Land as a Resource for Financing Urban Development

Date: 15 April 2008

Venue: Conference Room, NIUA, New Delhi

Mr. V.K.Phatak, Former Principal Chief Town & Country Planning Division, Mumbai Metropolitan Region Development Authority (MMRDA) and presently Director, National Housing Bank made a presentation at NIUA on "Land as a Resource For Financing Urban Development". Mr. Phatak first gave historical evolution of floor space index (FSI) as a regulatory tool in Mumbai. Till 1964, FSI was not used as a regulatory tool in Mumbai. Focus of building regulation was on height in relation to the width of road, light angle and ground coverage. This resulted in 5-6 storey buildings having a FSI between 2.5 to 3. However, in 1964 the concept of FSI was introduced to give more flexibility to building designers and use of modern construction technology.

In 1995, the Government allowed use of higher FSI for providing free housing to slum dwellers. This method was also used to support reconstruction of old buildings in the Mumbai city. In Maharashtra State Annual Budget 2008-09, the Finance Minister proposed that FSI in Mumbai suburbs will be increased from 1 to 1.33. However, the developer has to pay market price for the additional 0.33 FSI. Thus, Mumbai has a tradition of use of higher FSI for housing for the poor and reconstruction of old buildings. Mr Phatak however raised a basic point as to who owns the development rights in the present legal framework and therefore whether the state has the right to sell such rights. Some of the other methods of financing urban infrastructure through alternative methods of financing are a) levy of impact fee; b) area linked development charge; c) external development charge: and d) betterment levy. A recent report to MMRDA has suggested that the development charge related to (8 to10 %) the value of property could be a better option.

The various points raised by Mr. Phatak generated a lot of debate among the participants. Prof. Dinesh Mehta, Former Director NIUA and presently Professor, CEPT brought out two very pertinent issues regarding process of identifying landuse by planners and use of land for providing affordable housing

The meeting ended with thanks to the speaker and participants.