Mechanics, Materials Science & Engineering, July 2016
ISSN 2412-5954
Taxation of Public Owned Land for Real Estate Reconstruction in Kiev, Ukraine . . Malashevskyy 1, I.M. Ciobanu 2,a 1 candidate of technical sciences, associate professor, Head of the Land Management, Geoinformation and Cadastre department of the Institute of Advanced Education Kyiv National University of Construction and Architecture, Kyiv, Ukraine 2 candidate of technical sciences, associate professor of the Land Management, Geoinformation and Cadastre department of the Institute of Advanced Education Kyiv National University of Construction and Architecture, Kyiv, Ukraine a jdoroshenko@ukr.net DOI 10.13140/RG.2.1.1209.6243
Keywords: land tax, rent of land, reconstruction, real property.
ABSTRACT. Researched of plots and fences used during the reconstruction of real estate in the city Kiev and proposed taxation on public owned land for a period of reconstruction of the real estate. On the base of these calculations, demonstrate the feasibility of such a land taxation.
Problem definition. Public lands should ensure the proper functioning of settlements. The current Land Code of Ukraine [1] does not explicitly state the total used land. However, according to the settlements (squares, streets, driveways, roads, embankments, beaches, parks, squares, avenues, cemeteries, places of disposal and waste management, and etc.) (Article 83). A characteristic feature of the total land use is its free nature of use for the personal needs of the entire population. The operation of this land is carried out by an unlimited range of subjects that are not related to each by reciprocal rights and obligations, in accordance with established procedure. Typically, they are owned either by state or municipal authorities and cannot be transferred to private ownership. On these lands, the construction of permanent buildings and premises that comply with the purpose of these lands, as well as temporary premises, without prejudice to the land with special destination. Ukrainian law provides the possibility of limiting the right to use these lands (particularly during construction or other works) by closing driveways, streets etc. But this requires a decision issued by an authorized state body or local administration authority. Improvement of these lands is performed by municipal authorities of local councils and their subordinate organizations and institutions. They are also responsible for the proper operation of these lands [2]. According to the current legislation of Ukraine [1, 3] public land is exempt from land fee, but today there are cases where reconstruction of the existing building or facility occurs without registration of ownership or land use, and hence, without the development of land use documentation even though this land is occupied, especially by fence and no land tax for their use is charged. Funds obtained from land tax payment for the use of land during the period of reconstruction of houses will contribute to filling local budgets and an effective management of land in the respective region. The main material. When for allocation of a land plot for property construction special documentation for land management is elaborated, which clearly indicates the limits of the construction site and, if necessary, establishes a temporary rent for the land during the construction MMSE Journal. Open Access www.mmse.xyz
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period. Therefore, for this land, a land fee will be charged. Under Article 274 [3] the tax for land plots, provided after a normative financial estimation, shall be equal to 1% of the normative monetary value. For the estimation of the monetary value of land, the coefficient of functional land use - which reflects the relative profitability of economic activities shall be applied. In respect of land occupied for the current building works and the land set aside for future building works, this ratio is 0.5 [4]. There are many cases when the reconstruction of the existing building or facility occurs without the registration of ownership or use of land, and hence, without the elaboration of land use documentation, even when the land for public use is fenced for a long period which may create an inconvenience for safe and regular movement of the city community. In Kiev and in Ukraine in general, the issue of reconstruction is very current, as a large number of houses both residential and non-residential need reconstruction. Kiev is growing and developing, so the construction works, of course, do not stand still new comfortable residential areas, providing housing for the population are built and operated. There is also the old city where many buildings are cultural heritage, which need special care and reconstruction works. Also in Kiev, there are neighbourhoods of old buildings, which, due to financial problems cannot be demolished therefore they also should be reconstructed to ensure comfort and safety for the population. In addition, according to [5] the requirements of technical standards and maintenance regulations, as well as deadlines of cyclicality of reconstruction works of the housing stock in the next 20-25 years, 5.3 thousand buildings with the total surface of more than 20 million m2 need reconstruction. Out of this number, 4 thousand of very old buildings with the total surface of 11.8 million m 2 are planned for reconstruction, including 5 floors buildings from the first period of industrial housing construction with the surface of 4.0 million m2. If during the period 2001-2010 (Table 1) historical buildings - mainly houses and five floor houses were reconstructed, in the period 2011-2020, according to [5,6] reconstruction works (reorganization) will be performed for nine-storey buildings, especially panel houses built in the 70s. During the reorganization works of 5-9-16 floors panel houses in the period 2011-2020, some mandatory activities related to the development of energy efficiency in the housing stock have also been planned. Table 1. The volume of long-term forecast of housing reconstruction in Kiev, Ukraine. Is subject for reconstruction (thousand m 2 /%), total including: - 5-floors buildings -
Total
2001-2010
2011-2020
11816,3/100
2685,6/100
9130,7/100
4005,0/34 7811,3/66
1511,7/56 1173,9/44
2493,3/27 6637,4/73
If to make an estimation of the number of reconstructed objects or those that shall be reconstructed (Fig.1), as well as the surface of the public land that is occupied or could be occupied, without paying any land tax, it becomes obvious that the city budget is losing a lot of money. Therefore, it makes sense to examine this issue in detail.
