Finland – Response to Case 2007
Case to be discussed
Municipality Polderadeel
Highway under construction, a new junction to Polderadeel, municipality pays partly. Three new development areas: 1) industrial, 2) residential (many owners) and 3) a regional park. Municipality wants contribution from residential developer in the costs of park and junction. In addition a wind turbine area is under planning.
A. What kind of regulation does apply in your country in a case like this?
The general statute regulating land use planning and building is the Land Use and Building Act (132/1999, hereinafter LBA), together with the Land Use and Building Decree (1999/895). M
unicipality has the planning monopoly on master and detailed plan level. However, the plan has to follow the lines in regional plans and the State authority (Regional Environment Centre) has also some power to negotiate with the municipality about the plans and has a right to appeal to the administrative court. This means that in practice, it is better that the municipality agrees about the planning principles with the state.
More detailed regulation on the obligation of the landowner to participate in the costs of the infrastructure was added to the LBA in 2003. The instruments in the regulation are land use agreements and development compensation.
‘Land-use agreements state the provisions applying to the municipality and the landowner for planning or the implementation of a plan or both of these. The agreements were not mentioned in the legislation before the year 2000, although they were usual. By estimation 10% to 20% of plans involve agreements and the popularity of agreements in the municipalities is increasing. According to the Land Use and Building Act land use agreements shall not override the objectives and the content requirements of planning laid down in the Act. Typical targets for land-use agreements are the alterations of the existing plans, development of raw land, and the implementation of various kinds of projects, such as industrial sites, business parks and commercial centres. The agreement usually includes, for example, details of the area involved, planning and payment of the planning costs, the estimated amount of building rights to be planned, schedule for the building, building and paying for the infrastructure, principles of conveying areas, dwelling production, securities and sanctions for breaking the agreement. In these agreements it is normal to have a clause according to which the public areas are transferred to the ownership of the municipality. Also the possible compensations from the landowner to the municipality are often given in land areas; in cases of land-use agreements with land purchases a part of the purchase price can be settled by enlarging the permitted building volume.’ (Werdi 2003, p. 60)
LBA section 11
Land use agreements
Agreements made by a local authority regarding planning and the implementation of plans do not override the objectives and content requirements of planning laid down in this Act.
LBA section 91 a, subsections 1 and 2
The obligation of the landowner to participate in the costs of the infrastructure
In an area where a local detailed plan is drawn, a landowner who gains significant benefit from the plan, is obliged to take part, in the manner regulated later in this Act, in paying the infrastructural cost that occur the municipality. This participation should be attempted to be realised through an agreement.
The landowners must be treated equally when the obligation in subsection 1 is being realised.
LBA section 91 b, subsections 1, 2 and 3
Land use agreements
The municipality can make agreements concerning planning and plan implementation (land use agreement). However, it is not possible to make a land use agreement binding concerning the content of the plan.
A land use agreement binding both parties can be made only after the plan draft or –proposition has been publically displayed. This does not apply to agreements that concern starting the planning process.
In the land use agreement the rights and obligations of the parties can be defined more widely than the provisions in this chapter concerning development compensation stipulate.
As the LBA Section 91 a subsection 1 lays down, a land use agreement is the primary means to fulfil the obligation of the landowner to participate in the costs. However, if no land use agreement is reached, the municipality is able to get the costs needed for the development area (only that part of the costs) from the developer (so-called development compensation). Maximum compensation is 60% of the value increase the plan brings to the developer.
LBA section 91 c
Development compensation
If no agreement has been reached with the landowner on his or her participation to the costs of infrastructure building, the municipality can oblige the landowner to pay a part of the costs of infrastructure (which serves the said plan area), which is proportioned to the value increase of the plot caused by allocated building right in the local detailed plan, an increase of building right in the local detailed plan or a change of the purpose of use. (called development compensation)
LBA section 91 d
The costs of infrastructure incurred to the municipality
As such costs of infrastructure mentioned above can be considered acquisition, planning and building costs of streets, parks and other public areas in the plan area or outside the plan area, if they serve the plan area significantly as well as land acquisition costs for building public buildings serving the plan area significantly, for the part that they serve the plan area. In addition, costs incurred to the municipality for restoring the soil in the plan area, necessary noise prevention as well as planning costs (which have not been collected on the basis of section 59), can also be taken into consideration.
As costs mentioned in the previous paragraph are taken into account both estimated costs of the implementation of the approved plan as well as costs already incurred for actions necessary to implement the plan. The costs must be reasonable considering the characteristics and circumstances of the area.
The municipality must realise the actions, whose costs have been used when assessing the development compensation, within 10 years from the decision concerning the dev. compensation has become legally valid.
LBA section 91 f
The maximum amount of the development compensation Maximum 60 % of the plot value increase caused by the local detailed plan can be collected as development compensation. The municipal council can also decide upon a lower percentage for the municipality or plan area.
B. Do supra local authorities have the regulatory power regarding the location and realization of provisions like highways, industrial areas and wind turbine parks?
According to the main rule, a highway has to be planned in accordance with the land use plans. This means that the municipal plans have a priority. If there are no municipal plans then the regulations for planning the highway in the Highways Act (503/2005) apply. However, an engineering plan for the highway has to be made in all cases. Also an environmental impact assessment (EIA) has to be carried out when the engineering plan is being drafted. The final permission for the highway is given by the state.
