A VIABLE URBAN Land MANAGEMENT SYSTEM for the KATHMANDU VALLEY

A VIABLE URBAN lAND MANAGEMENT SYSTEM FOR THE KATHMANDU VALLEY

BALLABH PRASAD ACHARYA B. Arch. (Bombay), M. Sc. (AIT)

A Thesis in fulfillment of the requirements for the Degree of Doctor of Philosophy in Town Planning The University of New South Wales Sydney, Australia September 1991 PREFACE

The study of urban problems in Nepal presents methodological complications because of paucity of statistical information. With limited research and documentation on urban planning and development activities presently available, relevant secondary data on which to base research studies is either absent or scarcely available. Embarking on an ambitious broad based academic research, such as this, mainly on the basis of primary data generated through field investigations, would be prohibitive given the time and resources constraints.

The approach taken in this research is to narrow down the scope of the study to focus on new urban expansion in Kathmandu Valley, make use of available secondary material, and supplement the information and analysis through intensive contacts and discussions with relevant persons and agencies. Thus, the research relies mostly on descriptive methods of analysis and presentation. My personal involvement in Valley's planning and development and knowledge of local situation were valuable in the analysis and assessment of planning activities in the Valley, and in formulating proposals for reform.

This study was conceived at the Asian Institute of Technology (AIT) in Bangkok following my enrollment in the doctoral program in January 1987. My research proposal was accepted by AIT in April 1988, and following field visit in Nepal during late May until early August 1988, further work on the study was done there. It was proposed to carry out the study in four phases with two field trips to Nepal.

However, the study was discontinued for some time when I migrated with my family to Australia in late 1988. The necessity to adjust to a new environment in Australia, and to meet requirements of the University of New South Wales, resulted in delays in finalizing the Thesis. The lack of funds did not permit to make a second field visit to Nepal. The scope of the research was also widened considerably to explore, in depth, constraints and opportunities in adopting the proposed land management system in the

ii Valley. This resulted in slight deviation from the original proposal, in that, the preparation of a demonstration project was omitted.

The study, generally, analyses information obtained until July 1988. Therefore, the operation of the new planning law, which came into force in November 1988, is not covered, although an assessment of its salient features appears in Chapter Nine.

In the interim, Nepal underwent through a rapid process of political changes. Nationwide political unrest began in late 1989, resulting in the collapse of the three decades old partyless panchayat system and re-establishment of multi-party democracy in Nepal in April 1990. A new Constitution of Nepal was promulgated in November 1990, which replaced the previous Constitution of 1962. General elections for parliament were held in May 1991 and the popularly elected Nepali Congress Government was formed in June 1991. Planning activities have been slow during the transitional period since 1989.

Since a major part of this Thesis was completed before the above-mentioned political changes occurred in Nepal, the administrative, legislative and political arrangements under the old paucbayat system appear intact in the Thesis, as if they still existed. Although recent political changes and opportunities provided by the new democratic system are highlighted in the adoption and implementation of the proposed land management system, the analysis of the existing situation is confined to the planning system which operated under the pancbayat system. However, the following changes should be noted: presently, there is no town or village pauchayat, but any reference to either of them should be understood to mean a reference to a local government; the previous unicameral legislature, i.e. Rastriya Pancbayat, does not exist, instead, there is a bicameral legislature; and the previous zonal administration and the position of zonal commissioner have been abolished.

I believe, I have done justice to the Thesis, in spite of changes in my personal situation and Nepal's political climate, which happened during its preparation period spanning nearly four years.

iii ACKNOWLEDGEMENTS

Many individuals and agencies have helped me in my doctoral study, which spanned nearly five years. The Australian Government provided scholarship while I was at the Asian Institute of Technology in Bangkok (1987-88). The Human Settlements Division and the AIT community provided institutional support in the initial period of the study's inception. Ray Archer (AIT) provided constant encouragement and support during the course of this study.

My especial thanks to Dr Peter Murphy, my supervisor at the University of New South Wales, for guiding me to bring this thesis in the present form. Thanks are also to the staff of the School of Town Planning for their help.

I am thankful to my external examiners, Soorya Lal Amatya, Ray Archer and Alex Kondos for reviewing my thesis and providing valuable comments.

