Using land readjustment and FAR bonuses to create high density development in fringe areas of fast developing cities A Case of Ring Road Planning in city,

Jay Mittal, PhD, MBA Associate Professor & Director, Graduate Community Planning Program,

Auburn University, AL, USA

Land and Poverty Conference 2019: Catalyzing Innovation, March 25-29, 2019, Washington, DC Paper in Press as a

Book chapter in Das et al. ed. 2019. “Real Estate in South Asia,” Routledge, UK. Jay Mittal, PhD; MBA Case Study Location Surat, India

Surat Key Challenges and Responses in Indian Cities

• Key Challenges • Rapid growth preceding planning • Cash Strapped municipalities • Delays in Land Acquisition for Roads, public Infrastructure Projects • Result -- Adhoc, Haphazard, Leapfrogged, Lack of Infrastructure

• Responses • Plan Ahead and Innovate • Self-Financing Mechanisms, • Engage land markets and attempt to value capture, • Provide for future growth and inclusive development, • Learn from the Best Practices, customize to local fit, and innovate City of Surat

• 8th largest metropolitan area (Pop. 6.3 million) with annual growth rate of 4.5 % • 4th fastest developing city in the world (SUDA, The City Mayor’s Foundation, 2017) • From 2001 and 2008, Surat had an annualized GDP growth rate of 11.5 % • Top center for diamond polishing, textiles, petro chemicals • Average property value in Surat is approximately US$ 288,000 (1.87 INR cr.), per Makaan.com • Low allowable floor area ratio (FAR) of 0.6 in the fringe Land Readjustment

Bonus FAR Land Readjustment (History / Global) in India

Practiced in Japan, Germany, the Netherlands, S. Korea, W Australia, Israel, Turkey, India, Bangkok, Taiwan, Nepal and Sri Lanka (Turk 2008, JPL; Dwight 2009, ICMA; Karki 2004, Habitat International; Shnidman 1988, Urban Land) Origins in the United States in the L’Enfant plan – in 1791 in DC, George Washington persuaded land owners, assembled 17 large farms and 2 small hamlets to create the District of Columbia

Source: Reps, John W. 1967. Monumental Washington: The Planning and Development of the Capital City (Princeton, NJ : Princeton University Press, 1967). Past Research on Land Readjustment LR Countries Authors

India Mittal & Byahut (2017); Mittal and Kashyap (2015); Mittal (2014; 2013); Mathur 2013; Ballaney and Patel (2009); Home (2002); Bertaud (2010). Germany Hartmann 2015, LUP Called Umlegung Netherlands Louw 2008; Hong and Needham 2007; Krabben and Needham 2013

Japan Sorensen 1999; 2000a & 2000b; Yokohari etal 2006; Hein 2010 Great Kanto EQ, Reconstruction Post WW2 S. Korea Karki 2004; Choe 2002 Indonesia Agarwal 2000; Turk 2008; Supriatna & Molen 2014 in SEAR Taiwan Lin 2005 Nepal Karki 2004 Ethiopia Adam and Warren 2015 UK Home 2002 Thailand Archer 1992 Turkey Turk 2008; Turka & Turk 2011; Yilmaz 2015 Israel Alterman 2012; 2007; Yilmaz 2015 W. Australia Archer 1988; Yilmaz 2015 Finland Viitanen 2002; Yilmaz 2015 France Doeble 2002; 1982; Krabben and Jacobs 2013 China Li and Li 2007 Valencia, Spain Munoz-Gielen 2012 in EURS All 17 regions Can be compusolry, urbanizing agent Sweeden and others…… Process of land readjustment for Surat outer ring road

Fig. 2. Simplified illustration of land readjustment for Surat outer ring road Source: Adapted from Byahut and Mittal (2017) How does LR work ?

