Oleg Soroka: current economic conditions require active effort


In times of crisis economy the construction industry has always been the key “locomotive” of development. Therefore, today it is especially relevant to work proactively to improve the legislation in the field of urban planning activities. “Interfax” discussed the issues of the ongoing legislation development with Oleg Soroka, deputy of the Moscow City Duma, Deputy Chairman of the Committee on Urban Planning, Land Management and National Property.

Oleg Iosifovich, could you tell us about the work of the City Duma on improvement of urban planning legislation?

In the current economic situation we cannot stand still or work on improving the urban planning legislation in a usual mode. The following principle should be taken on board: everything in the normative regulation that obstructs or impedes urban development, or not yet regulated, should be improved. For example, now we are working on establishing clear rules of development of built-up areas, normative regulation for renovation of industrial and municipal areas, adjusting the law on shared construction, improving the standards of urban planning and design.

At the same time, we constantly work on amending the Moscow legislation, making them consistent with the federal laws or introducing certain regulations due to competences newly granted to the city. Moreover, it is important to understand that the solutions for many of the city issues including urban development, requires coordination with federal agencies and changes in the nation-wide regulatory framework.

Tell us about legislative initiatives concerning renovation of industrial zones

This question really on the agenda. Industrial and communal areas have huge potential for urban development. At the same time, you must strictly adhere to the rules and principles of development of these areas, so as not to harm the interests of Muscovites, owners, entrepreneurs, and the city as a whole. Renovation of industrial zones should be based on the declared fundamental principles, one of which is polycentric development of Moscow.

With this in mind, it is necessary to design in terms of multifunctional zoning without dominance of residential function. In our opinion, new jobs should be created on 20% – 40% of the reclaimed areas; it can be industrial parks, innovation, educational or medical clusters. This will secure abandoning of infill construction and using the integrated development principles for these areas.

Implementing a renovation of industrial zones an investor is often faced with a large number of owners in the area. This leads to a conflict of interest and as a consequence, to the disruption of the timing for development of the site. Is it supposed to make any amendments to the law regulating this process?

In fact, today large development companies often have to persuade the owners of small land plots or facilities to participate in development projects. There may be dozens of owners with canine appetite, and each one possesses a hovel on a given land. Initially, even legislators had different approaches to solving this problem. Offers prepared by the Moscow government and approved by the Ministry of Construction, radically change the situation.

The bill which now passed the first reading in the State Duma, provides rights to decide development plans of industrial and municipal areas, to define their boundaries, functional areas and the order of implementation of projects to the subjects of the Russian Federation. The subject of the Federation must approve a so-called Development Concept of industrial areas. Today, the Construction Code of the Russian Federation involves several town-planning documents, such as the City Master Plan, a boundary survey plan or an area planning design (PPT). Our bill proposes to introduce a new kind of urban planning documentation: a Development Concept of industrial and communal areas, which will regulate the legal relations in industrial zone, intended to reorganization.

What status will be assigned to this document?

The status of this document will be “lower” than the City Master Plan; other city-planning documentation will be developed on the basis of it.

When can we expect the adoption of this law?

We all hope that it will be adopted in the quarter II of this year.

Today much is said about the adjustment of 214-FZ, regulating shared construction activities. What are the proposals to amend the law?

As part of the prepared amendments to the 214-FZ it is supposed to tighten control over the expenditure of funds of shared construction participants, additional criteria of financial stability of builders are offered, they include a proposal of using alternative bank financing format, i.e. opening of escrow accounts. This offer caused the most heated debate in the business community and experts.

Let us consider – today the funding of projects is carried out in part at the expense of loan financing and mostly at the expense of shared construction participants. The proposed scheme assumes pro rata funding of design and construction works on the part of the bank and shared construction participants. That is, a shared construction participant enters into a contract with a bank, his cash is transferred to the bank account, and then this bank finances the construction works after checking the building process by the bank institutions.

Given that only after the commissioning of the building the developer will be able to get the funds that exceed the cost of the construction process. This proposal engendered considerable argument as it will kill the current financial control structure. In my opinion (we defended this point during the work on the bill), today’s economic realities do not allow us to use such a tough financing scheme, taking them into account the last edition of the bill offered an alternative to this scheme.

There are a number of other proposals, including raising the funding volume of real estate developer in the total cost of the project. There are proposals to provide additional rights to the federal subjects for inspection of shared construction projects, to review project documents by revenue authorities. In addition, we discuss the creation of a separate structure that would deal with issues of shared construction – the so-called Federal State Insurance Fund of shared construction projects. In our opinion, it should be a federal state fund, and developers will be obliged to make contributions amounting to 0.5% – 1.5% of transaction volume. The new structure would resolve global issues in the field of share construction, which now do not find their solutions.

Besides the shared construction there are other forms of attracting funds of citizens. For example, there are cooperative housing societies (CHS). How do you foresee the future of CHS?

There always has been a lot of discussion on this subject, and now there is heated debate, given the verge of bankruptcy of some real estate developers. In my opinion, we have to apply 214-FZ to such format as CHS, and subsequently amend the Civil and Housing Codes with a view to move beyond this format forever. At present members of such cooperatives are practically not protected, they are potential hoodwinked investors. I am surprised that some people continue to buy housing using this format.

Interfax – Real Estate