Urban development contracts: know the legal requirements and avoid criminal law risks

Urban development contracts are generally a benefit for the municipality, but also harbour criminal law risks. This is because the construction of building and infrastructure projects, especially wind farms, is regularly associated with monetary benefits. In urban development contracts, services provided by the municipality and consideration provided by the project developer are linked and mutually promised. This often - and frequently unrecognised - borders on corruption offences. And not only that: It is not uncommon for project opponents and/or unsuccessful competitors to file criminal charges. It is precisely against this background that legally compliant action is required. What is permissible and where the borderline to criminal offences lies is the subject of this seminar.

What is it about?

The Administrative Procedure Act and the BauGB assume the permissibility of public-law contracts, in particular urban development contracts. Accordingly, the public sector can enter into a contractual relationship with a private party, have a service promised and hold out the prospect of a consideration. At the same time, both administrative procedure law and building law set limits to these contracts. Performance and consideration must not violate a prohibition law; they must be in a reasonable relationship to each other and have a factual connection. This is intended to prevent a sell-out of sovereign rights.

Against this backdrop, public-law contracts that hold out the prospect of a state service that grants a direct or indirect economic advantage operate in an unmistakable area of tension. It is not only state subsidies, grants and public contracts that operate in this area of tension; the prospect of the creation of building and planning law in urban development contracts also represents a monetary benefit for the private party. However, as the local authority usually has its own interest in the private investment, the establishment or expansion of the construction or infrastructure project, urban development contracts are an integral part of everyday administrative practice in this context. Local authorities are often promised extensive consideration for their planning services.

Against the backdrop of the conflicting priorities described above, it is essential for local authority decision-makers to know the boundary between legally permissible contractual arrangements and an unauthorised exchange of service and consideration. This is because they not only have a duty of care towards their local authority, they can also run the risk of being liable to prosecution for accepting benefits and bribery if they accept prohibited benefits in favour of the local authority. So-called third-party benefits are covered by corruption offences.

Standards can be derived from the laws as well as criminal and administrative court rulings that help to ensure that public law contracts are legally secure and can be handled without municipal or personal risk. The seminar examines these standards.

Focal points:

• Principles and limits of public law contracts
• Permissible exchange of services in urban development contracts
• Infidelity and corruption offences

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