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Redevelopment is imperative for a city's rejuvenation

Saturday, 12 April 2014 - 6:30am IST Updated: Thursday, 10 April 2014 - 6:06pm IST | Place: Mumbai | Agency: dna

Redevelopment of Mumbai is still the buzzword. After all, the need is tremendous. Old buildings need to be repaired, families need more space, and new concepts that suit modern apartments need to be introduced.

Unfortunately, while the government has been supporting the need for redevelopment, it has not been able to translate this much vaunted enthusiasm into the right policy framework. Most of the new amendments brought out by the government have ended up leaving everyone more confused than ever. This has been complicated further by some pronouncements of the court which need further clarification.

A peculiar problem is that policymakers in Delhi often forget that Mumbai is not a landlocked area, but is surrounded by water on three sides. CRZ regulations that would make sense for the rest of the country, need to be approached differently for a city like Mumbai, which is also the country's commercial capital. It desperately needs a facelift – existing crumbling buildings must be redeveloped.

To discuss these issues, DNA got together a panel of experts comprising (in alphabetical order) Pritam Chivukula, Director, Tridhaatu Realty & Infra Pvt. Ltd; Ameet Mehta, Advocate, Solicis Lex; Mukesh M. Patel, Director and Knowledge Worker, Neelkanth Group; Ramesh Prabhu, Chairman, Maharashtra Societies Welfare Association; and Rajesh Vardhan, Managing Director, Vardhman Group.

The discussion, moderated by R.N.Bhaskar, with editorial support from Shahkar Abidi, threw up key issues and expectations. Given below are edited excerpts:

DNA: Why is redevelopment such an important issue for Mumbaikars? Could we have some background to this?

Prabhu: More than 60% of land in Mumbai has been categorised as slum area. This needs to be redeveloped. Secondly, we have about 17,000-odd buildings in South Mumbai , which are known as repair-board-cessed-buildings. These have been built prior to 1960) and therefore are going in for redevelopment. Thirdly, nearly, 20,000-odd housing societies all over the city, built prior to 1980, and over 3,700-odd buildings are also looking for redevelopment.

Then, there are other tenanted buildings – maybe, 5,000 to 6,000 buildings which are prior to 1980 – tenanted buildings in suburb, – and we thus have over 3 lakh properties all over Mumbai, open for redevelopment. With people coming to the city, and demand increasing, there is no option other than the redevelopment for the city.

The government is also supporting redevelopment by making the required amendments to the DC [development control] rules. The government increased FSI [floor space index] for slum rehabilitation from 2.5 to 3. Similarly, for cluster development the FSI applicable at present is 4. Talking about MHADA, FSI has been increased to 3 from 2 earlier. Coming to the other developments, like suburbs, private societies, it was 1 FSI, which was later enhanced to 1.33. Additionally, 0.67 TDR [transferable developmental rights] is also given, which means effectively 1 FSI and 1 TDR. Then, we have fungible FSI, which is again 35%,.

So, to sum up, the government is providing incentives for redevelopment.

Now, there is an incentive FSI as well. If you merge one plot with other available plots, the incentive FSI goes on increasing further depending upon the number of plots merged. There is no limit to FSI.

DNA: Oh! There is no limit.

Prabhu: Absolutely, there is no limit. The DC rules have been made in such a way that the existing tenants should be taken care. If there is one plot, then that is given 50% additional incentive FSI. If it is more than four or five plot then, again, there is a 60%, then 70% incentive FSI. For cluster development, there is a 4 FSI. So this way, lot of incentive FSIs are given. This is, in other words, an encouragement to opt for redevelopment. A lot of private societies which do not have conveyance deed are also going for it.

Chivukula: Typically, people who have been working in Bombay in the development space for long would know, it’s an overregulated market. Right, so there is not one agency which has – its vision being implemented in the city. So you have the Mumbai Municipal Corporation, which actually is the authority but it has contravening authorities like the Airport Authority, the CRZ, the Ministry of Environment and so on, so forth, which also then intervene in its approval process. So essentially when we have to go and approach the BMC for approval, it is also that we have to essentially get all these other approvals...

