Evgeniy Arbuzov, partner of ART DE LEX, has published an article in the Moscow Times newspaper about the initiative of the Moscow Government on investment climate improvement

On August 16 of this year the Russian government approved “Improvement of business climate in the construction sphere” road map. The road map provides for rather drastic measures for Russia, aimed at improvement of the investment climate. For example, it plans to simplify the procedures of obtaining a construction license, to reduce both the number of such procedures from 51 to 11 and the term of receiving a construction license from the 423 "record-breaking" days to 56 days, and to cancel land plot categories. Besides, one of the main areas of focus of the road map is to establish conditions for the most efficient land use.

Moscow was one of the first cities which took steps to implement own policy on establishment of the system of efficient urban land use for accomplishment of social tasks, infrastructure projects and development of the favorable environment for competitive investment projects.

This week it has become known that the State Inspectorate for control of use of real estate property in the city of Moscow prepared for approval by mayor Sergey Sobyanin a draft of the resolution “On criteria of non-use of land plots and non-residential property”. Now, the problem of so-called "long term construction projects", abandoned construction sites, lands of uncertain ownership is a highly charged matter for the infrastructure and economy of the city, which catastrophically lacks new construction areas within the Moscow MKAD Ring Road. According to the list of criteria of inefficiently used real estate which is planned to be in detailed till November 26 of this year, the Government of the city ofMoscow will be entitled to terminate lease contracts of real estate and land plots if any non-use criteria are fixed in respect of them. According to the State Inspectorate land plots are inefficiently used provided that they have not been used for three years and “lack the criteria of economic activity implementation”. This regulation will be applied both to agricultural lessees and developers of non-residential and commercial property, and also owners of non-capital construction objects. Moreover, the Resolution draft applies to non-residential buildings and constructions owned by the city. Upon enactment of the Resolution the Government will accomplish the tasks determined in the state program of the city of Moscow “Property and land policy of the city of Moscow for 2012-2016” in September of previous year, and inefficiently used land plots and non-residential property will be involved in the civil (economic) turnover.

At the same time, the list of criteria needs a considerable follow-up revision as the existing regulations do provide for interpretation of the land non-use criteria. Real estate market participants and lawyers have already noted that excessively general criteria may give rise to arbitrary cancellation of lease contracts on the grounds which will depend in full on an official’s subjective opinion. The prepared document provides no definition of the criteria of economic activity implementation and has no clear algorithm of application of the Resolution standards, and its corrections may give rise to even more extensive grounds for various interpretations.

Despite these negative responses, one believes that such decisive steps on improvement of the investment climate in Russia should be welcomed. Experts recognize that the lion’s share of any construction period in the country is spent on various approvals and bureaucratic procedures. This initiative, if turned into reality, will enable to remove barriers between business circles and the power. It is necessary not only to introduce amendments to the legislation, but also to reach the effective result, and it is possible only on the basis of a serious dialogue with the market participants and all interested persons.