Brief glossary

Authorisation-exempt Projects and Legal Processes (within a formally designated redevelopment area)

Authorisation-exempt projects and legal processes are, for instance, contracts aimed at anticipate legal succession, indefinite tenancy agreements and leasing agreements as well as tenancy agreements and leasing agreements for less than one year, as well as maintenance work.

Hardship Compensation

Hardship compensation is the name given to monetary payments made to those financially disadvantaged by a redevelopment project, even social disadvantage, and who therefore suffer particular hardship. Hardship compensation must be applied for. It is granted subject to the condition that those disadvantaged are not entitled to claim compensation for the disadvantages suffered, or that compensation is insufficient. Owners, tenants, lessees and other beneficial owners are entitled to apply.

Integrated Action Plan

The integrated action plan sets out measures and projects for achieving redevelopment objectives listed in the master plans. The priority is to link urban development and social projects with which the foundation for lasting development processes in the redevelopment area are created. The proposed measures set out in the integrated action plan are not inflexible; instead they are constantly checked and adapted (updated at least once a year).

Legal Fundamentals of Urban Development

The legal fundamentals of urban development are set out in the Federal Building Code, in the urban development support guidelines, in the administrative regulations concerning the Federal Building Code of the Federal States as well as in additional orders from ministries.

Master Plan / Urban Development Master Plan

The master plan represents the guidelines (objectives) of a local authority’s urban development project over the long-term. It comprises the aspects of future use (type and size of buildings, private and public spaces, other land uses), traffic development (flowing and stationary traffic, pedestrian traffic) plus the design intentions of urban renewal. Following administrative-internal coordination and participation of local people and agencies representing public issues, it is the next step in planning the preparatory studies, it also specifically sets out the planning initiatives and adds the latest information to the development proposal. By nature, the master plan is an informal plan and basis for:

• the participation of local people affected within the redevelopment area plus an explanation of the redevelopment measures all the way to social planning
• detailed explanation of the purposes and objectives of the redevelopment project
• assessing and deciding upon an application for planning permission, legal authorisation for redevelopment, individual urban development projects and the application for financial support.

Furthermore, the master plan forms the commercial basis of the relationship between local authority and the Federal Ministry of Transport, Building and Urban Affairs in respect of carrying out the redevelopment project with public funding involved.

Organisational Measures

Organisational measures are the province of the local authority. These include: * purchasing plots * moving residents and businesses for redevelopment purposes * demolition work * creating and altering site development facilities (roads, paths, squares) Based on a contract, the local authority can allow the owner to carry out the organisational measures either wholly or in part

Preparatory Investigations

In order to determine and justify the necessity of urban development projects and in order to justify the application for funding from federal government and state government, the Federal Building Code states that investigations are to be carried out to document and set out the shortcomings in function and substance in the area concerned. These investigations are described as preparatory investigations. In the closing section of the investigative report, the experts suggest an urban area that qualifies as a redevelopment area, in which urban development shortcomings are particularly bothersome, irksome or negative, and where redevelopment is an urgent necessity.

Preservation Statutes

With preservation statutes a town/city can indicate areas where demolition, alteration or change of use of buildings requires official permission.

Projects Requiring Authorisation (within a formally designated redevelopment area)

Projects requiring authorisation and legal procedures require the written authorisation of the local authority. This includes, for instance:

• Contracts for selling a plot or a heritable building right
• Encumbrances on plots in the land register
• Building projects and measures that increase value
• Dividing a plot
• Certain tenancy agreements and leasing agreements
• Removal of buildings
• Justifying, altering or rescinding an encumbrance