And I can make out that it’s a transitional period for the industry from being completely unregulated, resulting in a builder-raj situation.

And you know, we are trying to understand what all the issues are, so that we can eventually come up with probably a single authority, which can get all the approvals in place. There was an attempt made by one of the previous municipal commissioners to get us a single windowbut that did not happen. And within BMC there are 50 odd NOCs to get. But outside the BMC also, there are a lot. So if the focus is about entitlement – because land is anyways available only for redevelopment – we need to get all the clearances in place, otherwise it will affect the end consumer or the society members by delaying the project for so many more years. So this step actually I feel should take some part in leading this.

But now, by July, we hope to have a regulatory body, which is good because it’s going to be regulating all the participants in the industry.

DNA: Will it regulate the BMC also?

Chivukula: Fortunately, or unfortunately, it will not regulate the BMC. It was only made to regulate the builders.

Prabhu: Private builders.

Chivukula: Not even MHADA.

And now, there is a Supreme Court judgment. So by the time I got out of that problem, there is another problem, which has already been created. And not just prospectively, but with retrospective effect. So it hurts.

Patel: The Supreme Court judgment is about six metres of access area.

With due respect to the Supreme Court and the verdict, I think somewhere the true interpretation of DC [development control] rule has not been comprehended by the decision-making authority.

Coming back to the point the DC talks about RG...

DNA: What does RG stand for?

Prabhu: Recreational ground.

Patel: People talk about recreation ground, when actually it is for recreation area. Ground creates the impression that it must be at the ground level. But when you have a city growing at various levels, you can have a recreational area at the top – just under the sky, as a podium, where all can party.

Keeping that aside, there is a clear cut provision in the DC rule that any plot which is more than 20,000 square metres can go for podium and provide there, there is an option given to developer which is already suggested by the corporation.

I think that has been a mix-up that if plots which are more than 20,000 square metres only then there is an option. Is it true that the plots which are below 20,000 square metres there is no option. We think the Supreme Court should have asked for clarification from the corporation or the government, and then issued orders for prospective effect, not with retrospective effect. You cannot do injustice to the permissions already given.

DNA: So have you asked for review?

Patel: I think, they were not in a mood to. One explanation could be that when anything comes from the Supreme Court, the corporation or the government is scared to defend even its own rules. They say, Judgment aa gaya hai [Judgment has come], we can’t do that.

Chivukula: No, no, no. Review petition has gone on 17th of February.

Prabhu: Correct.

Chivukula: But the Supreme Court struck it down giving a certain amount of clarity in the judgment.

Chivukula: But there is a plan to file it our builder associations are all going to join hands to file the curative petition.

Vardhan: The industry faces many problems. But let's look at the judgement.

The Supreme Court clearly mentioned that the order is for 33(7) – the section which deals with the 18,000 old and dilapidated buildings in South Mumbai. But when you combine plots and opt for cluster development it falls under Section 33(9)

I am dealing with small plots in South Mumbai – 250-300 square-metre plots, on which there are dilapidated buildings.

The judgment clearly said that if there is any plot below 600-square-metreit it must have proper access for fire brigade to approach it. So a minimum open space of 6-metre on the ground level is required. It is important to note that it must be on the ground level, not upper level. It has to be kept open. But the BMC has a different interpretation – that it should be 6-metre straight.

So there cannot be any cantilever, any fungible FSI also cannot come into this segment, first.

Another issue is whether the judgement should be made applicable to 33(7) or all over Mumbai.

Then there is the need for 15% RG, which has already been discussed.

I think so around 50%-60% of the redevelopment in Mumbai – some 15,000 buildings out of 18,000 old buildings – are covered by the judgement. Hardly 2,000 to 3000 will be with 1,000-metre to 1,500-metre area.

