From Functional Zoning to Performance-Based Planning – the New Rules for Cities and Territory in Italy

Zoning is an essential tool for guiding the growth and transformation of cities, and is understood as the set of planning rules a municipality applies to the area under its jurisdiction.

It must, however, keep pace with the times. In the past, public authorities used “functional” zoning to decide which activities could be located in the various areas of the city (thus creating residential zones, office and commercial districts, industrial areas, etc). This was later followed by “morphological” zoning, which starts from a comprehensive mapping of the territory, identifying its historical and typological features, and sets limits and rules for transformation on the basis of the type of layout, urban fabric or building being redeveloped (historic centres, twentieth-century blocks, vacant or disordered areas to be redesigned, predominantly green areas, etc), while allowing greater flexibility in the choice of functions to be located there.

Zoning challenges

Today the challenge is different: in an era that aims to eliminate land consumption (Italy has chosen to bring forward the European 2050 target to a more ambitious 2030), the objective necessarily becomes the reuse of land, which in turn requires working on areas that have already been developed, to improve them. There are industrial areas in need of regeneration, but there is also a large amount of obsolete, low-performing residential stock that must be upgraded. This is without even considering the broader issue of public real estate assets, for which the Italian State Property Agency has estimated interventions by 2026 of around EUR2 billion, representing only a fraction of the total expenditure that would be needed to modernise a vast property portfolio.

In this context, zoning is called upon to operate in innovative ways, because the allocation of different urban functions to areas of land, in the traditional conception of this urban planning tool, is no longer suited to governing modern cities. The prescriptive approach gives way to a performance-based and evolutionary one.

Contemporary zoning

What, then, should be the content of contemporary zoning? First and foremost, mapping the city no longer takes place through rigid delimitation of zones (residential, tertiary, industrial), nor according to the traditional dichotomy between urban and rural areas. The land must instead be reclassified according to its characteristics (whether or not it has already been redeveloped), its quality (provision of services and green areas, climate vulnerability, quality of the building stock, architectural value, presence or absence of functions or of their proper mix) and its potential.

Moreover, the city is not just the sum of elements such as built-up areas, open spaces and public services: it is a complex reality defined by a set of interacting processes – mobility and transport systems, ecosystems, air quality and the factors that shape it, the availability of services for citizens, accessibility, the housing on offer, and safety infrastructure. These are decisive elements for improving quality of life in urban (and non-urban) areas and must be incorporated into territorial analysis in order to complete the cognitive framework and identify the objectives that transformation should aim to achieve.

Zoning can therefore be used to set the objectives and order of priority that must guide transformation processes. In certain areas, re-naturalisation may take precedence over the rehabilitation of existing buildings, when they are extremely degraded or poorly located in relation to the existing network of services. It may be useful to concentrate building development in other areas that are highly served by transport networks, including increasing the number of users and thus the demand needed to support their profitability. In this scenario, the need for private transport is reduced: public areas currently allocated to parking can be downsized and the space converted into the green infrastructure needed to transform heat islands into areas of environmental mitigation.

The focus therefore shifts from a rule prescribing the use assigned to an area to one that sets the objective which the transformation of that area must achieve, from a performance-based perspective. The new approach requires the collection and systematisation of a broad and complex body of data and, at the same time, makes it possible to read the territory through a series of overlapping layers: each of these identifies a process and its underlying logic, and reading them together provides an organic and overall picture of the reality being analysed.

It may therefore be said that zoning today operates with an integrated view of factors that go beyond the physical structure of the city and that shall not be considered autonomous from it (social structure, environmental quality, services for users, regulation of green areas, mobility, security), and that it pursues complex objectives in which transformations of the territory must be directed towards goals which, through urban design, also deliver environmental and social outcomes.

Digital and predictive tools

The use of digital and predictive tools – from data analysis to artificial intelligence – now makes it possible to collect and systematise all the elements relevant to zoning policies, and also to generate selective and targeted analyses to support the development of strategies for the city. In the evolutionary perspective discussed below, such tools could support the formulation of flexible rules that can be adjusted over the course of their application in line with changes in the surrounding context.

