Fungible FSI charge delaying redevpt projects

The redevelopment work of Shree Sarasvati Co-operative Housing Society in Chembur has come to a standstill, following a dispute between the developer and the society over the payment of a hefty extra charge for fungible FSI, to the civic body.

According to new rules that were introduced late 2012, developers have to pay for previously free-of-FSI spaces like balconies, flower beds, terraces and niches (as for lifts). In the Shree Sarasvati case, the developer would have to pay about Rs34 crore to the municipal corporation on the redevelopment of eight buildings.

“There was no fungible FSI charge when the agreement was signed in 2005,” said VV Krishnan, secretary, Shree Sarasvati CHS. “We have asked the developer to pay the amount now and recover it later, by increasing the construction area. But the developer has not said ‘yes’ or ‘no’.”

Shree Sarasvati is just one of many redevelopment projects that are affected by the new norms and developers are upset. “The premium charge for fungible FSI has become a bone of contention and has delayed the redevelopment of several old and dilapidated buildings,” said Anand Gupta, secretary, Builders Association of India.

Previously, developers were allowed to use up to 35% extra FSI (floor space index) in residential projects for balcony space, flower beds and such. The Brihanmumbai Municipal Corporation (BMC) now charges a premium for the use of this space – termed as fungible FSI – in line with the market rate.

The rational of the BMC for the charge is that residents are known to take these areas into their flats, increasing the load on the building structure, and anyway the builders charge buyers for this space. The civic body is reported to have collected over Rs1,000 crore through this charge last year.

“Without paying the charge we cannot start construction. We have already invested in these projects and committed to residents of the buildings to be redeveloped to give them more area, a huge corpus fund, additional amenities. From where will developers get more money now,” asked Gupta.

Atul Nemade, a housing activist. said developers must sit across the table with the authorities and work out an amicable solution.