But when we talk about suburbs, all plots – whether it is 1,500-metre, 2,000-metre have got stuck because of this 6 metre ruling. In any case the application of the judgement should have been prospective, not retrospective. If I have received the IOD [intent of disapproval, which is required before commencing work on a plot] I’ll enter into agreements with the tenants, or the members. They have vacated the premises.

I have to start a demolition also. Now, where am I?

Once the IOD is obtained then before CC [commencement certificate] you have to comply with 20 other permissions.

So, I have started complying all the permissions. I have obtained this. The original occupants of premises have shifted out from there. They have paid their stamp duty. I have paid my premium FSI also. If I have paid all these things, and my work stops suddenly because of a new judgement, where am I?

This is a real practical problem where so many projects are there, where IOD has been obtained and implemented.

So, irrespective of whoever has filed the review petition.....

Chivukula: The BMC.

Vardhan: I’m personally going to file a review petition within a short time.

Patel: I think, when you talk about redevelopment, one has to take this as an opportunity rather than a challenge, because the Mumbai has started developing. There was no FSI concept. The FSI concept came in 1960. There was no ownership concept. Ownership concept also came in – earlier most purchases were on a pagdi [goodwill amount] basis. So, as the city matures, the country matures as well, and the industrial businesses also begin maturing.

Then, in 1991 came the TDR.

Now, there was a development plan, which was made way back in 1991, which was also published in 1998-‘99, which was meant for only 20 years. Unfortunately, Mumbai has grown much faster then what the plans envisaged.

So I think the 2011 limit is already over and the DP plan is still not there. The corporation and the government have increase the FSI. The DC rule has no value because it has to be backed by various circulars and everything. And when you do a redevelopment, you must think about 100 years from now.

You can’t think that today there are four million people staying in a dilapidated area or in a slum and we have to provide them a home. You have to plan for the future as well. Redevelopment is not just construction of four walls or a building or a cluster. It’s a facelift of that territory, the suburbs and the city.

We have to work on how we would like to see Mumbai in 2060 or 2080.

Prabhu: You have to plan for the city's needs. How much transportation? How much residence, how much commercial, how many school, how many hospitals, and manage all that in the limited land area that Mumbai has.

Patel: Out of 535 square kilometre, only two-third is available. The rest is CRZ and forest. We have to do our master planning for 60 years, bringing it down to 40 years, 20 years, 10 years, invite suggestions, objections…

So why can’t we create world class residences for all of our people? And the millions and millions of people who are looking for their first home, why we can’t give them justice?

So let us do some introspection. If you give a solution in a piecemeal manner, it’s never going to work. The problem becomes bigger than what you analyze.

DNA: How does the lawyer view all this?

Mehta: There are two issues which affect this city, and the country as well. One is the applicability of a law and second is implementation of a judgment.

There is a great deal of confusion about these two. When I say applicability of law it means there are lots of interpretation, because each department may interpret it in a different way.

Take the Kohinoor judgement which came on 17th of December 2013. Take clause No. 63 which has four lines which say “we apply to those constructions where plans have still not approved or where commencement certificate has not yet been issued, all of it is concerned or directed to ensure strict complains accordingly”.

Now after that I go for a review of this for asking clarification of this there is further more confusion.

If accepted it will mean that merely because the plan are sanctioned the construction which has not yet started will be permitted though commencement certificate (CC) is not issued, this create more confusion.

Hence you have redevelopment of a place like Bangur Nagar in Goregaon where buildings are demolished, and then this judgment stops all work.

Now if you see every year there is one speed breaker in construction industry. First that could be Municipal Commissioner, who could maybe trying to bring about some new law, even though it was because of serious issues relating to implementation of that law.

Then came the notifications like the 4,000 square metre construction plots should reserve 20% of their flats for weaker sections. When that circular came, the first thought was that this referred to government-owned plots.

Now the implications are being comprehended. It is like I own three bedroom hall kitchen flat and the government suddenly decides that you mjust give your one bedroom hall kitchen to someone else.

Now there is the 6-metre rule came.

There are times when rules are tweaked, making things even more difficult. The Cooperative Department never had any role in the construction industry as such. But a circular came on 3rd of January 2009, got a 79 (A) procedures which required a clearance of this department as well.

