The planned changes in the Construction Law seem to indicate that the legalization of unpermitted structures will be even more costly than anticipated under the current statutory scheme.
In Poland, unpermitted structures are not automatically subject to demolition. Instead, building supervision authorities inspect the subject property in an effort to legalize it. An order for demolition is the last resort. At the same time Poland has two complex statutory schemes for retro-active permitting fee calculations which apply under different circumstances. The first applies when the premises was built without the required building permit, while the second applies when work was done without the required notification. Retro-active permitting fees for structures built without the required permits are calculated under the Article 49 section 2 of the Construction Law Act of July 7, 2004 (the “Act”). It requires the use of fines provisions provided for in the Article 59 f of the Act but the amount calculated thereunder must be multiplied by 50. The formula contained in the Article 59 f is as follows; the fine is the product of the fee (s), the coefficient of the building category (k) and coefficient of the size of the building (w). The fee rate according to section 2 of that provision is 500 PLN. The variable portions are given in an Annex to the Act. On the other hand, where a structure was built without proper notice, the steep fines can range between a 2500 or 5000 PLN depending on the nature of the construction.
The result is that the legalization of structures build without the required notice does not carry severe financial consequences, while legalization of structures build without the necessary permits may be simply inefficient. In light of the fiscal consequences under the statutory scheme above it is of often more profitable to demolish a structure and reconstruct one with the requisite permits than pay the fee. Unfortunately, the fee calculation formulas are not reflective of actual fees paid at the time of the legalization. For example, the legalization of a shop or a bar with an area of up to 2500 m 3 is 375.000 PLN, while for a shop between 2500 and 5000 m 3 is 562.500 PLN. The greatest inequity of the current regulation is that an investor can be expected to pay the same amount for the construction of a small shop as for one with an area of 2000 m 3. This is because under the Annex to the Act, which lists the categories of the premises, both premises belong to the same category. This restrictive approach to charges has resulted in an annual decline in the legalization of unpermitted structures. In 2009, 681 unauthorized constructions were legalized, while in 2010 it was only 571. In the first half of 2011 this figure had dropped to 182.
To overcome the apparent inequity in the construction law a legalization fee of 50 percent of the value of the premises being built has been proposed. It is unclear, however, whether the fee would be calculated based on the value of the work completed prior to the beginning of the legalization process or based on the future value of the facility. The Deputy Minister of Transport, Construction and Maritime Economy, Mr. Janusz Żbik, stated that legislation is planned to remove incentives for unauthorized constructions. Therefore it can be inferred that the construction department will be inclined towards the calculation of legalization fees on the basis of the complete and total value of the investment project, thus maximizing the amount of fees for legalization.
As of now, the excessive legalization fees are only one aspect of the issues with the planned legislation. There is also no distinction in the levels of culpability with respect to an investor’s willfulness in engaging in the unauthorized conduct. It means that the same as under the current law, investors who intentionally fail to procure a permit and those who obtained one but had it revoked for reasons beyond their control face the same penalties. Therefore the proposed changes do not affect the heart of the problem. Moreover, the repressive fee scheme will likely affect the number of legalizations to a greater degree.