Concept and urban planning function of the execution unit

In the field of urban planning law, the execution unit constitutes the basic unit for carrying out land management. It is not simply a line drawn on a map, but the delimited surface area where the public administration or private individuals must execute the necessary infrastructure for the land to acquire the legal status of a building plot.

For land to be built upon, it requires essential services such as road access, a water supply network, sanitation, electricity supply and public lighting. The execution unit groups one or several estates together so that the development of these services takes place in a coordinated and comprehensive manner, avoiding the isolated or disorderly urbanisation of individual plots.

Main characteristics of execution units

The regulatory and technical characteristics of these land areas vary depending on the applicable regional legislation, but they share fundamental common elements:

• Functional autonomy: Each unit must have the appropriate size and configuration to allow the distribution of urban planning burdens and the complete execution of the work.
• Equitable distribution: Legislation requires that urbanisation costs and compulsory land cessions are distributed fairly and proportionally among landowners, based on the land area contributed.
• Territorial continuity: As a general rule, the land parcels forming part of the boundary are continuous, although urban planning laws permit non-continuous units in certain cases to compensate for general systems.
• Right to build: Until the execution unit is fully developed or financial guarantees have been deposited, landowners do not usually obtain a building permit or first occupancy licence.

Action systems within the execution unit

Once the execution unit has been defined in the general or partial plan, urban management is carried out through different action systems. These systems define who leads the transformation of the land and how the operation is financed:

1. Compensation system

This is the most common private model. Landowners form a Compensation Board, assuming responsibility for contributing the land, financing the urbanisation works and executing the projects. The public administration supervises and approves the steps, but the economic initiative lies with the property owners.

2. Cooperation system

In this public management system, the administration acts as the developer. The local council carries out the urbanisation works, but the total cost is passed on to the owners within the execution unit through urbanisation fees. If an owner fails to pay, the administration can resort to enforcement proceedings.

3. Expropriation system

This is applied when the public interest prevails or in the event of repeated failure by private developers to meet their obligations. The administration acquires all the land included in the execution unit by paying the appropriate fair price to the original owners.

Compulsory cessions and Official Protection Housing (VPO)

The development of an execution unit implies that landowners must cede a certain percentage of urbanised land to the local administration free of charge. These cessions are allocated to roads, green spaces, public amenities and the percentage of profitable development rights regulated by the relevant land law.

Within the framework of the Comunidad de Madrid, urban planning regulations require a percentage of residential land within the execution unit to be allocated to the construction of VPO (Official Protection Housing). This measure aims to facilitate access to housing and ensure socially integrated planning in new urban developments.

Relationship between the execution unit and real estate financing

Acquiring land or developing housing within an execution unit requires rigorous financial analysis. During the initial planning and re-parcellation registration phases, financial institutions do not usually grant traditional developer loans due to the lack of formal building plot status.

To structure the land purchase, meet Compensation Board fees or refinance urban management costs, specialist advice is essential. The involvement of experts such as mortgage credit intermediaries allows for bespoke financial solutions to be designed, evaluating the available mortgage guarantees and connecting investment needs with banking institutions willing to finance development phase operations.

Differences between sector, execution unit and plot

To understand the hierarchy of urban planning, it is convenient to distinguish between these three key concepts:

1. Sector: The large territorial area defined by the General Urban Development Plan to be subject to partial planning. A sector can accommodate one or several execution units.
2. Execution unit: The intermediate operational scope where burdens and benefits are distributed and actual urbanisation takes place.
3. Plot: The minimum individualised and profitable surface area resulting from the re-parcellation process, suitable for building a development after fulfilling urban planning obligations.

Standard phases for developing an execution unit

The complete process of transforming land encompasses various legal and administrative stages:

• Delineation of the scope: Initial and final approval of the perimeter comprising the unit.
• Establishment of the management body: In the compensation system, the formalisation and registry recording of the Compensation Board.
• Re-parcellation Project: Technical and legal document grouping original land parcels, settling encumbrances and allocating new building plots between owners and the local council.
• Urbanisation Project: Civil works plan covering sanitation, electricity networks, paving and general services.
• Execution and handover of works: Physical completion of works and subsequent handover of infrastructure to the municipality.