TDR for Mumbai Development

TDR for Mumbai Development
May 2017 , by , in Property Talk

Large scale land acquisitions for public projects are fraught with issues, as it was experienced in the case of New Airport Project in Navi Mumbai.  Ramakrishna Nallathiga, Associate Professor at the National Institute of Construction Management and Research (NICMAR) elaborates on Transferable Development Rights (TDR) in this context.

Ramakrishna New PP

 

Most of the government agencies and departments are endowed with limited amount of land ownership; more so, in an urban area wherein private ownership of land tends to have a larger pie of total available land. Hence, land would have to be acquired from private parties for public purposes like infrastructure development.  However, land acquisition is never easy to achieve:

  • Private land ownership tends to be highly fragmented and would require spending good amount of time on their identification, liaison and seeking cooperation
  • Private land owners generally ask for market prices for their land, which is difficult to determine and governments take longer time to dispose the cases of payments. Also, the land prices fixed by the government based on land sales transaction prices did not always represent ‘fair price/value of land’.

 

The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement, 2013 has further stretched land acquisition process by not only providing for greater compensation (through solatium or premium on compensation) for different categories of people (which includes land owner, tenant and labourer) but also by providing for resettlement of affected people for projects involving sizable number of people displaced.

 

Transferable Development Rights (TDR) emerges as a possible alternative to the conventional method of land acquisition. Given its feature of compensating the land owner in non-monetary terms, it can play a useful role in city development.

FSI Distribution Map as proposed in the New DP 2034

 

The Concept of TDR

 

In traditional approach to town planning, the development potential (measured as development density) of land is fixed and not transferable i.e., it needs to be consumed at site.  TDR is meant to facilitate the use of surplus/unutilised development potential at one site to be utilised elsewhere.

 

The TDR is based on the assumption that each unit of land in a city has the potential to accommodate at least some level of development, which is determined by the property zoning, land use and development control regulations.

 

Essentially, the differential development potential of land can be utilised in a positive manner to preserve certain land uses which are required to be kept with little or no development on site; while at the same time, This unutilised development potential is tapped for beneficial use in other sector – such as residential housing through the issue of TDR that can be used for such an exchange.

 

Douglas Keare of Harvard University in 1999 suggested the need for TDR like mechanism for a better urban land management in Mumbai, like in other countries such as USA and Chile.

 

 

 

Evolution of TDR in Mumbai

 

The Maharashtra Regional and Town Planning (MRTP) Act, 1966 clearly mandated the local and regional planning authorities to prepare land use and development plans for cities and empowered them with imposing regulations on the development in order to curb unorderly city growth (both horizontal and vertical). However, the local governments or planning agencies were not provided with financial resources for the same.

 

The costs of development planning and implementation are large due to the rising price of urban land and increasing opposition to the surrender of land, especially in large cities like Mumbai wherein land price and development pressures are very high.

 

The Municipal Corporation of Greater Mumbai (MCGM) is perhaps the first urban local government in India to introduce the concept of TDR.  The Development Control (DC) Regulations 1991 of Greater Mumbai had laid down provision for TDR both to finance civic works in the wake of rising costs and to give a boost to residential development.

 

The DC Regulation 34 makes provision for granting TDR in lieu of compensation for land acquired for public amenities, social facilities and utilities in development plan subject to certain conditions under ‘Accommodation Principle’.

 

Recently, in November 2016, the Government of Maharashtra issued a notification under Section 37 (1AA) (e) of the MRTP Act, 1966, which proposed some major amendments to the earlier TDR scheme under the modified DC Regulation 34. This amendment also makes sure that the TDR scheme is in line with the provisions of Right to Fair Compensation & Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013.

 

TDR Design in Mumbai

 

The TDR is a market based instrument that tries to restore the demand – supply balance of development at a site.  The development potential of land in Mumbai is determined in the form of the Floor Space Index (FSI) – a ratio of the buildable area to plot area.

 

FSI is prescribed differently across different zones and that leads to some localities or plots with high development demand/potential but low FSI and vice versa.

 

Zone Allowed FSI
Island City 1.33
Suburbs nearer to the City 1.0
Suburbs farther to the City 0.5
Protected industrial and coastal areas on east 0.75

 

The additional FSI can be transferred through the issue of Development Rights Certificate (DRC), which becomes the instrument of TDR, provided that meets other criterion of the TDR Scheme. A higher development of land can be achieved through the purchase of TDR and lower development through selling of TDR.

 

The Development Rights Certificate (DRC) is issued by the Municipal Commissioner under his signature and it contains the FSI credit in terms of square meter of built up area awarded.

 

The TDR scheme clearly excludes the surrender of land made by owners or award accepted from under the earlier Land Acquisition Act 1894 or the recent Right to Fair Compensation and Transparency in Land Acquisition Act 2013.  Likewise, it exempts the already sanctioned layouts/ layout roads and also wherein land owner has already surrendered land through settling by other means such as receiving cash compensation or additional FSI. It also excludes gaothan areas and special areas.

 

Categories of TDR

Reservation TDR: The award of DRC to land owner for the surrender of land reserved for public purposes proposed under the Development Plan. It also covers deemed reservations prepared under the provisions of MRTP Act, 1966.

Road TDR: The award of DRC to land owner for the surrender of land reserved for new roads and road widening proposed under the Development Plan or the provisions of Mumbai Municipal Corporation Act 1888.

Heritage TDR: The award of TDR towards unutilised FSI of any structure or precinct under the DCRs due to restrictions imposed on them. It therefore compensates the owners of such structures for the loss of additional FSI (apart from that already developed).

Slum TDR: The award of TDR in lieu of constructing housing for slum-dwellers according to the regulations under MRTP Act, 1966.

