Thursday, February 18, 2016

Code Word TDR !







“Surround yourself with the best people you can find, delegate authority, and don't interfere as long as the policy you've decided upon is being carried out”…Ronald Reagan.

Reagan was an American politician and actor, who served as the 40th President of the United States from 1981 to 1989. Prior to his presidency, he has also served as Governor of California from 1967 to 1975, following a career as an actor and union leader in Hollywood. And sure the straightness of his way of working has been reflected in his above quote which our present chief minister seems trying to be adopting, especially when its Urban Development department. I have never personally understood why the Chief of the State insists keeping this department with himself when he has more important task like look after they entire State & this tradition has been followed since 90’s in our State. Sure there were more dimensions to this tradition than what seems to just our eyes. Not long ago the State was agriculture based & most of the CM’s preferred to keep rural development type departments with them as then that was the focus so obviously more money also was allocated to that front. But as the urbanization started in 90’s the politicians started realizing the potential of the land is far more in farming concrete jungles than the usual agriculture & they also realized, urban development popularly known as UD, doesn’t need any money rather it churns money by itself like the “Amrit” came out of the mythological “Samudramanthan!”
And then after 90’s major migration started toward the cities & Metros like Mumbai & Pune; suddenly every sq inch of land in these cities became as precious as gold & here is where politicians started taking more interests in concrete farming than regular agriculture. Terminologies like “Bhukhandache Shrikhand” are the outcome of power of UD only!  Obviously the supper boss of all politicians is Chief Minister & to keep control of these concrete gold mines it was important to have UD under the jurisdiction as its UD which decides fate of every piece of the land in the State so the CM then took UD & then later it became tradition.

Though our present CM does have clean image & intentions too about developing the cities & as the quote says he tried to put in best brains in the business i.e. in administration for making policies as well forming the age long delayed authorities like PMRDA. Yet some where something is missing &the present TDR policy the State has come up with is one such sign along with delayed development plans of cities like Pune & Pimpri Chinchwad. Lets first see about the TDR policy which is applicable for all the Municipal Corporations in the State & will be having major effect not only on few builders or projects buildings but on entire economy of real estate as well developments of these cities too! For those who have yet not familiar, I mean know the exact meaning of TDR because TDR is probably most used term after FSI in real estate & very much familiar even to the common man in reference to real estate, courtesy our Media! TDR is Transfer of Development Rights which means any land under the reservation for any purpose; the local body which is PMC for Pune can acquire the said land by giving land lord consideration in form of sq ft area he can build on any other plot which is free of reservation! In simple words if a plot has reservation of say sports ground & is admeasuring 10,000sq ft then PMC will give a certificate of said area to the land lord instead of money & the land lord will sale this certificate i.e. sq ft area to another person who has a vacant land somewhere else within the city & built in addition to potential of his own land! This isn’t as simple as it has been put in word. The entire procedure of getting this TDR certificate i.e. Development Right Certificate popularly known as DRC, is so tedious that its used to take two to three years in cases & even more. Obliviously this gives birth to a chain known as TDR racket or agents in every local body & they used to control rates of the TDR defeating the very purpose of TDR as at many places rates of TDR are more than the land rates where it’s supposed to being consumed. This affected the finished products rates i.e. rates of homes as well slowed down the reservation acquisition of the lands again damaging the development of infrastructure in the city. If we consider the 1987 development plan of the city, hardly 35% acquisitions of the reservations has been done; in short the city is surviving on just 35% of infrastructure that too planned some 30 years back! No wonder our roads are choked & so our drainage lines &as well the garbage depots & on other hand our water lines are running empty!

On all such background Central Govt came up paying double compensation that of market valuation of the land price for acquiring any land for reservation. This means if the compensation is being given in form of TDR for any land that also has to be given double! Obviously in our country the govt decides something but to come in actual action it took years & so finally our State govt took the action & come with new TDR policy reflecting this new amendments & then giving double TDR means there will be more supply of TDR in market (at least govt thinks so), so naturally to maintain the TDR rates lucrative for the land owners there has to be amendment in issuing policies of this TDR too. Means earlier the rules were allowing maximum TDR consumption on any piece of land up to 60% of the net plot area of the said plot, this was required to increase as then only there will be demand for the new generated TDR! Here is where new policy has been introduced but in doing so what has been published as intention & what’s actually came in existence are two different things & that broke all hell loose! Those who are ignorant about publish thing, to enlighten them, whatever State govt wants to change or amend in urban policies, before it comes in a policy or act, the said policy draft has to be published & kept open for suggestion objection from the sufferers or beneficiaries of the said policy. A hearing is carried our by competent authority like Joint Director Town Planning & then only the draft is approved by taking due cognizance of all the valid suggestion objections & then the Govt publishes the policy which comes as rule or gazette or whatever you call it.

