ISLAND CITY WOES

Wait for rise in FSI stalls redevpt plans

 

Mumbai: The state’s dithering on whether to grant FSI of 3 for reconstruction of old and dilapidated buildings has virtually stalled the redevelopment of these buildings in the island city. Officials in Mantralaya said the file was with CM Ashok Chavan’s office, awaiting his approval. Queries to the CM’s office on reasons for the delay elicited no response.
    In 2009, former CM Vilasrao Deshmukh had announced that residents of chawls and old buildings would get houses of 300 sq-ft carpet area. After the announcement, the BMC has received 241 proposals till date for redevelopment under Section 33 (7) of the Development Control Rules, said officials of the island city building proposal department. Many of these projects are yet to take off as builders await the increase in FSI, said sources.
    According to Mhada records, there are around 16,142 such buildings in the island city. Ajit Khatri, president, Practising Engineers, Architects, Town Planners’ Association (PEATA), said the government was unnecessarily dragging its feet on the issue. “It has been in the pipeline for a long time. The only other reason I see for the government not pushing for it is that it wants to promote cluster redevelopment,’’ he said.
    The effect has been felt largely in Matunga, Dadar, Mahim, Shivaji Park areas where there are several old and dilapidated buildings built on plots leased out by the BMC during the British era for 999 years. These are small plots and the increase in various charges by the BMC has completely stalled their redevelopment, claim developers.
    Architect Anil Doshi, who has worked on several 33(7) building proposals, said on an average, most of the flats in these buildings are approximately 500 sq-ft. “The tenant gets a flat of a similar or slightly larger size. However, the development cess (for building offsite infrastructure such as sewage, water pipelines etc), transfer fees and one-time premium being charged by the BMC are very high. This does not make the project economically viable,’’ he said.
    The development cess is Rs 5,000 per sq-mt, the one-time premium is approximately Rs 14 lakh per 100 sq-mt and the transfer charge is 50% of the ready-reckoner rate. So if the plot is in Matunga and the ready-reckoner rate is Rs 40,000 per sq-mt, then the transfer fee is Rs 20,000 per sq-mt, which is another Rs 20 lakh for a 100 sqmt plot.
    “With FSI of 2.5, the redevelopment project becomes economically unviable and therefore, 3 FSI is necessary,’’ said Doshi.
    Pujit Aggarwal, general secretary, Property Redevelopers Association and CEO, Orbit Corporation Ltd, said in case of free-hold plots, giving larger homes to tenants reduced the free-sale component. “This makes the project unviable,’’ he said.
    According to urban development officials, the average profit margin in redevelopment of old and dilapidated buildings is approximately 37.5%.
    Anil Goenka, convener, Federation of Old Buildings Cooperative Housing Society and Tenant Association, said the government should encourage redevelopment through tenant co-operative housing society rather than through developers. “To a society formed by tenants, the government offers only 2 FSI. If they were to grant the same FSI that it gives the builders, then we will not only be able to recover the cost of construction, but also create a corpus for the maintenance of buildings and give a portion to Mhada as well as the landlord,’’ he said.
    Housing expert Chandrashekhar Prabhu said one of the reasons tenants were reluctant to go in for development was their complete loss of faith in developers. “There have been several instances where tenants have been forced to sell their homes and move to the suburbs. Girgaum has several such examples. There is now more awareness and more and more tenants are saying no to redevelopment,’’ he said.