After that, the BMC came into the picture, stating that because the Cooperative Department has released the circular of 79(A), I will now not issue the IOD to you, till such time, that you get a certificate from the Deputy Registrar.

Now, what is the Cooperative Department to do with a IOD?

This causes corruption. So there is a lot of confusion over the application and implementation of any ruling.

I’ll tell you there are two more issues. While we are going through this judgment, this judgment is basically touching five important aspects of the DCR. It affect Regulation 23 which is requisition of amenity open spaces. It touches Regulation 31, which affects the height of buildings. It touches Regulation 33, that relates to additional floor space index. Then it touches 38, that concerns the building. And it touches 40 which relates to fire protection requirements.

Now in the judgment if you’ll see a classic contradiction. It states that concerning fire protection requirement the rule would apply even to “plots up to size of 600 square metres under DCR 33(7)”.

Now if I am going to count six metres in a 400 square metre plot or even 250 square metre plot, what is going to remain in the plot?

There is nothing that is going to remain in the plot.

Another issue is that there is a law which says that upto 23.99 metre height, I do not require approval from the chief fire officer (CFO)

Now this judgement requires me to take a fire approval even if I have a small plot of 300 square metres, or where the building has a height of less than 23.99 metres.

So that confusion is there and it’s going to prevail for some more time.

Prabhu: The industry wants to remedy this situation. Unfortunately, when it comes to redevelopment everybody wants to have a say. Whether you want to talk about income tax, you want to talk about service tax. You want to talk about stamp duty, registration, MVAT. Talk about the collection, revenue department, In fact, every department is interested in this.

Now when we talk about revenue department, it also comes to another department. Now, as far as industry is concerned, real estate has not yet been given an industry status.

DNA: Once the regulator comes in it becomes industry.

Prabhu: Absolutely. Then you have many organisations. Besides CREDAI and MCHI.

There is the council for architects, for practicing engineers and town planners. But ultimately we are not been able to come out in a proper perspective because there are many departments and there is no coordination. But now there is a ray of hope. There is now a regulator.

The office has yet to be established. But ultimately it is only for the sale portion. As far as redevelopment is concerned the regulator is again silent. They are saying that redevelopment is not covered under the regulator.

So only this regulator will be only for the sale portion. So frankly speaking, the department, the industries are looking for a solution. They are always trying, and there is a lot of paper work, lots of meetings, lots of committees. But the result is elusive because of the bureaucratic approach.

Chivukula: Even while these disputes continue, we’ll also be competing with other cities in the country.

DNA: And the competitors are going to get fearsome.

Chivukula: Yes. So we have Bangalore, Ahmadabad...

We’ve got Pune, we’ve got Delhi. Everyone is competing and a person has a choice to stay in Bombay, or stay in Bangalore. Earlier, there were few opportunities for work outside Bombay. Now there are opportunities of work everywhere in the country.

And if we do not look at it in this light, you are going to lose your sheen.

DNA: And the new cities are Dholera and the Aurangabad.

Chivukula: Yeah. And Lavasa probably…

All these places are going to get more attractive because they are more organized. They have better facilities. You can you know, lead a better lifestyle. And eventually you’re going to degenerate Bombay into a old age home for people who bought crores of apartments and they have not yet repaid their loans or probably they can’t move out.

So that’s a real issue that at the state level, at the Chief Minister's level, at the Chief Secretary level, at the MCHI-CREDAI whatever, we need to discuss that are we keeping the city attractive enough for it to be able to attract investments over a period of time. And I’m an investor. I, over the period of my next 25 years, will not continue to invest in Bombay if this issue remains.

Probably if I were 60 I would say, “I don’t have any more to do. I have just five years more. I’ll bear with this.” But I’m still 40. I have another 25 years to go. I may think of another city.

The other issue is about these multiple clearances. It’s just been four years post Adarsh, and we have seen complete bureaucratic paralysis and pushing the buck to the other table, because of obvious reasons. There have been, obviously, bureaucrats who’ve been targeted. Therefore, they say, “no more, I’m not going to be the political scapegoat.”