Performance-based or generative zoning

Zoning in Italy today is guided by a main direction: a performance-based or generative (as well as regenerative) approach, which sets a performance target rather than a static configuration of the territory. Within this framework, various instruments come into play, introduced by national legislation (Legislative Decree No 28/2011, Presidential Decree No 380/2001 and many others) and then implemented in different ways at a local level.

The most widespread mechanism is probably the incentive system, whereby additional building volume bonuses or reductions in the costs of transformation works (urbanisation charges, construction cost contributions, charges for the provision of services) are granted when the planner’s objectives are met. In this way, depending on the needs of the specific context, it is possible to “reward” transformation projects that achieve minimum thresholds for objectives considered relevant for each city or territory, such as energy savings, use of renewable sources, introduction of systems to mitigate ambient temperatures, planting of new greenery, de-paving or re-naturalisation of impermeable areas. This may extend to recognising benefits where specific urban functions that are deemed strategic in light of the context are created (social housing, small-scale retail, craft activities, medical laboratories, nurseries, etc), or where a mix of functions at a neighbourhood level is achieved that is considered strategic for creating active, well-served areas. In other cases, a neighbourhood emissions budget has been introduced, which sets the theoretical limit of emissions that the neighbourhood as a whole may generate, taking into account those associated with mobility, consumption and energy production.

Evolutionary zoning

A further step could be what might be called evolutionary zoning: in other words, planning urban transformations so that they can change over time as the surrounding conditions change. One clear example is the issue of tourist flows and residential units being converted into accommodation facilities, of varying sizes and degrees of dispersion. These are phenomena that have a significant impact on the areas in which they occur, and that spatial planning must be able to steer. But those impacts differ greatly depending on whether we are dealing with large cities or small towns, where a revival of tourism can support local policies for enhancing the area and countering depopulation. In both cases, rigid tools are of little use: what is needed are evolving rules that allow solutions to be adapted as the context itself evolves.

The main areas of regulatory innovation

At a national level, there is now a clear intention to intervene in urban transformation processes by introducing new elements, in line with the analysis set out above. The current national legal framework on building and planning is extremely complex and, in some respects, rests on very old legislation. There is therefore a strong need for reform that co-ordinates this broad and fragmented body of rules and introduces the necessary elements of innovation.

At the same time, there is growing focus on specific sectors linked to rapidly expanding activities, where it is necessary to anticipate their impact on the land and regulate that impact from the outset.

Updating legislation on building and construction safety

As regards the former aspect, in December 2025 a draft law was approved (“Rationalisation and reorganisation of building and planning administrative regimes and related permits”, 4 December 2025), providing for a comprehensive overhaul of the legislation on building and construction safety, which is currently governed mainly by the Consolidated Building Act (Presidential Decree No 380/2001), itself recently amended by Decree-Law No 69/2024 to introduce certain simplification measures. The new text will have to update building regulations in light of new technical developments in construction law, including seismic safety, structural safety and energy consumption. Secondly, it will provide for co-ordination between planning rules and those on the protection of cultural heritage and landscape, as well as health and tax law. Finally, the procedures for issuing building permits (building permits, certified notices of commencement of works, etc) will be revised.

A particularly important aspect of the new framework will be identifying which provisions relate to subject matters that fall within the exclusive legislative competence of the State and setting out the fundamental principles for those areas in which the State’s legislative power is shared with the Regions. In the latter case, legislative activity at the two levels of government often overlaps and comes into conflict, as each asserts its own prerogatives and competences, leading to difficulties in interpreting the rules.

Of particular interest are the rules on the correlation between categories of building works and the permits required to carry them out, on the determination of uniform criteria for identifying consideration/charges, and on the requirement to simplify and rationalise administrative procedures, avoid duplication and reduce compliance burdens for citizens and businesses. Lastly, identifying the cases in which, following an assessment of the level of urbanisation of the relevant area, building works may be authorised without the prior adoption of implementation planning instruments can also address the interpretative difficulties that have arisen in similar situations and have led both public authorities and courts in various jurisdictions (criminal, administrative and accounting) to adopt often conflicting positions.

