Kyiv, September 21, 2016. The problem of “small architectural forms” requires clear legislative settlement at the state level – to establish the uniform rules of the game that would satisfy both the needs of business and city authorities. It is important to clearly regulate the term of a transitional period (two to three years), which is provided for adapting to the new conditions. The legislative decisions proposed both for the general concept and for the transitional period should be submitted for public discussion. This conclusion was reached by representatives of the Kyiv government, Antimonopoly Committee, expert environment and businesses during the discussion at Ukraine Crisis Media Center. The experts also added that the term “temporary buildings” (TB) is a more correct term for the stalls, because the “small architectural forms” include also decorative vases, park benches, etc.
The conflicts of laws and inconsistencies of positions of different authorities constitute the heart of the problem. Oleksiy Khmelnytskyi, head of Kyiv Regional Department, Antimonopoly Committee of Ukraine ACU), noted that today there are about 11,000 “small architectural forms” in Kyiv, about 6,500 of which are legal, i.e. those that pay Kyiv authorities fixed contribution for using the land plots. However, even the “legal” stalls have caused many legal conflicts, as a result of which the situation becomes totally unpredictable for business.
First, there is no uniqueness of the requirements to be fulfilled by an entrepreneur so that his stall will be legitimate. According to Ihor Polotun, deputy head of the Department for Municipal Improvement Control, Kyiv City State Administration, the city government has no claims to the stalls that pay equity contribution. “By resolution No. 6262 the Kyiv City Council proposed that owners of temporary building should pay the equity contribution. Those who pay it are legal,” he explained. But Serhiy Dorotych, representative of the Association of economic entities of Ukraine, stated that de facto such “small architectural forms” are also illegal under Art. 211 of the Land Code of Ukraine. “None of TBs has valid documents confirming the right to use the land. So, all TBs are beyond the law, and at any time they can be removed, because the equity participation is not the principal payment for TB placement. There are many cases when the stalls have been removed despite the fact that people have paid equity contributions,” he stressed. Therefore, this legal contradiction creates a huge room for abuse. Secondly, he said, the Kyiv City State Administration continues to refer to the arrangement drawing of “small architectural forms” notwithstanding the fact that it has been abolished by the court.
The second legal conflict relates to the Kyiv City Council’s decision to ban stalls from selling alcohol after 10 pm. The Antimonopoly Committee claimed that this decision distorts competition in the market in favor of large retailers. “For unknown reasons, the Kyiv City Council has not agreed this decision with the ACU despite the fact that it must do it under the law of Ukraine,” emphasized Oleksiy Khmelnytskyi, head of Kyiv Regional Department, Antimonopoly Committee of Ukraine. He noted that representatives of the Kyiv authorities were invited to the discussion, but they did not respond.
On June 8, Kyiv regional territorial office of the AMCU recognized this decision illegal and obliged the city council to cancel it within a month. The city council did not cancel it. “As the city council lawyers have not appealed against this decision within two months, there is a legal conflict: both Kyiv City Council’s decision No. 237,237 of March 2016 and our decision are effective. […] And now it is unclear how entrepreneurs who sell alcohol products should proceed,” explained Hanna Minchenko, deputy head of the Kiev regional territorial office of the AMCU.
Transparency for the use of equity funds is in question
At present, no one knows exactly where and how the money that the owners of small architectural forms pay for equity participation is spent. According to Oleksandr Melnyk, Head of the Alcohol Industry Association, one small architectural form gives an average of UAH 100,000 a year. Ihor Polotun states that it is spent on “repairing porches, driveways and dismantling illegally placed TS who do not pay for equity participation,” but entrepreneurs, who were in the room, assured that no special fund or budget article provide for such resources. They also said that they are not happy with the way government and businesses communicate today and want a more open and substantive discussion.
Settling the issue of small architectural forms requires developing a concept at city and state levels.
Most of the experts agreed that the question of complete elimination of stalls as a “vestige of the past” should not be raised – for now temporary outlets are god for both small businesses, and residents of the areas with no sufficient infrastructure. A key problem is the lack of single legal regulation of their activities. “Small architectural forms should exist, but not the way they do now. We need a concept agreed at the city and state level so that they are all equal and legitimate, and every entrepreneur could receive a legal place for their activities on a competitive basis through signing a contract,” noted Mykola Soroka, Adviser of the Verkhovna Rada Committee on Industrial Development. “There should be uniform rules and coordination of the rules – this is a matter of discussion among various interest groups – local community and businesses. Each city can have its own specifics, so approaches will be different, but the general framework should be unified,” said Liubomyr Chorniy, senior expert, USAID Program “Leadership in economic governance”. He noted that the income from such a business is small, so their administrative spending should be minimal. In particular, the procedure for obtaining land should be easier than for developing a capital structure and it is important to ensure protection of entrepreneurs’ property rights. Entrepreneurs stressed that, considering all legal conflicts, it is necessary to impose a moratorium not only on the installation of new stalls, but also on dismantling the already installed until the final legal settlement of the issue of small architectural forms.
Yaroslav Hlibischuk, Expert of the Civil Expertise Centre, said that the Centre had prepared a basic version of the draft law that offers a solution to the TS problem. The document was discussed several times and is being prepared for submission to the Verkhovna Rada. However, according to business representatives, it still has many admonitions and needs further discussions involving all stakeholders.
European experience: shopping spaces on the ground floors
Yulian Chaplynskyi, Lviv senior architect, said that the issue of temporary structures is problematic in Lviv as well. At present, the local government imposed a moratorium on installing new temporary structures, so their number is preserved at the level of 1,700. But their number will be reduced. The decision is still looked for, including through consultations with German experts. As an option – to gradually raise the rent for land, so that these booths become unprofitable, and parallelly – as an alternative, to offer businesses the ground floors of buildings, as is done in Europe, where the ground floor is preplanned as a commercial space. “Shaping the new principles of zoning city districts, we can make pedestrian promenades a magnet “for retail with favorable price conditions for entrepreneurs that would attract people due to a large number of small shops,” he explained.