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The Fund for Housing Construction Support was created in 2008 with the purpose of developing land plots assigned for housing construction. The Funds objective is to engage nonused of inefficiently used state-owned land into market turnover (meaning lands assigned to some unitary state enterprises and other government institutions, to Russian Academy of Sciences and agricultural academies). At first the plan was to use the fund for searching such land plots and preparing all the appropriate documentation. The a special Government Commission would review the land plots presented by the Fund and decide either (1) to leave them as federal property or to hand them over to the RF constituent entities under a mandatory condition of connecting to the utilities and selling through an auction during the next three years, or (2) the Fund will develop such plots itself (prepare city planning documents and create infrastructure) with further selling through an auction. Several years ago such scheme could have certain success, but to today its weal points are obvious. And the main of them is low effective demand for land plots assigned for housing construction.

One of the new schemes engaging the Fund for Housing Construction Support stipulates funding of construction by the Residential Mortgage Agency through earmarked loans to the banks. The banks will then issue loans to the developers and provide mortgages to those who buy housing. In this scheme the Fund for Housing Construction Support will perform as a guarantor for selling the housing, and in case such housing will not be in demand at the market, the Fund will buy it out at a distress price of RUR 30,000 per sq. m. The land plots prepared by the Fund (see above) will most likely become part of this scheme. The scale of the Fund and the nature of its activities does not provide for the possibility of qualitative change in the situation of shortage of prepared (from the engineering point of view) land plots for housing construction, because for massive housing construction allotment and engineering preparation of hundreds of thousands hectares per year is required1.

Summarizing the above it can be said that a whole set of measures is required to improve the efficiency of the current land policy:

- creation of efficient mechanisms for interaction between the federal economic government institutions and regional executive power bodies;

See details in the Annual Report on the Activities by the Fund for Housing Construction Support for 2009 http:/ fondrgs.ru; Expert No.26, July 6, 2009.

Section 6.

Institutional Problems - analysis of regional land policies at the federal level, evaluation of their justification and of their consequences for the regions;

- measures to improve the situation from invalidation of certain legal acts and holding certain officials liable for offences of competition policy up to initiating criminal law suits;

- change in regulating the activities of Land Redistribution Fund;

- tightening control over buying out agricultural land and some other categories of land.

6.3.4. Lease of State and Municipal Land Lease-based relations continue to dominate in the sphere of land use, and the situation is not likely to change in the long-term perspective. With that it is especially important for such relations to be stable and mutually beneficial both for the state and for the tenants.

As for the state, we can see that in unstable financial and economic situation in 2009 when effective demand for buying out land from the state fell drastically and budget revenues from privatization and from activities of joint-stock companies with government participation and of unitary municipal enterprises were going down as well, those were the revenues from land tenants (lease fees) that demonstrated growth1.

It is obvious enough that in volatile and unfavorable economic environment those players who are more mobile and more flexible than the government. So budget revenues from business activities are unlikely to come back to high level until the economy stabilizes. In such conditions fixed budget revenues which are not dependent on companies performance become especially valuable.

It means that improving the efficiency of state and municipal land resources management is one of the most relevant tasks.

And while discussing the ways to resolve this task it is quite relevant to remember about the problem of Land Redistribution Fund, about contradictions between federal and regional land policies; about the problems of shares in land and of bankrupt agricultural producers who were not excluded from the registers; about the problems of cadastral value of land being the basis for lease payment calculations, etc.

Recent changes of legislation in the sphere of land lease were connected with the changes in distribution of revenues from leasing land between budgets of different levels. These changes have been quite significant over the recent years2. Thus, until April 2007 100% of revenues from sale and lease of municipal land plots went into the respective local budget.

This became one of the factors impeding delineation of federal and municipal land, because in case of such delineation local budgets would be losing revenues.

In April 2007 the share of revenues in the budgets of settlements and city districts from leasing non-delineated land was reduced down to 50%, which led to shortfall in income in the regions.

Provisions to compensate for such loss were enacted in July 20083. The law stipulated in favor of local budgets redistribution of no less than 50% of revenues from leasing federal land plots located under the respective local governments jurisdiction and from selling the rights See details in: G. Malginov, A. Radygin. Privatization Process and Land Relations Status Economic and Political Situation in Russia, April 2010 - M., Institute of Economy in Transition, p.36.

Article 62 of the RF Budget Code.

Federal Law No.161-FZ On Housing Construction Support of July 24, RUSSIAN ECONOMY IN trends and outlooks for leasing such land plots in case the powers to manage and dispose such land were granted to the RF entities and in case the regional legal framework does not stipulate otherwise.

The practice of regional authorities exercising their powers for leasing land brings a lot of questions, including questions from prosecutors agencies revealing numerous violations. According to Yuri Chaika, General Prosecutor of the Russian Federation, leasing state and municipal property including plots assigned under the right of economic management and the right of operational management with violations of the effective regulations is observed on a mass scale1.

For example, it was identified that in the territory of Mordovia Republic federal property (real estate and land plots) were leased based on the directives of the Head of Federal Property Management Agency without any tenders and without report about the site valuation2. In Tver Region 87 legal acts of local self-government bodies about regulating agricultural land use and turnover were qualified as contradicting to the federal legislation. Granting land plots with violations of the respective procedure is also one of the key problems in the sphere of land use. As per the results of checks by prosecutors of Kaliningrad Region, 227 breaches of law were identified. In Stavropol Region during similar checks prosecutors introduced representations to officials and companies directors about elimination of laws violations in the sphere of land use.

On top of that, facts about criminal offences bribes, abuse of powers by the Head of district administration and the Head of Land Resources and Land Use Planning were revealed in Chelyabinsk and Pskov Regions. In the city of Kislovodsk criminal proceedings were initiated against former Mayor and Vice-Mayor for unlawful allotment of land plots (for bribes)3.

