**Economic Consequences of Adopting Local Spatial Development Plans for the Spatial Management System: The Case of Poland**

**Przemysław Sleszy ´ ´ nski 1, Maciej Nowak 2, Paweł Sudra 3, Magdalena Zał ˛eczna 4 and Małgorzata Blaszke 2,\***


**Abstract:** The spatial managemen<sup>t</sup> system in Poland struggles with serious costs as a consequence of local planning. The problem is the lack of appropriate value capturing mechanisms and cost compensation for municipalities, along with significant burdens. Private property is subject to special protection, but the public good is less valued. The article attempts to assess the situation in Poland, recalling also the experiences of spatial managemen<sup>t</sup> systems from other European countries. It combines legal, economic, and geographical perspectives. The specific objectives were demonstration of geographical (interregional and functional) regularities related to the economic (financial) consequences of adopting local plans and identification of financial effects resulting from the implementation of local plans in communes, i.e., in particular, their size, structure of revenues (income), and expenditures, in relations with the budgets of municipalities and the population living in communes. First, the determinants of spatial policy were defined in the context of institutional economics and the real estate market. Then, a unique database of forecasted and realized budgetary revenues and expenditures of 2477 communes in Poland related to spatial development (infrastructure construction, land transformation, purchase, etc.) was analyzed statistically. Additionally, for five selected communes of different functional types, this issue was examined in detail. It has been shown that municipalities do not derive adequate income from spatial development, and improper policy of local self-governments results in heavy burdens, threatening to disturb their financial balance. The formulated conclusions regarding the legal, economic, and spatial mechanisms may contribute to building tools (instruments) for more effective spatial managemen<sup>t</sup> in various countries.

**Keywords:** local development; local law; budgets of local units; financial consequences of spatial chaos

#### **1. Introduction: Assumptions and Goals**

The spatial managemen<sup>t</sup> system and the use of spatial policy tools must always be related to the conditions existing in the real estate market. These institutions are interdependent with each other. The legislator should be able to notice this in every country, appropriately balancing interests of "actors" interested in creating legal solutions in this respect. Much depends on the specific institutional framework, both formal and informal, relating to planning practice. Geographical areas (territories) should be covered by legal acts regulating land destination principles, and the use of the local planning practice should complement their function. If this regulatory role of spatial planning is not fully realized, there is a scope for spatial conflicts to arise [1].

**Citation:** Sleszy ´ nski, P.; Nowak, M.; Sudra, P.; Zał ˛eczna, M.; Blaszke, M. Economic Consequences of Adopting Local Spatial Development Plans for the Spatial Management System: The Case of Poland. *Land* **2021**, *10*, 112. https://doi.org/10.3390/land10020112

Received: 29 December 2020 Accepted: 21 January 2021 Published: 25 January 2021

´

**Publisher's Note:** MDPI stays neutral with regard to jurisdictional claims in published maps and institutional affiliations.

**Copyright:** © 2021 by the authors. Licensee MDPI, Basel, Switzerland. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license (https:// creativecommons.org/licenses/by/ 4.0/).

Difficulties in building an appropriate institutional framework result from two ways of sharing the good of limited space: public and private ones. On the one hand, there is a need to conduct an active spatial policy on a local scale, which should effectively protect the area's values related to spatial order; on the other hand, real estate market participants, especially owners, would like to benefit from their rights. Against this background, contradictions occur that are sometimes difficult to reconcile [2–4]. Failure to properly fulfill the regulatory role also means a waste of resources present in space. Improper allocation means a lack of optimal use, e.g., irrational land use and suboptimal distribution of various functions based on these resources [5–8]. The consequences of spatial conflicts are wide and cover all spheres of human activity in geographical space.

That is why the role of local spatial development plans (from now on referred to as local plans) is so important. They are key (regulatory) tools of spatial policy, which are, at the local level, most responsible for determining the land use. Local plans significantly affect the value of real estate and the real estate market. The local plans are subject to research as signals that can influence the decisions of interested actors [9,10] and impact of the process of preparing planning framework [11]. The results of some analyses indicate increase of real estate value in consequence of adoption of local plans [12,13]. Among other directions of research, the impact of planning acts on the supply and prices of housing shall be mentioned [14,15]. However, the use of local plans in European countries is different: they have a different scopes and legal effects. In some spatial managemen<sup>t</sup> systems, it is the impact of plans on the value of a property that determines the frequency of preparation of plans due to the costs of their implementation for public actors.

Less frequently discussed issues include the economic consequences of spatial regulations influencing real estate market participants' behavior. In this context, Poland seems to be an interesting example because of the complicated and inefficient spatial planning system, generating costs estimated at the level of at least EUR 20 billion per year [16]. They also include the impact of spatial chaos on the real estate market.