DNA: Yes.

Chivukula: And as these conservations are happening, there are lot more conversations happening, surely there’s going to be a fallout. And we give ourselves milestones, so then we say, let this government go, let’s see what happens.

I’m sure if this government goes and new government comes and the same scenario exists, there is going to be a revolt. It’s going to be revolt from all sides, from the industry participants and also the customers.

DNA: Customers, who are stuck in the middle, yes.

Chivukula: The customer base is a much bigger base? Right! But who is paying for all these delays?

Eventually, the consumer is paying. Who is paying for any price hike in my input cost? Price hike in any premium, my premium is to be in lakhs. Now they are in multiple lakhs to the BMC. My open space efficiency premium, my sewage premium – any damn premium is five times more, retrospectively. Okay, the policymakers wanted to share, you know, in our profit. Eventually, it’s the consumer who is paying for it.

DNA: Yes.

Patel: And, yeah, it is the regulators. Now, what do you mean by regulator?

Do you want to regulate the enabler of the industry or do you want to regulate the industry itself?

When you talk about regulator, do you want to regulate only developers or there will be at least a one-windowclearance system? We have been at least hearing for three four years this kind of a thing. So there is a landowner. There is a developer. Then there is a mechanism of approvals – state authority or a local authority. There is a BMC, various authorities. So they must be regulated too.

So having paid 100% of the money for approvals, why can’t the plans be approved within 90 days or 120 days?

If you want a building to be completed within two years or 18 months, why do approvals take more time than that?

So what is the accountability for the government to do that?

Whether you bring one window or you have thousands of windows, whether you have ten departments, you decide that. But give us permissions within 120 days.

DNA: Time-bound clearances.

Patel: Yeah. And don’t take our application, unless we make all the applications together. Most of the times, the developers have been blamed that you don’t do that. Let’s take all the applications together and then come with that.

And once the approvals are there in place, once the project has started and assuming the customer side, if, out of 100 customers, 30 customers will not pay on time, developer still has to complete the project. So what is the penalty for those customers? Why should a project suffer?

So having a regulator is a very good thing. But he must cover all aspects. Everyone concerned over that. That’s a very good initiative, has to be used in a right direction.

Chivukula: MCHI has met the CM seven times. And I know the agenda has been detailed and he’s had his entire battery of bureaucrats sitting with him, taking notes of what hurts industry.

Now, it’s like a principal of the school or college right? You can only go to the principal to complain. If the principal is the problem, you can’t complain it to the principal about the problems any more.

DNA: You can change the school.

Chivukula: You can only change the school. This is really the problem.

Vardhan: In MoEF matter, whenever – wherever we are redeveloping projects and in which the construction is below 20,000 square metres, you will find a repetition in the Mumbai High Court that why they are not allowing us to redevelop 20,000 square metres also?

And in our matter only the first judgment came, and after that, the policy was also drafted, but again the new secretary once again modified the policy.

Again I went to the High Court and -- in another matter -- we obtained permission that till 20,000 square metres, they should grant us further CC.

Chivukula: If you see the trend, who we are going to? We’ve started using the court as a CM.

Vardhan: No. We are asking the court to direct the CM because the CM has not taken the decision.

Chivakula: Eventually, we have to take law in our hand, which is probably not the right way. But the second alternative, you go to see the number of reviews – the petitions that we have filed in High Court, is that like huge list we have.

Vardhan: Whether it is MoEF, whether it is 20% inclusive rising housing policy, what we are going to talk about or whether it is high rise committee. Each and everything aims for redevelopment or for the development of Mumbai.

But if you submit a plan in high-rise-committee, there are different guidelines for high-rises as compared to MoEF. MoEF requirement is something different than in high rises, open space and these requirements are something quite different. Again, there is a big ambiguity whether once you comply this requirement you will be in the clear or not.

