Tuesday, March 02, 2010

Civic body's TDRs are like junk bonds

Civic body's TDRs are like junk bonds

the Palike, unlike the metro, Has no money to pay property owners

The Bruhat Bengaluru Mahanagara Palike has been acquiring land to widen roads. In return it has been offering Transferable Development Rights (TDRs) to those losing their land. Ashwin Mahesh, who is with the Center for Public Policy at IIM, Bangalore, and a member of the ABIDe Task Force, tells DNA that these serve no purpose.

What is a TDR?
A Transferable Development Right (TDR) is like a bonus construction permit for a building. When a portion of an existing building is taken away from the owner (usually through land acquisition) the government gives him a TDR, so that he can construct a building with the same area elsewhere. Building laws permit only a certain amount of construction. But with TDR, you can build more than this limit.

Why is the BBMP giving TDRs to land owners? Why does it not just pay them for the property?
The BBMP does not have the cash to pay them! The Metro has also acquired land for its construction,and it has been paying landowners. Since the BBMP does not have that kind of money, it has been giving people TDRs. The Palike is telling the people, "Go build elsewhere," But this is not working.

Why haven't TDRs worked?
TDRs only make sense if they can be used somewhere. Ever since the Revised Master Plan (RMP) was notified in 2007, most buildings are allowed to have three floors. For most individual sites, three floors are too high. Before the 2007 RMP, people could build only two floors on most sites. RMP 2007 was a kind of tatkal, legalising greed and stupidity.
But you can't have tatkal upon tatkal. The TDRs being issued by the BBMP cannot be used anywhere, since now the permissible construction limit even without the TDRs is quite high. Moreover, with Akrama Sakrama on the horizon, why would anyone want the TDR? You can simply build what you want and seek amnesty later. The TDRs are like junk bonds.

Is there a solution to the problem?
All we need to do is take two simple steps. First, revise the Master Plan to bring back the old Floor Area Ratio (FAR) of 1.75 for most buildings. The 3.25 FAR (which permits extra floors) that became permissible under the RMP has become a cruel joke. Then TDR will work, and citizens will be willing to accept the rights as equivalent to cash.
The other thing is for the city to define a 'TDR sink zone' in which the construction of very tall buildings can be permitted. In some of the newer cities of China, and also in new developments in old cities, large swathes of land have been earmarked for the construction of skyscrapers, with FAR levels as high as 5. Creating such zones in Bangalore, strategically located around key Metro stations, would allow additional TDRs to be absorbed in a reasonably well-planned manner.

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