I am thankful to many landowners and residents in Pokhara and Gatthaghar (Bhaktapur) for their valuable time, opinions and suggestions, and to my friends at the Kathmandu Valley Town Planning Office and the Department of Housing, Building and Physical Planning for their help during my field survey. Thanks are also extended to staff of a number of government and municipal offices in Kathmandu and Pokhara. My especial thanks are to my friends Hemant Arjyal and Prem Lohani and to Shanker Pradhan (Chief Planner, Kathmandu Valley Town Planning Team) and Padam Chhetri (Senior Planner, Department of Housing, Building and Physical Planning).

For their understanding, thanks and love to my children, who missed me in the evenings and during weekends. I would like to express my love to my wife Shanta, who shared with me moments of tension and hard work, but always encouraged me in the study and understood the dedication this work required. Many thanks to her, and to all others who directly or indirectly helped me in this study.

For all the above, and much more, I thank God.

iv ABSTRACT

The Kathmandu Valley underwent through a rapid phase of urbanization after 1950, especially since early 1970's, despite the formation of its three principal towns during the 6th and 9th century AD. A number of efforts towards planning and developing the Valley were carried out since mid 1950's, but it was only in 1976 that the Nepalese Government formally approved the Valley Plan and established an agency to undertake regulatory functions.

This study aims to assess the effectiveness of the current planning system operating in the Valley and to formulate an implementable land management system to guide future urban expansion in the Valley so as to achieve the objectives of planned urban development and an adequate urban land supply in a situation of mainly private land ownership and development. This is undertaken through the formulation of a broad based research design of a general exploratory and evaluative nature combined with a prescriptive part that is sensitive to the local situation. This research is mainly based on secondary material supplemented by intensive contacts and discussions in Nepal with planning and implementing officials at both central and local levels, landowners, tenants and land brokers.

The development of the Valley has always been accorded a high priority by the Government. Since modem urban planning has a relatively short history in Nepal, the various components of the planning machinery are, however, still evolving. It is found that current planning efforts have not been very effective in guiding urban development in desired locations resulting in a number of serious problems. These include: haphazard and unplanned urban sprawl, encroachment onto low-lands and agricultural belts, incompatible land uses and violation of regulations, inadequate provision of urban infrastructure and services in new housing areas, rapid! y increasing land values and declining affordability of residential land, deteriorating housing situation, and unco-ordinated sectoral works resulting in piecemeal and ad hoc urban development activities.

v The study concludes that opportunities for guiding the Valley's future urban growth through conventional planning mechanisms are limited and that a new approach to urban development should be adopted. An improved land management system (LMS), for guiding planned urban expansion and providing adequate land supply, is formulated for adoption in the Valley.

This Thesis describes the proposed arrangements necessary for adoption of the LMS in the Valley; discusses constraints and opportunities in adopting the system and its various techniques and measures; suggests how these can be modified to fit in with local situation, recent initiatives and political changes; and shows how these measures improve opportunities for plan implementation in the Valley.

vi TABLE OF CONTENTS

page

TITIE PAGE ...... i PREFACE ...... ii ACKN"OWI.EDGEMENTS ...... iv ABS1RACT ...... v TABI..E OF CONTENTS ...... vii UST OF TABI..ES ...... X UST OF FIGURES ...... xi EQUIVAI..ENTS ...... xii ABBREVIATIONS ...... xiii

PART ONE: EXISTING SITUATION

CHAPTER

1. INTRODUCTION 1

1.1 Urbanization Trends and Problems in Nepal ...... 2 1.2 Kathmandu Valley Context ...... 2 1.3 Urban Land Development Process ...... 8 1.4 Government Response ...... 11 1.5 Present Urban Land and Development Problems ...... 13 1.6 The Challenge ...... 21 1.7 Rationale of the Study ...... 25 1.8 Objectives of the Study ...... 27 1.9 Research Design ...... 28 1.10 Scope and Limitations of the Study ...... 33 1.11 Organization of the Thesis ...... 36