However, the overall context of opposing the corruption does not yet allow for qualitative improvement of the situation 70% of bribery offenses are about bribes below RUR 10,000.4 That means, the level of anti-corruption fighting is merely on a household level.

Local self-government bodies often lease land plots for construction on a non-tender basis5, such violating the provisions of law from 2005 and onward6.

See Report by Yu. Ya. Chaika, General Prosecutor of the RF, at the meeting of the Council of Federation within the Federal Assembly of the RF, April 28, 2010 - http://genproc.gov.ru/management/ appearences/document-33/print=1.

See details at www.genproc.gov.ru.

Land Allotments.- Expert Online of August/29, 2008.

See Report by Yu. Ya. Chaika, General Prosecutor of the RF, at the meeting of the Council of Federation within the Federal Assembly of the RF, April 28, 2010 - http://genproc.gov.ru/management/ appearences/document-33/print=1.

See, for example, Ruling by Higher Arbitration Court of the Russian Federation of September 10, N 9652/08 on case N 60-32127/2007 about invalidation of Resolution of Yekaterinburg City Mayor; about invalidation of Resolution of Petrozavodsk City local self-government Head; Ruling by Higher Arbitration Court of the Russian Federation of September 1, 2008 N 8498/08 on case N 26-3935/2007; Ruling by Higher Arbitration Court of the Russian Federation of June 23, 2008 N 7697/08 on case N 54-3588/20077 about invalidation of Resolution of Ryazan Regional Government about leasing a land plot to LLC Semeyniy Ochag for construction of an apartment building; about invalidation of Resolution of Blagoveschensk City Mayor; Ruling by Higher Arbitration Court of the Russian Federation of June 4, 2008 N 6692/08 on case N 04-7170/0619/548 about invalidation of Resolution of the Head of Voskresensky Raion Municipal Formation of Moscow Region; Ruling by Higher Arbitration Court of the Russian Federation of April 23, 2008 N 4491/08 on case N 41-2-19501/06, etc.

For details see: Land Relations and Real Estate Markets // Transition Economy. Outline of Economic Policy in Post-Communist Russia in 20002007, M., Institute of Economy in Transition, 2008, pp.608609.

Section 6.

Institutional Problems Violations of such kind and criminal offenses in the sphere of land redistribution mean that state/municipal property is transferred not to the most efficient owner and the respective budget is likely to lose some revenues.

In July 2007 the Federal Law On Small and Medium Size Business Development was enacted fixing one of the types of property-related support of smaller and medium-size businesses as granting the right to lease state and municipal property (land plots, buildings, nonresidential premises, etc.) under privileged terms (p. 1 of Article 18).

According to Andrei Sharov, former Director Government Regulation Department in the RF Ministry of Economic Development, though this new law has been effective for a relatively small period of time, positive outcomes can already be observed. List of properties for lease have been developed in 34 regions comprising in total 29.5 thousands plots with the overall area of 6 mln 215 thousand sq. m. Certain benefits were defined in 50 constituent entities of the RF: in Oryol Region, for example, business men were relieved of lease payments, and in some regions including Moscow, lease rates were fixed at the level of 2008.6.3.5. Legal Framework on Land Issues: 20071. In July 2007 Federal Law No.221-FZ On State Cadastral Records of July 24, 2007 effected starting from March 2008 stipulated consolidation two registration systems: Federal Agency for Real Property Cadastre (Rosnedvizhimost) and Bureau of Technical Inventory (BTI). The State Cadastre System shall be finalized by the end of 2011.

The key issues in acquisition of rights for land plots and land turnover are changes in the procedure for entering a certain land plot into cadastre and cadastral activities. Inefficiency of both mechanisms can materially affect the dynamics of privatization process and land turnover.

2. In 20072008 the norms about simplifying the procedure of granting and registering titles for land plots of gardeners, truck-farmers, dacha owners and their associations came into effect receiving the name of dacha amnesty. Simplification of the procedure the basis of which was laid back in June 2006 is mainly connected with cancellation of the mechanism of centralized collection of applications, preparation of documents and decision-making about land plots privatization including for individual use. The legislator introduced another mechanism stipulating for individual acquisition and registration of title for a land plot and a separate mechanism for acquisition and registration titles for land of common use by noncommercial associations of gardeners, etc.

As the first step the simplified procedure was introduced for the period until January 1, 2010, and then it was prolonged until March 1, 2015.

In addition in 20072008 other legislative initiatives targeted at improving the dacha amnesty mechanism were undertaken:

1. Simplified procedure of title registration was introduced starting from October 1, for those who have land plots registered in state cadastre meaning they either have cadastre plan of the land plot no matter how old or in case there is no such plan a cadastre number of the land plot.

Amendments to minor privatization law are being discussed in the Council of Federation, April 8, 2009 - www.arenda.irbp.ru.

RUSSIAN ECONOMY IN trends and outlooks 2. The possibility of simplified registration of titles was stipulated in November 20071 for land plots2 of citizens having inherited buildings or facilities or received them on other grounds without documents certifying the right for the respective plot3.

3. In May 2008 the period was fixed until January 1, 2015 during which no permit will be required for commissioning an individual home or submission of such permit for technical inventory of such home including development and issuance of technical passport.

4. Also in May 2008 changes were introduced into the Land Code4 stipulating for simplification of procedure for land plots titles registration by way of replacing the requirement for having the land plot map by the requirement to have cadastral passport for which significantly less data is needed, as well as less efforts and costs. authorities of state power bodies of the RF regions and of local governments were changed:

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