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Fig. 1. Distribution of housing in Ukraine and in Kiev by year of construction [5]. Reconstruction of buildings and structures may be necessary when changing the functionality of use for the existing buildings, when they are modernized or restored. The reconstruction works on buildings and structures may include changing the configuration and size of the existing facilities, construction of new facilities. Therefore, it will always be current issue in the development of the city. Also in accordance with [7] for any works aimed to change the appearance of the facade is mandatory to establish a temporary fence. The main purpose of all protection fences is to prevent the penetration of people on the protected territory, so that they do not cause harm to their health or property, which is located behind the fence. These constructions provide protection, as well as keeping people to a safe distance from the place where the works are held. All of fence constructions shall be adjusted for ease of installation, long life and reliability. According to [9], fences which are used in the reconstruction of real estate can be classified as follows (Fig. 2).
Fig. 2. Types of fences, which are used in the reconstruction of real estate. MMSE Journal. Open Access www.mmse.xyz
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By examining the examples of the use of temporary fencing for reconstruction of buildings in Kiev, it was established that (Fig. 3) for reconstruction works of buildings as fences functionality purposes protective security fences are used, which have selected elements, panels for constructive solution made of: - profiled metal sheets, on the 10 Upper Val street; - wood, on 8/12 Kostiantynivska street and 4 Kontraktova square; - profiled metal sheets and plastic netting fence, on 21/20 Vladimir street.
Kostiantynivska Street, 8/12 Street, 10
The Vladimir Street 21/20 Kontraktova square, 4 Fig. 3. Photo-fixation of temporary fencing for reconstruction in Kiev, Ukraine. We investigate the reconstruction of the Central Department Store (CDS) in Kiev, which is located the land from 2 B. Khmelnytsky street, in the Shevchenko district of Kiev, which represent part of the old city. This is one of two buildings in the Khreshchatyk ensemble, which survived in its original form after the Second World War. As a result of the reconstruction, the total store area will be doubled achieved through the use of the courtyard and underground space. The facade of the building, built in 1939, will remain unchanged. Behind the historic facade of the Central Department Store a new building of the department store will be constructed. According to the data of automatic system of "Cadastre" software package the owner of the building is a legal entity the company "Esta Holding". The land with an area of 4.721 m2 is privately owned. The object of research is situated in the area where a large numbers of people is constantly moving, thus, for safety purposes (Fig. 4) a fence has been established.
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Fig. 4. Plot of land on 2 B. Khmelnytsky street, Kiev, Ukraine [8]. In fact, the fence occupied a territory of public use, which is not regulated by any approved documents hence the territory has no status. Performing some estimative measurements of the territory of public use, which was fenced for the period of reconstruction, we found that the area has 945 m2. Estimation of the normative monetary value of this land (Table 2). Table 2. The calculation of regulatory monetary value of a land plot. Indexes Land area Economic-planning zone The base cost of 1 m2 of land Factor for functional use of land
Local factors in the location a land plot within the economic-planning zones
Basis Contract of lease of land (draft) [10] (Appendix 2)
2341.81 UAH/m2
The procedure of regulatory monetary value of agricultural land and the settlements [10] (Appendix 4) - in the zone pedestrian accessibility of community centers - in the zone highways of high city forming value - in the zone walking of high-speed urban and external passenger transport - without centralized gas supply - within the protected area
Regulatory monetary valuation Land tax
0.50 1.20 1.20 1.15 0.95 1.20 1.89
Synthesis local rate
Coefficient of indexing monetary valuation
Value 945 m2 the zone
Tax Code of Ukraine, art. 289. Letter of the State Agency of Land Resources of Ukraine on 10.01.08 Letter of the State Committee of Ukraine of 09.01.2009 Letter of the State Committee of Ukraine of 11.01.2010 Letter of the State Tax Service of Ukraine of 19.01.2011 Letter of the State Tax Service of Ukraine of 20.01.2012 Letter of the State Tax Service of Ukraine of 21.01.2013 Letter of the State Agency of Land Resources of Ukraine of 01.10.2014
1.028 1.152 1.059 1 1 1 1 2081547.3 UAH
Land tax (if the lease) is 3% of the normative assessment MMSE Journal. Open Access www.mmse.xyz
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62446.419 UAH
Mechanics, Materials Science & Engineering, July 2016
ISSN 2412-5954
Thus, in accordance with the calculation, the normative monetary evaluation of the land of public use amounts to 2,081,547.3 UAH, and the land tax 62,446.419 UAH. Since the reconstruction of the Central Department Store lasts already for 4 years, it is subject to a 3% land lease of the normative monetary value which amounts to 2,997,428.112 UAH, which is exactly the amount of budget loss in Kiev. Also, exploring the territory of the economic-planning zones no 61, which according to [10] is located in the Shevchenko District of Kiev, including the following streets: Khreshchatyk, Volodymyrska, Prorizna, Tereshchenkivska, B. Khmelnitsky, T. Shevchenko boulevard, Pushkinska street, 4 objects under reconstruction were identified (Fig. 5). We analyzed them in detail and calculated the land tax for that part of the public land that is actually occupied by a temporary fence.
