Municipal property management is one of the key powers of local self-government. After all, municipal property — and, more broadly, municipal ownership right — lays the foundation for the operation of local self-government, municipal institutions and companies, as well as, to an extent, for filling the municipality budget.
As evidenced by the survey of the participants of the training programme “STEPS for Specialists. Municipal Property Management”, municipalities most often seek advice on leasing and privatisation of municipal and abandoned property. According to the experts, granting a concession for municipal property is the most problematic issue. Local self-government bodies rarely use this practice due to a rather complex procedure with multi-level legal regulation. Experts also emphasise certain misunderstandings that arise when dealing with the so-called shared municipal property of municipalities.
“The Law on Local Self-Government still has a specific concept of ‘shared municipal property of municipalities’. It applies to the property of a district council or a regional council. Shared property can also include assets of joint enterprises when it comes to intermunicipal cooperation. However, the legal framework is lacking in this aspect of municipal property,” said Andrii Pohorilyi, Adviser on Decentralisation and Local Self-Government at the Regional Office of U-LEAD in the Volyn Oblast.
Essentially the Economic Code of Ukraine defines a concept of an economic entity (legal entity or individual entrepreneur) that owns some property. And in the meaning of the Economic Code, a local self-government body (including district and regional councils) is, rather than being an economic entity itself, only vested with the competencies such as ownership, use and disposal of property. That is, it is an entity managing the property, while the municipality itself is the owner of it.
Among the key aspects of managing municipal property is its proper registration.
“In order to own municipal property and manage it, it must be registered. Because any other property rights in the future are derived from ownership (including lease, securing property under operational management and economic trust, etc.),” said Victoria Cheban, Adviser at the Regional Office of U-LEAD in the Chernivtsi Oblast and Head of the Working Group on the Management of Municipal Property and Utility Companies.
Since the largest share of property under municipal ownership is movable and immovable property, effective management of municipal property is crucial for municipalities. After all, in addition to being the basis for the operation of local self-government and a source of income for the budget, it requires expenses to maintain it in proper condition. So the big question is how to effectively manage municipal property, or at least balance potential income and expenses.
The experts point towards a comprehensive approach that includes the development and implementation of the Municipal Property Management Programme as one of the ways to ensure effective management of municipal property. This instrument presents a clear overview of the general composition of municipality property, the scope of expenses for its maintenance and potential income from this property. If you have a complete vision like this, appropriate management decisions can be made.
“Comprehensive management of municipal property requires having a single document. It can provide for funds, say, to establish the right of ownership. After all, in order to dispose of something, you need to properly register this right of ownership. And this sometimes takes quite a lot of money. For example, if technical documentation has to be drawn up for real estate or if you need to appeal to court regarding ownerless or abandoned property, a court fee is charged,” said Victoria Cheban, Adviser of the Regional Office of U-LEAD in the Chernivtsi Oblast.
Experience of individual municipalities shows that the Municipal Property Management Programme should contain the following components:
- Summary of the general structure of municipal property;
- Procedures to register land plots where municipal property is located;
- Procedures to identify ownerless and abandoned property;
- Procedures to lease of municipal property;
- Procedures to privatise, alienate and write off municipal property;
- Procedures to issue title documents for municipal property.
The experts add that the basic document for effective management of municipal property is the Municipal Property Register. In the most general sense, this register should contain:
- Basic information about the type and characteristics of the property;
- Registration data;
- Information on transfer for use to third parties;
- Property value;
- Information on the availability and details of title documents, etc.
“There is still no legal requirement to create municipal property registers. However, the trend to align Ukraine’s legislation with European legislation indicates that sooner or later this will become mandatory. And based on the experience of municipalities that already have municipal property registers, this simplifies the process of finding potential buyers, tenants, investors, as well as facilitates the more effective management of municipal property,” said Mykhailo Lysykanych, Adviser on Decentralisation and Local Self-Government of the Regional Office of U-LEAD in the Ternopil Oblast.
Also be aware that in a sense, the current legislation partially requires municipalities to summarise and systematise information about municipal property available in the municipality. Ultimately, the law requires to publicise the information of local self-government as open data that includes municipal property.