The aim of this work is to evaluate the effectiveness of local territorially targeted policy by identifying an implementation gap between intended and implemented development (in a case in Eastern Poland, a ‘post-communist’ transition economy). The systemic conceptual matrix integrates an interplay of intended, actualised and implemented spatial policies with institutional framework in the context of a struggle for control of building development (including communal investment), and threats for public interest. The matrix applies the conformance and performance criteria in analysing the gap. The work identifies the ‘vicious circle’ (implementation gap's mechanisms) of spatial policies and land use planning that leads to an increase in urban sprawl. A ‘deficit’ of public interest consists the key issue of spatial policy that results in ‘fuzzy effect’, which includes scattering of communal investments. Decreasing urban sprawl is not about refining technical land use plans but requires a shift from land use planning to strategic public interest spatial planning.