Redevelopment Authorisation

Redevelopment authorisation is necessary if the owners within a formally stipulated redevelopment area would like to make changes to their plots, and these changes require authorisation. (please see Projects Requiring Authorisation) Redevelopment authorisation within the meaning of Section 144 BauGB is to be applied for from the local authority. A decision has to be made about the authorisation within one month of receipt of the application. In certain circumstances this period can be extended by three months. Authorisation can only be refused if the planned project / the planned legal transaction makes the redevelopment project significantly more difficult or impossible, or if it is contrary to the purpose of the redevelopment project. Authorisation can be granted subject to conditions, with a time limit or with provisos. In certain cases, the local authority has a duty to refuse to grant authorisation. Redevelopment authorisation from the local authority does not mean that planning permission is not required! Even in a redevelopment area the building regulations authority is responsible for dealing with the planning application and authorising it. This is why an owner who wishes to build within a redevelopment area must make two applications: the application for authorisation of his project as per sections 144 and 155 from the local authority, plus the planning permission application. The application for redevelopment authorisation can be informal, i.e. in the form of a written application, or an application form can be used, which is available from the local authority.

Redevelopment Bye-law

A redevelopment area is stipulated by the local authority with a redevelopment bye-law. This is defined in such a way that the redevelopment work can be purposefully carried out and that the objectives of the urban development project can be achieved.

Redevelopment Note

A redevelopment area becomes legal and binding with the public announcement that it has been designated as such. The local authority then informs the Land Registry concerned as regards the bye-law and has the so-called “redevelopment note” entered in the land registers in which the plots situated within the area concerned are entered. Entries are made in Section II of the land register without the participation of the owner. The redevelopment note entered in the land register means that the plot concerned is situated within a formally designated redevelopment area and thus the stipulations of the Federal Building Code apply, the urban development law in particular. The entry is only for information purposes and does not encumber the land register. The redevelopment note is deleted from the land registers once the urban development process is complete without any costs accruing to the owners.

Redevelopment Projects

In certain circumstances, tax exemptions / tax allowances are possible in relation to redevelopment projects. Tax offices, tax consultants will provide relevant information upon request, as will the restoration and renovation contractor on a non-binding basis.

Replacement and Extension Areas

Local authorities can also stipulate replacement and extension areas outside a specified redevelopment area in redevelopment bye-laws if, as a result of the objectives and purposes of the redevelopment project, such areas are required for replacement buildings or for communal facilities.

Restoration and Renovation Contractor

The restoration and renovation contractor acts in a fiduciary capacity to assist the local authority in carrying out redevelopment projects. The core tasks of the restoration and renovation contractor include preparing urban development plans, managing the trust assets, preparing applications in line with government support guidelines, acquiring the land for the trust assets, producing business plans, advising owners and investors (including contractual arrangements) as well as providing all the information associated with the urban development project concerned. At every stage of the procedure and at every stage of implementation, congenial cooperation with local people and with the local authority is paramount. One-to-one consultation sessions, held locally, ensure that local people, as well as the local government authority, are well looked after in a direct way.

Settlement Amount

Once the redevelopment project is wound up, the law dictates that owners of plots within the redevelopment area are to pay settlement amounts. First of all, an independent expert committee determines the value of the plot: (1.) the value of the plot prior to redevelopment (initial value per m2 in Euro), plus (2.) the value of the plot after redevelopment (final value per m2 in Euro) on the due date concerned. Whether the plot is built upon or not, and the value of any buildings, does not affect this assessment. The settlement amount is the difference between the initial value and the final value, i.e. owners must pay the amount by which the plot has increased in value as a result of the local authority redevelopment project in the form of a settlement amount. Any change in value resulting from market conditions must not be factored in. Upon application, in certain circumstances, the owner may change the settlement amount into a redeemable loan. In return, the owners of plots in redevelopment zones normally do not have to pay contributions to site development costs.

Urban Development Funding

Urban development funding used by the redevelopment project consists of one third federal funds, one third state funds and one third local authority funds. The federal and state funds are authorised once a year and are to be augmented by the local authority.

Winding Up the Redevelopment Project

Redevelopment projects are wound up by rescinding the redevelopment bye-law. It is also possible to rescind the redevelopment bye-law, in certain circumstances, in relation to individual parts of the site or to individual plots. As soon as the rescindment bye-law comes into force, the redevelopment entries are deleted in the Land Register.