Small, fragmented land parcels are assembled, the pooled land is then re-parceled and redistributed after land planning and installing infrastructure

Fig. 1. Land readjustment simplified. Source: The Scottish Centre for Regeneration 2011, the Royal Institution of Chartered Surveyors Scotland and Architecture and Design Scotland accessed from http://www.gov.scot/Publications/2010/12/31110906/8 Surat Outer Ring Road Features • The Surat outer ring road (ORR) will connect 40 villages on the periphery of city • ROW for the planned ORR is 90 m wide and 66 km long • A Special Purpose Vehicle (SPV) – Urban Ring Development Company (URDC) has been created with SMC and SUDA as majority shareholders of URDC • In Phase 1, 29 km of ORR’s ROW is planned to be carved from 8-LR Plans in the SUDA area – 1,720 Ha and 3-LR Plans in the SMC area – 739 Ha • Planned land allocation for ORR follows the GTPUD Act, which requires landowners receive at least 50 % of their land area contribution, 20 % for roads, 10 % for public amenities, 10 % for the land bank for resale, and ~60 % is returned to landowners • Bonus FAR will be available to landowners in exchange for a payment of 40 % of the Jantri rate (government-set minimum land price). This would allow developers a maximum FAR of 4.0 instead of 0.6 FAR and provide high density development and revenues for URDC. • URDC plans to earn more than 10,000 INR cr. from the sale of land and development on both sides of the ORR. This is equivalent to > US$ 1.5 billion TP Scheme No. Villages Area (Hectares)

8 Plans in SUDA (Areas Outside the Municipality) – 1,720 Ha 51 Khadsad, Pilodra, Simada, Kosmada 229 52 Sania Hemad, Kosmada, Chedcha 200 53 Sania Hemad, Chedcha, Vedcha, Sabargam 209 54 Niyol, Sedhav 245 55 Niyol, Deladva, Mohini 253 56 Khambhasala, Sania Kande, Kharvasa 300 57 Kharvasa, 182 58 Valak 102 3 Plans in SMC (Areas Outside the Municipality) – 739 Ha 83 , 274 84 Kosad, Bharthana, Kosad, Motavaraccha, Abrama 335 85 Sarthana. Pasodra, Laskana (Detailed) 130 Table 2 Surat Outer Ring Road – Phase 1 LR Plans Source: Surat Municipal Corporation I Hectare = 2.5 Acre 2459 Ha (6076 Acre) of Land area planned along the ring road ROW, and ROW was carved Average Unit LR size ~ 200 Ha (516 Acre)

Original Lots

Original/ Final Lots/ Layout Land lots for Public and Auction Final Lots Growth Scenario Unplanned, Haphazard, Leapfrogged, No intervention

Fig. 4. FAR Scenarios with and without Land Readjustment – TP 85

Growth Scenario Planned intervention with Land Readjustment and Density Bonus Surat Outer Ring Road Features

• In Phase 1, 29 km of ORR’s ROW is planned to be carved from 11 Plans in the SMC / SUDA area for 2459 Ha (6076 Acre). • 10 % for the land bank for resale will potentially generate 245 Ha (600 Acres) of prime value auctionable land for URDC • At a highly conservative land value estimate of $1 mill/acre, it’s = $600 mill (for only less than half length of ORR) • FAR Bonus earns 40% of Jantri Value to URDC = 6076 x 0.6 x (1mill x 0.4) = 1.46 $Bill (for only less than half length of ORR) • City gets major infrastructure road project, 6000+ Acre of serviced land is supplied with high density potential, and other public amenities are planned. • ~60 % is returned to landowners with potential to build @ FAR = 4 Case of Land Readjustment and Floor Area Ratio Bonus for Planned development

From Here to Here Thank You ! Q/A

Contact: [email protected]

Content Note: Not presenting Technical Paper (Encourage Participation)

• Background (Case study city, Planning Process) • Share Concept (Land assembling) • About Land Readjustment (LR) and its Process • How LR was used in the Ring Road’s case • FAR incentive for high density, capture land value • Potential Outcomes Basic Premise and method