Against this introductory background and problem formulation, the objectives of the article are


To achieve these goals, the article first defines the conditions of the spatial policy in the context of governance failure and the real estate market, combining these issues with the problems of spatial managemen<sup>t</sup> systems in Europe, which are discussed in the literature. Against this background, we present Polish experiences concerning the economic consequences of adopting local plans, which make up the essential empirical part of the article. The focus is on the regularities related to the effects of implementation of local plans on the municipal budgets, according to the functional types of communes. In this context it is worth to add a terminological clarification. *Gmina* is a basic local administrative unit (LAU) in Poland. It corresponds to the former NUTS-5 level, that is, the LAU-2 level, according to the classification of Eurostat. The term "commune" is used commonly for an English synonym of gmina as the smallest territorial division for administrative purposes in Poland. Therefore, it will be used interchangeably in the text with the universal term "municipality".

Against this background, a thesis is formulated that improper regulations, combined with governance failure in the spatial managemen<sup>t</sup> system, result in a burden on budgets of communes. Estimating the economic effects of local plan arrangements is important both from the viewpoint of rationalizing the local spatial policy and the sustainability of communes' public finances. We associate it with the optimization process, i.e., reaching the best spatial managemen<sup>t</sup> decisions [17,18]. The tool used to achieve this goal is the forecast of the economic effects of the adoption of a local spatial development plan (from now on referred to as the forecast), the implementation of which in Poland is an obligatory element of the procedure for developing a draft local spatial development plan. The Polish spatial managemen<sup>t</sup> system belongs to the systems classified as protecting real estate owners' rights in particular. Its detailed analysis is important for several reasons:


The article combines (and unifies) the economic, geographical, and legal perspectives. Developing an approach combining the showed perspectives and enabling the achievement of research objectives with their careful consideration should be a new contribution to the literature dealing with spatial planning and development issues. In the literature on the subject, the issues of economic consequences of spatial planning are considered limited in the dimension relating to all municipalities in a given country. Such an analysis in this publication makes it possible to distinguish groups of communes with different trends in this respect, which also entitles wider conclusions.

In our literature review, we identified the conditions and the problems of the role of local plans and of the economic consequences of spatial planning in European countries. We have highlighted the specificity of the Polish system against this background. Then, we analyzed all communes in Poland in relation to the following issues: forecasted revenues and expenses resulting from adoption of the local plans and realized revenues and expenses relating to the above forecasts. In the Discussion, we applied the conclusions resulting from the research to a wider discussion on the economic consequences of spatial planning.

#### **2. Research Method and Source Materials**

For the purpose of exploring the diversification of the financial implications of local planning, data from a survey "Spatial planning in the commune" (carried out by the ministry responsible for the "spatial management" public affairs sector and the Central Statistical Office under the Public Statistics Research Program) were used. This survey consists of collecting responses from all communes in Poland (2477 units in 2019) on the following issues:


We used the latest available data for 2019, showing the current implementation of local plans' provisions. In terms of revenues (forecast and realized), these were revenues to communal budgets resulting from (1) planning fee, (2) increase in property tax, (3) tax on civil law transactions, and (4) category of "other" costs. In terms of costs, we took expenses of local budgets into account, which are related to (1) construction of communal roads, (2) purchase of land for roads, (3) construction of technical infrastructure, and (4) other costs included in the "other" category.

Responses have been obtained from a different percentage of communes in the country, depending on the thematic group of the questions (forecast, current status, income, and expenses)—it was 49.5–63.0% of local governments. Out of 2299 communes with local plans, 915 (39.8%) answered questions from all four groups, another 309 (13.4%)—questions from three groups, and 386 (16.8%)—questions from two groups, and 136 (5.9%) to questions from one group. In 1746 communes (75.9%), at least one answer was given. It was possible to collect comprehensive and unique material that allows analyzing and testing the economic effects related to the adoption of local plans on a very detailed spatial scale, and thus to conclude on impacts of spatial planning on the real estate market.

Datasets from the Local Data Bank of the Central Statistical Office for 2017–2019 were used as regards the information on communal budgets. Taking the three-year period into account was aimed at averaging the data in order to avoid local governments' financial indicators' volatility over time. The analyses used the indicator of total communes' income and their self-income ratio. Total revenues of municipalities in Poland include their own revenues, as well as general subsidy (which is a form of redistribution of state revenues, e.g., from taxes) and specific subsidies from the state budget. Own revenues include local taxes (on real estate, means of transport, small business, inheritance and donations, civil law, agricultural, and forestry activities) and revenues from local fees (stamp duty, market fee, maintenance fee, spa fee, etc.).

The division of communes in Poland into types, the so-called functional classification, has been developed specifically for spatial planning monitoring purposes [19]. It distinguishes ten types of communes based on the administrative and functional hierarchy of cities and towns (voivodeship capitals, sub-regional, and local centers), specific locations of communes (suburban zones and transport corridors), and economic functions (tourism, agriculture of various intensity, etc.). To obtain proper generalization, the communes were aggregated to 10 types. Table 1 includes basic information about the distinguished types.


**Table 1.** Basic information about the analyzed categories of communes.

> Source: [13].
