in the basic town-planning laws and the Law "On Local Self-Government in Ukraine", according to which, firstly, state architectural and construction supervision and supervision should carried out by the central body of executive power on the construction, urban planning and architecture; secondly, permission for the beginning of construction works should be issued by the State Architectural and Construction Inspectorate of Ukraine or its territorial bodies. Thus, from 01.01.2008 a number of powers of local self-government bodies in the field of urban development were transferred to the authorized bodies of state power - the State Architectural Inspectorates.

The next stage of town-planning reforms was the adoption of the Law "On Making Amendments to Certain Legislative Acts of Ukraine Regarding the Promotion of Construction" from 16.09.2008.

On 08.10.2008, resolution No. 923 approved the Procedure for accepting completed objects in operation. According to this resolution (paragraphs 4-16), the executive committees of the local councils were in fact deprived of the authority to take on construction-finished facilities, which were assigned to them under No. 1 item "b" Article 31 acting at that time on the basis of released Law "On Local Government in Ukraine." Local self-governmental bodies in Ukraine were only authorized to approve acts of readiness of facilities for operation and to assign postal addresses to completed facilities. The Law of Ukraine "On Amendments to Certain Legislative Acts of Ukraine Concerning the Improvement of State Regulation in the Sphere of Housing Construction" dated 29.06.2010, the power of the executive bodies of local councils for the commissioning of completed buildings were replaced by the Law "On Local Self-Government in Ukraine" (subparagraph 1, paragraph "b" of Article 31) remained the authority only for participation in this process.

The next significant changes were introduced to the Laws "On Local Self­Government in Ukraine", "On the Basics of Urban Development”. Currently, the Law of Ukraine "On the Regulation of Urban Development" [10] provides for such power of local government in the management of urban development activities, such as the planning of relevant territories, the issuance of urban development conditions and constraints for developers, the adoption of decisions on the organization of complex development of the territory, establishment of the order of share participation in the development of the infrastructure of the settlement, the maintenance of the urban cadastre.

The law "On the Basics of Urban Development" [7], as amended on 17.02.2011, also provides for such powers of local self-government bodies in the field of urban development, such as the establishment of urban and architectural authorities within the executive committees, the establishment within the limits of their authority the regime of land development, the acceptance of the completed facilities for operation, the organization of the creation and maintenance of a cadastre, the state control over compliance with the legislation in urban development and the stoppage of construction, which is carried out with violations of town planning documentation, control over the safety of the operation of buildings and structures regardless of the form of ownership.

Similarly, the powers of local self-government bodies in the field of construction have been defined in the Law "On Local Self-Government in Ukraine" [6]. Thus, over the last five years, the organizational economic powers of local self-government bodies have been reduced to the level of competence for the planning of populated areas, the issuance of town-planning conditions and restrictions on land plots, the conclusion of contracts of share participation in the development of the infrastructure of settlements and participation in the commissioning of urban panning facilities, the conduct of a town planning cadastre.

Management problems in the economic sphere of the city, at present in the economically developed countries of the world are being solved by consolidating the efforts of the state and the private sector in finding new forms and methods of creating, managing and regulating the city's infrastructure, and by consolidating the interests of the state (represented by the state body, which carries out architectural and construction control) and private capital (represented by private companies that conduct investment in the field of construction), as well as taking account of interests as a penalty minute, and the developer of construction sites of the city, Comrade.

The main problem is to work once such a methodology for the selection of projects, the result of which would be equally useful and relevant for all interested parties (power structures, business, society, consumer) [12].

The Verkhovna Rada of Ukraine in July 2010 adopted the Law of Ukraine "On Public Private Partnership", which came into force in October 2010. In accordance with this document, the following principles are planned:

• Equality before the law of state and private partners during the implementation of projects;

• Prohibition of any discrimination of the rights of private or state partners;

• Coherence of interests of the state and private partners with a view to obtaining mutual benefits from the results of the projects;

• The invariance of the ownership form of the object throughout the life cycle of the project;

• Recognition by public and private partners in the rights, duties and responsibilities provided for by the laws of Ukraine and the terms of the contract;

• Fair distribution between the state and investor of the risks associated with the implementation of the projects;

• Choosing a private partner exclusively on the basis of competition.

Article 5 of the draft Law of Ukraine "On Public-Private Partnership" provides following PPP forms:

• Concessions;

• About joint activities;

• On the division of products;

• Other contracts concluded within the framework. It seems more expedient to fix three large groups of PPP forms in the Law:

≠ contracts for management and maintenance;

≠ contracts for operation and maintenance;

≠ contracts for design, construction, financing and operation (including concessions).

This classification is used in the legislation of many countries, and in practice each country independently determines PPP and its types:

1. Contracts for management and maintenance provided for the implementation by the private sector entity of the functions of managing and servicing objects of state property, the adoption of administrative decisions on the current operating and production activities.