Amenity TDR: The award of TDR for undertaking the development of public amenities on the reserved land. The public amenities eligible under the scheme are listed in DCRs.

Miscellaneous TDR: The award of TDR for any purposes as may be notified by the Government through either modification of addition of the provisions of sanctioned DCRs.

 

Generation of TDR

 

The TDR can be awarded to land subjected to acquisition when it is surrendered free of cost to the MCGM; it should be free of all encumbrances and as per stipulations of MCGM.

 

Location of area under reservation TDR Entitlement
Mumbai City (Island city) Upto 2.5 times the area of surrendered land
Mumbai Suburbs/ Extended Surburbans Upto 2 times the area of surrendered land

 

These TDR entitlements get reduced to 2.35 and 1.85 for Mumbai City and Suburbs/Extended Suburbs, wherein the land surrendered cannot be levelled and fencing cannot be erected under the prevailing DCRs.  Further, to incentivise the surrender of land, an additional incentive FSI/TDR up to an extent of 20%, 15%, 10% and 5% of surrendered land is proposed when the land owner surrenders within 1 year, 2 years, 3 years and 5 years from the notification of the scheme.

 

The new TDR Scheme also exempts the TDR arising from the construction of amenity/roads/reservations as well as Slum or Heritage TDR from the above entitlement. It also excludes certain other categories such as DP Roads, CRZ areas, Low Density Zones, Hazardous Zones, No Development Zones and certain zones with natural/legal constraints.  Further, DRC is issued only after land is levelled to ground floor and fencing wall is erected on the site.

 

 

 

Utilisation of TDR

The TDR that gets generated from the area/zone as mentioned earlier can be utilised subject to the extent that it is permitted by the Municipal Authority i.e., Municipal Commissioner.  The extent of TDR that can be utilised is given as per the following formula:

 

TDR (Utilisable) = {Price (gen area)/Price (rec area)} * TDR (Generated)

Price (gen area) refers to land price in Rs per sq m as per Annual Schedule of Rates (ASR) in generating area

Price (rec area) refers to land price in Rs per sq m as per Annual Schedule of Rates (ASR) in receiving area

TDR (Generated) is the extent to FSI/TDR under DRC

 

For the first time, the utilisation of TDR has been related to the road width, which perhaps serves as an indicator of physical infrastructure availability.  The extent of TDR/FSI utilisable on receiving plot is subject to limits.

 

S No. Road Width of Plots Fronting on (m) Maximum permissible TDR loading
    Island City Suburbs/Extended Suburbs
1 < 9
2 9-12.2 0.17 0.50
3 12.20-18.30 0.37 0.70
4 18.30-30.00 0.57 0.90
5 >30.00 0.67 1.00

Utilisable TDR on plots in relation to Road width

 

The maximum buildable potential calculus is subject to area-wise restrictions as well and subject to other conditions laid down under other schemes such as affordable housing, Slum TDR and other such schemes notified by the Government from time to time.

Category of TDR Area/ activity Allowable FSI
Reservation Island city 1.33
  Suburbs (nearer) 1.0
  Suburbs (extended) 1.0
  Eastern City (M Ward) 0.75
Amenities Land development 1.0
  Land development and construction work 2.0
  Construction work 1.0
Road Land development and construction work 2.0
  Construction work 1.0
Slum Re-development 2.5
Heritage Forgone additional FSI of the heritage site Equivalent to the additional FSI

Area-wise allowable FSI for TDR utilisation in Mumbai

 

The TDR cannot be utilised under following circumstances:

  • Where permissible FSI is less than 1.0
  • On plots falling within 50 m on roads on which no new shops are permitted, particularly as prescribed in Sub-regulation (2) of Regulation 52 of 1991 DCRs
  • In the island city and the following non-receiving corridors: (a) Western Corridor – between tracks of Western Railway and S V Road and between tracks of Western Railway and Western Express Highway (b) Eastern Corridor – between the tracks of Central Railway and LBS Marg.
  • In the Coastal Regulation Zone as defined by the Ministry of Environment and Forests
  • On plots located in M Ward, except TDR generated from M Ward and slum TDR generated elsewhere
  • In the No Development Zone (NDZ) and Tourism Development Zone (TDZ) and in those areas where either MMRDA or MHADA is the special planning authority
  • On plots for housing schemes of slum dwellers for additional FSI is permissible under sub-regulation (7), (9)and (10) of Regulation 33
  • In areas having any development prohibition or restrictions imposed by any notification issued under the provisions of any Central/State Act or the regulations

 

Lessons emerging for other Cities

 

  • The receiving and sending areas need to be identified on the municipal plan itself as it has been done in Bangalore so that the information uncertainty does not arise. The recent amendments in Mumbai have removed the earlier definition of North bound TDR flow and linked it to parameters like related to infrastructure capacity in terms of road width. It does not relate to current development patterns.  In fact, development patterns and intensities can be well checked through a good design of TDR.  Delineation of the zones lacking in infrastructure and development parameters shall be done for a better utilisation of the TDR.
  • The trade aspect of the TDR needs to be well thought and mechanisms for making these transactions fair, open, clear and transparent have to be sought. They also need to maintain the database on TDR utilisation very well and should be able to trace the patterns so that the TDR design can be modified to suit the future needs.
  • TDR utilisation potential is higher along the mass transportation corridors such as railway lines and highways but these areas are exempted from TDR loading. Therefore, the development potential of this zone goes unutilised.
  • There needs to be clarity on the tax treatment of TDR, especially through treatment of it as goods or service tax and the various local taxes that it could be subject to. These issues will also have to be resolved beforehand.

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