AppId is over the quota
Land is often an issue for an investment project. Often in this country the land suitable for an investment project is public. It is quite difficult to involve public land into investment projects. Especially this is true for greenfield projects.
In Russia if an investor wants to obtain a parcel of public land for construction, most likely it will have to be purchased through a tender or auction. Alternatively, an investor can go through a complicated procedure of the approval by the authorities of a location of the future facility. These are the only available options. Smart investors have tried to obtain public land by exchanging it for other land that they owned, but courts ruled that only the first two alternatives could be used.
According to the Land Code of the Russian Federation, public land can be made available for construction purposes through the procedure of a prior approval of the location of a facility-to-be-built or without such an approval.
Obtaining of a prior approval of the location of the future facility is a long and difficult process without guaranteed success. However the first option also implies difficulties, because the Land Code requires a tender or auction in the event the land is made available to an investor without a prior approval of the location of the future facility.
Certain investors believed that this rule does not apply to cases where the investor owns a similar parcel of land (i.e. with similar area, zoning and permitted use requirements).
In a recent court case that was tried by the Superior State Arbitration Court of Russia a parcel of land owned by a private investor was exchanged with the local authorities for the parcel the investor wants, i.e. no tender or approval procedures were involved.
However according to the decree of the Superior State Arbitration Court of Russia, an agreement for an exchange of parcels that violates the procedure stipulated in the Land Code (tender or auction) is invalid (Decree No.18545/10 of the Presidium of the Superior State Arbitration Court of the Russian Federation dated June 21, 2011).
Therefore it is still difficult to involve public land in the investment process despite statements of local authorities about the improvement of the investment climate and their assistance to potential investors.
Based on the above, greenfield projects involving public land depend very much on the benevolence of local authorities that can facilitate the approval process. Or it is a purchase of land which could make the entire project much more expensive.
Dmitry Churin is a Russian attorney practicing rel estate law with years of experience with international law firms in Russia.
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