2. Operational and maintenance contracts provided for rent by the private sector of production facilities and for the performance of the operator's functions. The private sector is responsible to the consumer as an operator of services. The purpose of such contracts is to increase operational efficiency and improve the quality of services provided, as well as attracting funds from the private sector to finance the facility. One form of this type is leasing [13].

3. Contracts for design, construction, financing and operation presuppose the implementation by a private sector entity of not only functions for managing, maintaining and operating a concession object, but also for its financing, construction or reconstruction. In other words, unlike other types of PPPs, within the framework of concession contracts, the concessionaire can take over the capital costs of the facility. In addition, in some cases the concessionaire assumes responsibility for the provision of related services, for example, billing for services, collection of payments and management public relations. The public sector retains only the functions and rights of the regulator.

3.1. Concession contracts, the main objective of which is to improve the quality of services, reduce costs and risks of the public sector, and expand the opportunities for infrastructure development. An important aspect of concession contracts is the dependence of the volume of reimbursement of the costs of the concessionaire on the quality of services rendered by it, determined by indicators of its performance.

The main activities of deregulation in the sphere of urban management are connected with town-planning, the organization of state registration of property rights, the development of mechanisms for public private partnership, a new concept of local self-government and the development of a basic law in housing and communal services.

PPP implies a partnership between the state and the private sector, not only in providing resources for project implementation, but also in sharing benefits and risks. Advantages for each of the interested parties will be:

• For the public sector: ensuring the development of infrastructure at an accelerated pace; the possibility of providing better services; attraction of funds and experience of the private sector in the field of investment management; transfer of technology and know-how; transferring part of the risks to the private sector; effective management of the private sector; optimal distribution of budgetary funds; development of local capital markets and the banking industry; attraction of private and international investments; control over the management of the service and the quality of the infrastructure; The possibility of projecting the experience of private companies in the sphere of creating infrastructure facilities for other similar facilities, which presume financing from state sources;

• For private business: the opening of a market previously owned by the public sector; but investment opportunities and, accordingly, new sources of income; sharing of risks with the state; the possibility of off-balance-sheet transactions; the possibility of obtaining an acceptable rate of return; acquisition of experience in managing large projects; growth of the image on the market;

• For consumers: ensuring an optimal price-quality ratio for consumers; better distribution of tax revenues; better quality and better management of the project; the possibility of obtaining a positive external effect.

According to the Ministry of Regional Development and Construction, in the sphere of urban development, the measures of deregulation, in particular the adoption of the Law "On Urban Development Activity" and the corresponding normative legal acts, ensured the acceleration of the time for issuing permits from 415 days to 21-64 days, depending on the category of complexity object of construction. As a result, in 2012 the State Construction Committee issued 109 thousand construction decisions to Ukraine, which is 2.5 times higher than in previous years. At the same time, the permissive principle was replaced by a declarative principle, according to which the construction of 99% of objects was started in 2012. As for the construction expertise, it was reduced from 45 days before the expert commercial organizations certified by the Ministry of Regional Development of Ukraine.

The results of deregulation in the sphere of registering property rights to immovable property have shown the lack of organizational support for the introduction of a new registration procedure by authorized Ukrstatereestr. At the same time, the BTI continues to deal with the initial technical inventory when the new house is handed over. Electronic registers have 30% of information about ownership rights for movability, other information is stored in the archives of the BTI. According to the law, BTI is not obliged to transfer information contained in inventory files and archives, which reduces the transparency and accuracy of recording property rights for real estate. It is necessary to regulate and form an information base on property rights for immovable property agreed upon between the BTI and Ukrstatereestr.

Deregulation related to the development of public private partnership, the new concept of the local government system and the development of a basic law in the area of housing and communal services, requires an organizational and economic justification for implementing measures aimed at: increasing the investment attractiveness of public private partnership projects through a joint risk sharing and between the state and private investors; standardization of services provided by local self-government bodies, through the development of criteria and indicators, the use of which will support the required level of quality of services and contribute to growth; the establishment of uniform rules for consumers and suppliers of housing communal services, the definition of communal resources for goods, the introduction of mandatory technological and commercial accounting, as well as the separation of legal relations between property (housing policy) and the management of housing utilities (provision of communal services).

The development of entrepreneurship in the sphere of urban development is not only a factor of economic and financial growth, but also solves the most important social task of increasing the employment and self-employment of the country's population. For Donetsk old-industrial region, which is currently experiencing serious economic difficulties, the tasks of comprehensive support for the development of entrepreneurship in the town-planning sphere acquire strategic importance.

The complexities that arise in the current state of business processes in urban planning are one of the main factors that restrain the economic growth of both the state as a whole and the Donetsk region in particular. With the purpose of improving the business environment in Ukraine, since 1998, a number of presidential decrees have been adopted: "On the Elimination of Restrictions Restraining the Development of Entrepreneurial Activity", "On Certain Measures on Deregulation of Entrepreneurial Activity", "On the Simplified System of Taxation, Accounting and Reporting of Small Businesses". These decrees are aimed at simplifying the procedures for registration of business entities, their business, accounting and reporting, and access to economic resources.