The new framework will also have to reorganise the criteria on the sustainability of buildings, including acoustic quality, the management of materials derived from demolition activities, and the use of recycled materials and energy efficiency. It will have to promote the use of reclaimed materials, green roofs, systems for rainwater harvesting, and the identification of strength, stability, sustainability and accessibility profiles for buildings.

The bill still has a long and complex path ahead of it before it can be translated into directly applicable rules. In the meantime, the legislature is intervening through targeted simplification measures. The most recent measures (Law No 18/2025), adopted in December 2025, concern a reduction (from 12 months to six) in the period within which the municipality may annul a building permit just issued, and confirmation that “tacit consent” applies to the formation of building permits even in relation to listed/protected properties.

Specific sectors of attention

With regards to specific business sectors, particular attention is being paid to data centres and short-term tourist lets, while logistics, in a now stabilised context, has recently undergone a reorganisation as regards freight terminals.

Data centres

With respect to data centres, guidelines have been adopted for the conduct of environmental assessment procedures (by the Ministry for the Environment and Energy Security in Decree No 257/2024; and by the Lombardy Region in Regional Government Resolution No XII/2629 of 24 June 2024), and Lombardy has recently approved a draft regional law (which must still receive final approval from the Regional Council), aimed at promoting the development of new data infrastructure. The regional law will have to identify brownfield areas as the priority locations (without, however, excluding other sites) and will require municipalities to draw up a list of areas within their territory that are disused, run-down or unused.

The draft text classifies data centres, for the purposes of their location and of determining charges and standards, as productive settlements. Where they require an electrical capacity of less than 5 MW, they may be located not only in industrial/production areas but also in office and commercial areas. Where they are located in other areas that encroach on agricultural land, the construction charge is increased by 50% in order to finance compensatory measures for territorial regeneration and the restoration of ecosystem services.

Finally, the bill provides for accelerated procedures for single environmental authorisations and integrated environmental permits, where required by the technical characteristics of the settlement, and for forms of co-planning between municipality and province or region for the siting of medium-sized (with a requested electrical capacity of more than 10 MW) or large (more than 50 MW) data centres.

The national bill (AC 1928) is intended to promote the development of data centres by introducing a single, simplified authorisation procedure, and is still under review by the parliamentary committees. Under the text as currently known, projects are deemed compatible with production and office use classifications; the new developments are qualified as works of public utility, non-deferrable and urgent, and may be implemented in derogation from town-planning instruments and from the requirements on the mandatory provision of public and private parking. The bill also encourages the conversion of decommissioned (or decommissioning) coal-fired power generation sites for the construction of new data centres, as well as the strengthening of the national electricity grid to support the growth of these new infrastructures.

Short-term tourist lets

Many stakeholders have highlighted the need not only to regulate the activity of short-term tourist lets, but also to introduce strict limits on the possibility of carrying it on, where appropriate. In short, in 2023 an obligation was introduced to assign an identification code to every unit used for short-term or tourist rentals, which came into force on 1 January 2025. The government has recently floated the idea of increasing the tax rate applicable to rental income from this type of letting, from 21% to 26%, but the measure has been dropped for the time being.

From an urban planning standpoint, several municipalities have introduced territorial restrictions on the possibility of using properties located in certain areas or falling within certain types for short-term lets (Florence, Sirmione, Venice, etc). The Emilia-Romagna Region is examining a draft law aimed at regulating the phenomenon by introducing a new use category within the broader tourism/accommodation class, with which units will have to conform. Municipalities will then be able to identify, in their planning instruments, areas and zones in which to limit or exclude the carrying out of such activity.

However, the administrative courts have rejected the possibility for municipalities to impose bans and restrictions: in one of the many cases brought against a municipal regulation, it was held that the letting of property, including for tourist purposes, where carried out on a non-business basis, does not fall within the prescriptive and prohibitory powers of the public administration.

Logistics

Finally, from a logistics perspective, a new framework law on freight terminals was approved in October 2025. Freight terminals are now recognised as strategic national infrastructure, and the law promotes their development and enhancement through administrative simplification measures designed to speed up authorisation procedures and improve the sustainability of new logistics hubs, which will be required to maximise the use of renewable energy and certified energy-efficiency systems.