But in this case whatever has been published & kept for suggestion objection was entirely different than what came as policy! Means the TDR given against the acquired land is now doubled but it’s unclear about the consumption of it. Now the TDR consumption will be different on different road widths. Means wider roads will have more allowable TDR consumption on the plots adjoining to them. This means less TDR than what ever has been permissible strait 60% in many cases; so many plots have lost their potential. Then the biggest blow was in the draft published there wasn’t any mention of plot size restriction for TDR consumption, it was only adjoining road’s width was the criteria but now plots less that 10,000sq ft will have only 20% allowable TDR to be consumed on them in compare to earlier 60%; this has made every small plot non viable especially the redevelopment projects of old buildings which are mostly on smaller plots. Then even plots below 1 acre i.e. approximate 40,000sq ft also can consume up to 50% TDR which again is loss in compare to earlier policy. SO who is benefitted by the new policy, it’s only the plots with bigger size than 1 acre & that too adjoining to wider roads. Now how many such big size plots are there in Pune is a question being asked & in whose favor this new policy is?

Then there is one more aspect & that is of slum tdr i.e. the tdr which a developer gets in lieu of development of slum. Earlier one can use entire 60% of permissible tdr on any plot which is generated out of slum popularly called as slum tdr. This was to promote slum development but this policy isn’t clear as on prima fascia it will allow only 20% of slum tdr in the entire permissible tdr utilization is what appears. This has raged the slum developers & in the end the slum dwellers! As if the use of slum tdr is curtailed naturally it will affect the slum development as developers will lose interest in slum development is the logic.

Earlier tdr was given on account of zones i.e. A, B C & D as per the core of city labeled as A zone & subsequently the newly merged villages like baner & kondwa as D zone. A zone tdr could be utilized in any zones but D zone is to be consumed in that zone only. This wasn’t perfect system as rates of the lands even within a single zone varies a lot for e.g., C zone consists land from aundh to pashan obliviously a developer with plot in aundh can give more rate than that of pashan, so some times it becomes nonviable to use the tdr again defeating the purpose of the tdr. But in this policy again there are no zones any tdr can be used anywhere in the city & will be used in respect of lands ready reckoner rates. This created further confusion as how to evaluate exact cost per sft & what rate a person should sale. Agreed its better than zone system but effective working is bound to make lots of problems is what experts say!

What I wonder is why can’t we make a linear, simpler policy & why we have to always come up with some complexity which is not going to give us anything but more stress in doing business as well the home buyers in the city! We have enough building codes right from fire noc to side margins & height as well parking which controls how much area can be build on a particular piece of land. Why we need to apply restriction of utilizing tdr on plot size in such case? Let whatever is permissible on the land by all building norms be the measure of use of tdr & let anyone have any tdr allowable on the plot. As if a plot is bigger but on a 9m abutting road but the lane is dead end & has no traffic then where is the question of traffic congestion due to more tdr on such plots? Equally important is transparency in tdr rates as well procedure of giving tdr; PMC itself took the charge & govern sale procedure of tdr so as it won’t be black marketed which is happening now, with only few people having entire hold on tdr! This is possible only if PMC takes lead & become a buyer & seller of tdr, by issuing tdr certificate as well collecting sale money & then depositing the same to the owners account! Now after too much of hohallah by not only developers but by political parties as well other associations; the news is the policy is again being reworked & soon republished!

This whole issue may sound a bit technical & one may think what’s in it for common citizen but the tdr policy is going to hamper not just real estate but entire city at large. As day by day lands are getting costlier & we need homes is a fact. We can’t increase the land size but what we can do is increase the potential of the existing land for home building & simultaneously we need infrastructure also for the ever growing population. In both things tdr is vital subject as govt don’t have funds to buy the lands reserved for infrastructure like roads & play grounds & govt can’t allow the tdr rates go so high that it will take out the final product i.e. home out of budget. So we need a policy which will strike the balance between both & for that as Mr. Ronald Regan has said, we need to find out right people first who will go to the root of the issue & then make a policy by taking in consideration all wise brains in the business & then frame a policy! Till then policies will be framed but just for the manuals & to decorate tables of the “babus” & the common man will keep reading news & waiting for his dream home comes in existence, is the bitter truth!

Sanjay Deshpande 

Sanjeevani Dev.

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