An important role in this is assigned to the state by local self-government bodies, which are the first instance determining the relationship between business entities and the state. The function of creating favorable conditions for doing business, that is, the function of the implementer of the state regulatory policy in the sphere of economic activity, is legally entrusted both to the central authorities in terms of determining the main parameters and to the local authorities regarding the good observance of these parameters. On the basis of Article 19 of the Constitution of Ukraine, the bodies of state power and local self-government bodies, their officials are obliged to act only within the framework of the powers and means provided for by the Constitution and the Laws of Ukraine. Thus, it becomes necessary to decide the issue, to what extent do the actions of the above-mentioned bodies and their officials respond to the problems of state regulatory policy, using the methods approved by the formation of the Cabinet of Ministers of Ukraine No. 308 dated 11 March 2004 and Order No. 2 of The State Service for Regulatory Policy and Business Development "On the Formation and Organization of Work of the Committees on the Issues of Accelerated Review of Regulatory Acts and Methodological Recommendations for the Analysis of Regulatory Acts" dated January 13, 2011.

The Cabinet of Ministers of Ukraine for the last 9 years made several corrections to the state policy in order to exclude the failure to comply with the legislative acts in the lower level of the state hierarchy. Beginning with 2005, there were already 3 attempts at conducting the regulatory framework of local self-government bodies in accordance with the law.

In 2005, three orders of the Cabinet of Ministers of Ukraine No. 272 were adopted on 19.07.2005 "On Certain Measures Regarding the Implementation of Regulatory Acts in Compliance with the Principles of State Regulatory Policy", No. 321 dated 08.08.2005 "On Priority Measures to Improve the Situation in the Case of Accelerated Review of Regulatory Acts and Improvement of the Registration and Permit Procedure", No. 391 dated September 08, 2005 "On Further Measures for the Implementation of the State Regulatory Policy”.

In accordance with these orders, the executive authorities were required to conduct an expedited review of all regulatory legal documents of the regulatory property and bring them in line with the legislation, canceling the obsolete ones or making necessary partial changes in them. This process was called deregulation.

In 2008, an attempt was made to simplify, as far as possible, the rules and procedures for conducting entrepreneurial activities in the most problematic areas, in the opinion of the Cabinet of Ministers of Ukraine, in the sphere of construction, as well as in land usage and tourism. On July 11, 2008, the Cabinet of Ministers of Ukraine issued an Order No. 824 "About the Entrance to the Review of Regulatory Acts for Foodstuffs of the Inhabitants of the Land".

In December 2010, the Verkhovna Rada of Ukraine adopted the Law of Ukraine "On Accelerated Review of Regulatory Acts Adopted by Bodies and Local Government Officials".

An analysis of the dynamics of the adoption of the above legislative acts provides grounds for asserting that the work on deregulating entrepreneurial activities in the urban planning sphere has become one of the priority activities of local governments and their research institutes and officials, as a result of which for the last few years there have been some changes for the better. To the example, the creation of single licensing centers (centers of provision of administrative services) significantly simplified the procedure for conducting licensing procedures. However, there is still a huge amount of work to improve the legislation and the algorithms of its application in the activities of local self­government bodies, which will play a positive role in the deregulation and economic activities in the sphere of city construction.

Unfortunately, until today in our country, the issues of defining the framework of public private partnership and the lack of a systematic approach to the development of PPPs in Ukraine to determine the further direction of actions for its development have not been left unresolved. In this regard, at the moment, there is a need for further improvement of the scientific, legal and institutional bases for the introduction and development of PPPs.

In order to establish, effectively function and develop a system of motivational mechanisms in the urban planning sphere, it is necessary to take certain measures at the state level in the development of the concept of the development of public private partnership, which will include goals, tasks, principles, mechanisms and tools, as well as the creation of a well-conceived, scientifically sound long-term strategy for the development of PPP in urban planning.

The generalization of the world experience in the development of motivational mechanisms in the urban development area allows us to work out concrete proposals within the framework of improving the regulatory framework based on the introduction of amendments to the Law of Ukraine "On Investment Activities" dated September 18, 1991 [14] and the Law of Ukraine "On the Regime of Foreign Investment" dated 19 March 1996 [15] with the aim of taking into account the interests of both investors engaged in construction activities and customers of construction projects in the cities of Ukraine.

Based on the foregoing analysis of the dynamics of changes in the scope of powers of local self-government bodies in the sphere of urban development, it can be concluded that it is necessary to make additions to paragraph 42 of Article 26 of the Law of Ukraine "On Local Self-Government in Ukraine", in which to specify and expand the notion of "other town-planning documentation", as well as to make additions in paragraphs 1 "b" of Article 31 of the above-mentioned Law, which more clearly define the "order established by law" with the aim of expanding the scope of powers of local governmental bodies in the sphere of city construction.

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