Fig. 5. Photo-fixation of objects for reconstruction in the economicUkraine.
Kiev,
Table 3. The calculation of land tax for the occupied land for real estate reconstruction. Indexes Address the objects for reconstruction Area [8] m2 Area of land public use occupied fence for a period of reconstruction m2 Economic-planning zone The base cost of 1 m2 of land Factor for functional use of land
Value Prorizna street, 25 240
B. Khmelnitsky street, 2 4750
40
945
400
T. Shevchenko boulevard, 4 1556
30
420
Khreshchatyk street, 50
the zone 2341.81 UAH/m2 0.50
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Local factors in the location a land plot within the economicplanning zones
ISSN 2412-5954
- in the zone pedestrian accessibility of community centers = 1.20; - in the zone highways of high cityforming value =1.20; - in the zone walking of high-speed urban and external passenger transport = 1.15; - without centralized gas supply = 0.95; - within the protected area = 1.20;
Synthesis local rate
Coefficient of indexing monetary valuation
Normative monetary evaluation, UAH Land tax, UAH / Month Land tax, UAH / Year The total amount of land tax for the year, UAH
Tax Code of Ukraine, art. 289. Letter of the State Agency of Land Resources of Ukraine on 10.01.08 (1.028); Letter of the State Committee of Ukraine of 09.01.2009 (1.152); Letter of the State Committee of Ukraine of 11.01.2010 (1.059); Letter of the State Tax Service of Ukraine of 19.01.2011 (1); Letter of the State Tax Service of Ukraine of 20.01.2012 (1); Letter of the State Tax Service of Ukraine of 21.01.2013 (1); Letter of the State Agency of Land Resources of Ukraine of 01.10.2014 (1);
88107.822
2081547.294
66080,8665
925132,131
2643,234
62446,419
1982,426
27753,964
31718,815
749357,02
23789,112
333047,567
1 137 912,519
It seems that only for few objects under reconstruction the city loses every year about 1,140,000.00 UAH. At city level, these revenues in the local budget will be several times higher. Summary. Thus, on the base of these calculations proved as examples, we can demonstrate the feasibility of land taxation, occupied for the period of reconstruction of real estate. References [1] Land Code of Ukraine (2002). Verkhovna Rada of Ukraine; Supreme Council of Ukraine -4, art. 27. Available at: http://zakon4.rada.gov.ua/laws/show/2768-14 [2] Available at: http://leksika.com.ua/17711216/legal/zemli_zagalnogo_koristuvannya [3] Tax Code of Ukraine (2012). Verkhovna Rada of Ukraine; Supreme Council of Ukraine (VVR), -VI. Available at: http://zakon4.rada.gov.ua/laws/show/2755-17 [4] The order on the normative monetary value of agricultural land and human settlements (2006). Order of the State Committee of Ukraine, Ministry of Agrarian Policy of Ukraine, the Ministry of Construction of Ukraine, the Ukrainian Academy of Agrarian Sciences. (Official Bulletin of Ukraine), 2006, p.154. Available at: http://zakon3.rada.gov.ua/laws/show/z0388-06 [5] On the approval of the General Plan of Kiev and its planning projects for the suburban until 2020 (2002). Decision of Kiev ity ouncil 2002 370/1804. Available at: http://kmr.ligazakon.ua/SITE2/l_docki2.nsf/alldocWWW/56E1D135DED9D0B0C22573C00053FC A6?OpenDocument [6] Worleyparsons, ENSI, Local Development Institute, Institute of Housing Estimated study on the ), p. 86. Available at:http://www.teplydim.com.ua/uk/news/view/350/otsnochne_ dosldjennya_vpliv_novogo_zakonodavstva_na_budvelnu_galuz_ta_jitloviyi_sektor# [7] On approval of the maintenance, repair, reconstruction, restoration of facades of buildings in the city of Kiev (2003). Decision of Kiev ity ouncil . Available at: MMSE Journal. Open Access www.mmse.xyz
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http://kmr.ligazakon.ua/SITE2/l_docki2.nsf/alldoc WWW/59F485FD766981AAC22573C000530E70 [8] Public cadastral map of Ukraine (2013) Available at: http://map.land.gov.ua/kadastrova-karta [9] Fences for inventory construction sites and sites of construction and installation works (1978), Specifications , GOST 23407-78, Moscow [10] On approval of the technical documentation on the normative monetary estimation of land in Kiev and Procedure of estimation (2007) Decision of Kiev city council 2007 43/1877. Available at: http://search.ligazakon.ua/l_doc2.nsf/link1/MR071188.html
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