Zwickauer Strasse redevelopment area

There will be some changes for owners within the redevelopment area once the redevelopment statutes come into force. The application of the redevelopment law in accordance with the BauGB helps to control the development in order to gradually realise the objectives of the redevelopment in the area. For example, a redevelopment note is entered in all land registers at the beginning, informing notaries and owners of the application of the redevelopment law. Permits must be obtained from the City of Chemnitz for all property sales or the creation of encumbering property rights and changes to properties and structures (e.g. the renovation or conversion of buildings, including the change of use of properties). This also applies to projects that do not otherwise require authorisation under the Saxon Building Code. With this so-called redevelopment authorisation, the city ensures that only measures that comply with the redevelopment objectives in the area are implemented and that speculation with properties is avoided. The application forms are already available on the Amt 24 service portal under "Projects in redevelopment areas, apply for authorisation". The Urban Planning and Property Office, Urban Renewal Department also provides advice on how to apply.

Once the redevelopment objectives have largely been met, the redevelopment area can be completed after around 15 years and the redevelopment statutes can be cancelled by the city council. The redevelopment measure was decided in the so-called comprehensive procedure. If the entire area develops well, the land value of the properties will increase as a result of the city's redevelopment measures.

These findings are already available from 5 other redevelopment areas that have been successfully implemented in the city over the last 30 years. This "redevelopment-related increase in value" is to be paid by the owners to the city in the form of "equalisation contributions" after the redevelopment area has been completed. The amounts collected in this way are to be reinvested in the "Zwickauer Strasse" area, as even after 15 years there will still be a certain need for redevelopment.

What are equalisation contributions

A redevelopment area is defined in order to significantly improve the urban development of a neighbourhood - e.g. through better streets, green spaces, public squares or the renovation of buildings. The majority of the costs are borne by the city, state and federal government. As the owners in the redevelopment area benefit from the expected increase in value, the law provides for them to share in the costs of the redevelopment. After completion of a redevelopment, the city therefore levies the so-called equalisation amount. Equalisation amounts are payments made by property owners to the city. They compensate for the increase in value resulting solely from the city's redevelopment measures. The City of Chemnitz is obliged to levy the equalisation amounts determined.


How the equalisation amount is calculated

The calculation takes place in several steps:</p

<p class="text-justify">1) Land value before redevelopment

The value that the property would have had without redevelopment measures is determined
 

2) Land value after redevelopment

The land value after completion of the redevelopment is then calculated, taking into account the measures carried out in the area. General changes in land prices due to the economy or inflation are not taken into account.
 

3) Difference  from 2) and 1) = redevelopment-related increase in land value
 

4) Redevelopment-related increase in land value less any offsetting facts (e.g. the owner's own redevelopment expenses) = equalisation amount

The difference between the "before" and "after" land value less any allowable expenses on the property results in the equalisation amount.

An equalisation amount is only due if the determined land value has increased as a result of the redevelopment. The specific calculation is made on the basis of standardised valuations (by the expert committee) and is carried out individually for each property at the time the redevelopment statute is revoked.

Both the assessment of what the property would be worth without the redevelopment process and the determination of the actual value with the redevelopment process take place at the same time after the end of the redevelopment. The equalisation amount does not include any increase in the value of the building. Renovation measures on the owner's own property therefore do not increase the equalisation amount.

The owner's own modernisation and restructuring measures can be taken into account accordingly when determining the value.

The prerequisite is that the measures carried out by the owner correspond to the renovation objectives; that a corresponding written agreement was concluded with the Urban Planning and Property Office before the work was commissioned and that the services provided can be proven.

Time schedule

Compensation amounts are only due after the completion of the redevelopment area. With the cancellation of the redevelopment area, the city determines the land value before/after and sets the compensation amount by notice. This notice states the amount, reasons and payment deadline; in individual cases, payment in instalments is also possible. The Zwickauer Straße redevelopment area will be cancelled 15 years after its commencement at the earliest - i.e. not before 2037.


Who has to pay the compensation amount

The person liable to pay is the person who is listed in the land register as the owner of a property within the scope of the redevelopment area when the redevelopment statutes are cancelled.


Early redemption

In Section 154 (3) BauGB, the legislator provides the option of voluntarily redeeming the equalisation amount early. However, it must be possible to determine the amount with sufficient certainty. The City of Chemnitz will examine the possibility of early voluntary redemption from 2029 onwards.

Property owners can then redeem the future equalisation amount early if they wish. To this end, the city will determine an expected equalisation amount for the property and conclude a redemption agreement. Once this amount has been paid, the obligation to pay equalisation amounts is deemed to have been settled, regardless of the final value determined later. A procedural discount of 15% can be granted up to one year before the planned completion of the redevelopment area.

The income generated by the redemption benefits the redevelopment area and is used for measures still to be implemented in the redevelopment area. They thus contribute to the further fulfilment of the redevelopment objectives.

The state also grants tax benefits for the modernisation of buildings owned by private owners in redevelopment areas and for listed buildings in order to facilitate private investment (in accordance with Sections 7h and 7i of the Income Tax Act). These tax incentives often have a major impact in redevelopment areas. To this end, it is essential to conclude an agreement on the implementation of these measures between the urban planning and property office and the owner before starting the refurbishment measures.

> Information on the procedure § 7h, 10f and 11a EStG