2. THE STUDY IN PERSPECTIVE 39

2.1 Urbanization and Urban Development Problems in Asia 40 2.2 Failures and Limitations of Urban Land Market ...... 42 2.3 Government Responses to Urban Development Problems . . . . 44 2.4 Trends of Urban Land Policy ...... 44 2.5 Alternative Land Development Systems ...... 53 2.6 Land Management Approach to Urban Development ...... 62 2.7 Guided Land Development ...... 66 2.8 Land Pooling/Readjustment ...... 70 2.9 Other Land Management Measures and Techniques ...... 78 2.10 Future Directions ...... 84

vii 3. URBAN EXPANSION AND lAND DEVELOPMENT SYSTEM 87

3.1 Administrative and Urbanization Patterns in Nepal ...... 87 3.2 General Setting of the Kathmandu Valley ...... 91 3.3 Demographic Trends and Density Patterns ...... 92 3.4 Kathmandu Valley Land Resources ...... 93 3.5 Urban Expansion ...... 95 3.6 Land Market ...... 100 3.7 Urban Land Development ...... 105 3.8 Chapter Conclusions ...... 114

4. PLANNING HISTORY AND lAND POLICY INSTRUMENTS 116

4.1 Planning History of the Kathmandu Valley ...... 116 4.2 Legislative Framework for Planning ...... 120 4.3 I..and Taxation ...... 129 4.4 Chapter Conclusions 133

5. PLANNING MACHINERY IN ACTION 135

5.1 Agencies Involved in Urban Development ...... 135 5.2 Institutional Arrangements ...... 140 5.3 I..and Use and Planning in the Valley ...... 148 5.4 Plan Implementation ...... 162 5.5 Chapter Conclusions ...... 169

6. OPERATION OF NETWORK INFRASTRUCTURE PROVISION BODIES ...... 171

6.1 Public Roads 171 6.2 Water Supply, Drainage and Sewerage ...... 183 6.3 Electricity Supply ...... 193 6.4 Chapter Conclusions ...... 199

PART TWO: PROPOSED ARRANGEMENTS

7. SUMMARY AND SYNOPSIS: ADOPTION OF A lAND MANAGEMENT SYSTEM IN THE VALLEY 203

7.1 Country Profile ...... 203 7.2 Planning and Land Development in Kathmandu Valley . . . . . 205 7.3 Need for a New Approach ...... 209 7.4 A Land Management System for the Valley ...... 210 7.5 Plan Implementation through the Techniques ...... 223 7.6 Adoption of a Land Management System in the Valley . . . . . 228 7.7 Components of the Proposed Land Management System 232

viii 8. CO-ORDINATING MECHANISMS 235

8.1 Co-ordinating Arrangements ...... 236 8.2 Land Development Programs ...... 245 8.3 Land Market and Supply Information System ...... 252 8.4 Chapter Conclusions ...... 256

9. ORGANIZATIONAL AND INSTITUTIONAL ARRANGEMENTS 257

9.1 Organizational Changes ...... 257 9.2 Legal Arrangements ...... 264 9.3 Financial Resources ...... 268 9.4 Manpower Resources ...... 275 9.5 Chapter Conclusions ...... 279

10. PARTICIPATION AND IMPLEMENTATION 282

10.1 Participants in Land Development ...... 282 10.2 Issues in Formal Private Land Development ...... 285 10.3 Issues in Formal Public Land Development ...... 287 10.4 Regulating Land Development Process ...... 288 10.5 Encouraging and Assisting Land Brokers ...... 291 10.6 Landowners', Tenants' and Citizen's Groups ...... 294 10.7 Project Implementation ...... 296 10.8 Socio-Cultural Constraints ...... 305 10.9 Chapter Conclusions ...... 306

11. CONCLUSIONS AND EPILOGUE ...... 307

11.1 Reflecting on Priority Issues ...... 307 11.2 Reflecting on Objectives of the Study ...... 312 11.3 Implications of Changed Political Situation ...... 321

APPENDICES

A: URBAN LAND POOLING PROJECI'S IN POKHARA 324

A.l Urban Land Development in Pokhara ...... 325 A.2 Chipledhunga Road Project Case Study ...... 329 A.3 Bhairabsthan Bus Station Project Case Study ...... 337 A.4 Constraints and Problems ...... 344 A.S Lessons from the Pokhara Experience 350

B: LAND RESOURCES MAPPING PROJECf TABLES ...... 354

REFERENCES 356

ix UST OF TABLES

Table Number page

1.1 Population of Town Panchayats in Kathmandu Valley ...... 7 1.2 An Historical Overview of Planning in Kathmandu Valley . . . . . 12 1.3 Growth of Urban Population in the Valley ...... 21 1.4 Overview of Objectives and Research Design of the Study 32