Even when it comes to the 20% inclusive housing policy, it clearly says it is for the zonal, basic zonal FSI. So wherever redevelopment is there, is there any basic zonal FSI remaining? I don’t think so.

But now they are applying this to all redevelopment. If it is more than 4000 square metres, you have to provide 20%.

And again, if we go in an area like Vile Parle with airport nearby, where we have to complete the construction within five to six storeys, we are not able to consume our existing FSI with TDR. So how do we give 20%?

So there is individual problems with individual projects, locations, sections. Each and every section has got some different problems.

Patel: I would say sir, this 20% is again iniquitous and illegal, because this 20% is a myth. How can government impose on any industry and especially on developers that every 100 house you construct, we’ll give you 20% you construct smaller than size, like telling you go to Udipi hotel and every day, you sell 100 plates of idli, 20 idlis you sell at 50% price.

You go to a Raymond showroom, you sell Safari suits and 20% you give it a concession. Why, because government will give some cloth free or you reserve some seats in the aeroplane or have some jewelry at 20%. I don’t know whether it’s legally defensible. It’s against equity.

You create a new layout where there are more than four buildings in that area, and one out of those four building can be constructed for weaker sections. I’m not against that. Developers are not against it, but you need to do it the right way.

How do they expect a one bedroom hall kitchen person to stay near to your four bedroom apartment? I’m not saying poor or rich. But I am concerned with the mindset. There is the maintenance criterion and various other criteria. This is nothing but a backdoor entry of the Land Ceiling Act. Instead of 10% they had made 20%.

Mehta: We’ll take the example of CRZ.

This is another classic case of confusion in the city. For the last three years, I’ve been hearing that the CRZ rules are being changed. The CRZ-II as such is the bigger problem within 500 metres.

Now, I’ve been hearing that the draft of CRZ rule is ready reducing the restriction area to 150 metres. Now the entire Mumbai has been built within 500 metres of high-tide-water-mark right from Churchgate, Nariman Point till Gorai. It’s all within 500 metres.

Now, what would those buildings do? Should they wait? They are not able to do development. When I went for a project in Versova when a developer approached us, asking us, “can you help us in this matter? “ We told, yes we will.

I went to a senior bureaucrat in the city. And he told me, I can get you project-specific approval. Now, what this term project-specific-approval? What does it mean? Why only project-specific-approval? Why not that you clear a particular area or maybe a particular location?

The entire city is next to the bay. How would you then do reconstruction? And most of the buildings on the sea front are almost 40 to 50 years old. Till when they should wait now?

Chivukula: The environmentalists are not totally wrong. Their thought process is right. When we had a Tsunami, we saw the effects of having development on the coast.

But like you say, it has to be a consolidated view. We have to take their views also. And we have, I mean, if you see a seaside apartment, it’s completely dilapidated because it’s been weathered by salt for 40-50 years.

Get these guys to reclaim by paying some fund and we reclaim that amount and you give more area, I mean. We’ve classic case is Singapore.

Yeah, we are very enthusiastic to go and make a Shivaji statue in the middle of the sea, but that same enthusiasm is missing when you look at the needs of people staying near the sea.

Prabhu: I think that maybe we’ll have to file a writ petition for that 4,000 square metre rule which requires 20% should be given to economically weaker people. It could be a writ petition; that is a best option. Second, before going to the writ petition also, we will have to represent to the government saying that, you want to come up with the affordable housing, most welcome. But don’t mix up with other projects.

Even if you want people to support affordable housing, give additional FSI to the one who wants to do this. In fact, for affordable housing, 300 square feet is the norm, and the one who develops only 300 square foot, he is going to be a different type of developer.

So you appoint a different regulator for that type of construction, and see that additional FSI is given, some concessional rates are given. Service tax, VAT, stamp duty could be exempted. Proper systems need t be introduced.

Secondly coming to the time bound program, lots of PILs, lots of writ petitions have already been filed. Maybe, we will have to list out everything and file a PIL, maybe through the consumers in the High Court. Because now, the governments have stopped working. Bureaucrats have stopped working.

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