Application of sustainable urbanization ladder further clarified

A new urban development must meet a need that can be substantiated quantitatively and/or qualitatively. The basis for calculating the quantitative need is to set the demand for the new development against the supply. With a May 22, 2019 ruling, the Administrative Law Division of the Council of State (Division) answers a few questions about this calculation.

What was going on

The municipality of Breda facilitated the expansion of a four-star hotel on the edge of the Mastbos with 53 rooms and new facilities through a zoning plan. Local residents and friends of the Mastbos argued against this, with a number of grounds for appeal raising questions about the application of the Ladder for sustainable urbanization. The Division's answers to these are interesting for practitioners.

Hard plan capacity

After defining the region within which the expansion of the hotel will have effects, supply and demand in that region can be compared for the purpose of determining quantitative needs. In this case, the municipality chose a region of municipalities around Breda, and the Division found that demarcation appropriate for the development of a four-star hotel with 100 rooms eventually.

In order to then compare supply and demand, the hard planning capacity must be considered for the supply side (ECLI:NL:RvS:2016:24). The Division makes clear what is meant by this: it refers to supply that can be realized on the basis of irrevocable planning decisions, even if that supply has not (yet) actually been realized.

In this case, not all of those planologically possible developments had been included. The municipality had estimated the feasibility of projects within the irrevocable planning possibilities and determined that a number of developments were unlikely to go ahead. Recently, an application for a hotel elsewhere (although planologically permitted) had also been withdrawn. Developments whose chances of realization were estimated at less than 75% were therefore not included by the municipality.

Here the Division is not satisfied. As long as the planning basis for those developments is in place, no significance comes from an estimate of feasibility, but the full capacity that can be realized must be included.

Airbnb

An interesting question raised was whether the supply of Airbnb in the region should also be included. The Division considered that "the Council reasonably disregarded the supply in the region of Airbnb rooms, since it did not appear that this market in this case was of such a size that it should have been expected to have any effect on the determination of surplus hotel rooms in the region."

This consideration clearly indicates that Airbnb supply cannot be completely ignored, but will have to be determined on a case-by-case basis whether that supply has an effect on the determination of a surplus of hotel rooms in the region. It is notable, however, that the Division talks about the size of Airbnb's market and does not take into account that Airbnb possibly operates in such a different segment that it does not belong in the comparison (or: if Airbnb should be included, the demand for Airbnb should also be included on the demand side). So a question that remains unanswered for now.

Qualitative need

If there is no quantitative need (because supply exceeds demand) and thus numerically there is a surplus of hotel rooms if the development goes ahead, this does not necessarily mean that the development cannot go ahead. This is because qualitative aspects also play a role.

In this case, the municipality found that the expansion of the hotel would add qualitative value to the hotel offerings, as the expansion targeted new audiences, including so-called leisure and wellness guests, less mobile hotel guests and guests in need of medical care support.

The Department is consistent in its application of the ladder. A confrontation between supply and demand must also take place for the qualitative need. The municipality had not contrasted the focus on new target groups with the supply (hard planning capacity) for specifically those target groups in the region in question. Only after such a confrontation can it be reasoned whether the expansion of the hotel will actually generate its own demand. The municipality will still have to conduct this research.

Conclusion

It is advisable to be systematic when preparing a report for the application of the Ladder for Sustainable Urbanization.

First, the region within which the development has an effect must be defined. Then, for the quantitative need determination, the supply and demand confrontation must take place, by comparing the hard plan capacity with the demand (development). This should include actual supply that affects demand. Also, questionable developments that are planologically possible should not be discounted. All irrevocable planning capacity must be included.

When it comes to qualitative substantiation, it is important to contrast the special qualities of the development against the supply in that area as well.

This ruling can be seen as a nice complement to the overview ruling for the application of the Ladder for Sustainable Urbanization given by the Division on June 28, 2017 (ECLI:NL:RvS:2017:1724).

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