Highways Act section 17, subsections 1, 2 and 3
Preliminary and final engineering plans shall be based on zoning plans with legal consequences as provided in the Land Use and Building Act wherein the location of the highway and its relationship to other land use has been determined. In areas where a zoning plan with legal consequences is being drafted or amended, measures may be taken to draft preliminary or final engineering plans based on the goals of the zoning plan.
National land use objectives as well as regional plans and local master plans shall be taken into account in the manner provided in the Land Use and Building Act. Preliminary engineering plans shall not be adopted contrary to regional plans or local master plans with legal consequences. Preliminary engineering plans may be adopted contrary to the valid local detailed plan with the support of the municipality and the regional environmental centre. Final engineering plans may not be adopted contrary to a zoning plan with legal consequences.
The provisions of subsection 1 notwithstanding, a highway may be planned if the nature of the highway, with consideration to location and relationship to other land use can be adequately established without a zoning plan in cooperation with the municipality, regional council and regional environmental centre.
Concerning the industrial area the municipality has the decision making power in the form of the master plan and local detailed plan. However, it has to take into account the opinions of the state too. According to the LBA, in the planning all effects of the area have to be assessed. If the industrial impacts are too high the area cannot be planned for that purpose.
LBA Section 9Impact assessment in connection with planning
Plans must be founded on sufficient studies and reports. When a plan is drawn up, the environmental impact of implementing the plan, including socio-economic, social, cultural and other impacts, must be assessed to the necessary extent. Such an assessment must cover the entire area where the plan may be expected to have material impact.
The wind turbine park requires either a land use plan decision or individual permit decisions, depending on the provisions of the LBA. The level of planning (regional, master or local detailed plan) is defined by the extent of the project as well as the characteristics of the area. If an area has been designated for a wind turbine park in the regional or master plan, a planning decision on a more detailed level is usually not necessary, but the project can be realised through municipal permit decisions. The permits required are either a building permit or an action permit (a permit for minor construction work). An exemption permit may be required, e.g. in shore areas without a detailed plan. Building wind power solely on the basis of a permit decision (i.e. without a land use plan) is possible only in areas where the need of matching the wind power building with other forms of land use is insignificant and where there are no special environmental values (e. g. harbour or industrial areas). An environmental permit in accordance with the Act on Environmental Protection (2000/86) is required, if the turbines are regarded to cause unreasonable nuisance to inhabited areas. The municipal environmental authority makes decision on this permit. The environmental impacts of the building of the turbines must be assessed in the plan drafting and permit procedures. The scope of the assessment depends on the environmental values, other land use, the planning situation in the area as well as the scope of the project. For significant wind power projects, an EIA procedure in accordance with the Act on EIA (1994/468) is required.
C. Do public authorities have the power to force developers, who own the land, to contribute in the cost of public amenities? What are the limits in this respect?
Yes they have. See the answer in question A.
D. In which way municipalities have the power to regulate the management of built residential areas?
They do not have the power in other ways than by defining in the local plan how the building sites can be formed (subdivision plan) and what joint facilities should be carried out. This means, e.g. that if in the plan the sites are planned for row houses, block of flats or for many separate houses on the same site an apartment house company has to be created for each site. The company is a special limited company, which has a board, housing manager and annual meetings.
In this way the municipalities have some power to regulate the management of built residential areas, but they have no power on how the companies are run in practice and who are the persons in the boards and who are the managers, if it does not own shares in those companies. In that case the municipality is a normal shareholder. In the plan can also be regulated that there has to be, e.g. an laundry house joint for some sites.
Sources:
Werdi (Hakkarainen), Erja. Chapter 7.5 “Planning and Building” in the book Viitanen, Kauko – Palmu, Jussi – Kasso, Matti – Hakkarainen, Erja – Falkenbach, Heidi: Real Estate in Finland, 2003 (on the webhttp://www.tkk.fi/Yksikot/Kiinteisto/julkaisut/verkkojulkaisut/julkaisuB107.pdf)
Publication of the Ministry of Environment “Tuulivoimarakentaminen” (Building Wind Power). 2005. (on the web:http://www.tkk.fi/Yksikot/Kiinteisto/julkaisut/verkkojulkaisut/julkaisuB107.pdf)
Unofficial translations of the Land Use and Building Act and Highways Act are available on the web in The Finnish State legal database Finlex:
Highways Act: http://www.tkk.fi/Yksikot/Kiinteisto/julkaisut/verkkojulkaisut/julkaisuB107.pdfLand Use and Building Act: http://www.tkk.fi/Yksikot/Kiinteisto/julkaisut/verkkojulkaisut/julkaisuB107.pdf NOTE:
This translation does not include chapter 12a concerning compensation paid to the municipality for costs of infrastructure, which was added to the Act in 2003. The provisions in chapter 12 (Sections 91a-91p) referred to in this text have been translated by Ms Nuuja.
Prof. Kauko Viitanen MSc (Tech), Student of Law Katri Nuuja, Helsinki University of Technology, Department of Surveying, Institute of Real Estate Studies 18.12.2007