3.1 National and Urban Population ...... 89 3.2 Built-up Area of Greater Kathmandu by Town Panchayat . . . . . 97 3.3 Land Prices in Kathmandu Valley ...... 101 3.4 Land Transactions in Valley Districts ...... 104 3.5 Profile of Public Housing Schemes in Kathmandu ...... 111

4.1 Land Ownership Ceiling ...... 124

5.1 Existing Urban Service Agencies in Kathmandu Valley Region 141 5.2 Greater Kathmandu Land Use, 1971 and 1981 ...... 150 5.3 Land Allocations in Kathmandu Valley Land Use Plan, 1976 . . . 154 5.4 Land Allocations in Greater Kathmandu Land Use Plan, 1976 156 5.5 Land Allocations in Proposed Kathmandu Valley Land Use Plan, 1984 160

6.1 Length of Roads Network in Kathmandu Valley, 1982-1987 175 6.2 Development Budget and Actual Expenditure on Road Sub-sector in the Kathmandu Valley ...... 180 6.3 Estimated Income Statement of Water Supply and Sewerage Corporation for Kathmandu and lalitpur ...... 187 6.4 Estimates of Water Demands and Supplies in the Kathmandu Valley Urban Areas ...... 188 6.5 Financial Allocations for Line Extension, Rural Electrification and System Reinforcement in the Valley ...... 198

7.1 Benefits of Proposed System to Participants ...... 217 7.2 Constraints in the LPIR Technique and Ways to Overcome Them 221 7.3 Constraints in the GLD Process and Ways to Overcome Them . . 222 7.4 Obstacles and Opportunities in the Adoption of the Proposed Land Management System in Kathmandu Valley ...... 230

A.1 Time Sequence in the Chipledhunga Road Project, Pokhara . . . . 335 A.2 Landowners' Transaction Statement, New Bus Station Project, Pokhara 341 A.3 Time Sequence in the Bhairabsthan Bus Station Project, Pokhara 342 A.4 Official Records of Land Value Changes - Chipledhunga Project ...... 347

B.1 Land Systems in the Kathmandu Valley ...... 354 B.2 Land Capability and Land Utilization in Kathmandu Valley 355

X LIST OF FIGURES

Figure Number page

1.1 Kathmandu in Relation to Three Natural Regions of Nepal 3 1.2 Settlements and Land Use in Kathmandu Valley ...... 5 1.3 Three Municipal Areas and Three Administrative Districts of Central Government in Relation to Kathmandu Valley ...... 6

2.1 Goals of Urban Land Policy 49

3.1 Greater Kathmandu Built-up Areas (1971-1981) ...... 98 3.2 Kathmandu Valley- Land Prices ...... 102

5.1 Principal Relationship of Urban Sector Institutions in Nepal 136 5.2 Project Planning and Implementation Procedure- Kathmandu Valley ...... 138 5.3 Organization Structure of Kathmandu Valley Town Development Committee ...... 144 5.4 Greater Kathmandu Urban Land Use, 1981 ...... 151 5.5 Greater Kathmandu Land Use Plan, 1976 ...... 155

6.1 Kathmandu Valley Road Network ...... 174 6.2 Existing Water Supply Sources in Kathmandu Valley ...... 185 6.3 Major Power Sources and Transmission Lines in Kathmandu Valley, 1988 ...... 195

7.1 Land Policy and Management for Asian Cities ...... 212 7.2 Land Management System ...... 214 7.3 An Urban Land Pooling/Readjustment Project ...... 218 7.4 The GLD Process ...... 220

8.1 Proposed Institutional Setting of Kathmandu Valley Development Authority (KVDA) ...... 243

9.1 Task Force Proposal for a New Structure for Kathmandu Valley 260

10.1 Participants in Land Development ...... 284 10.2 Unified Land Subdivision and Building Permit Issuance System . 290

A.1 Land Pooling Projects in Pokhara ...... 327 A.2 Chipledhunga Road Project ...... 332 A.3 Bhairabsthan New Bus Station Project ...... 340

xi EQUIVALENTS

Currency Rs 23.10 =US $ 1.00 (mid 1988) Aust. $ 1.00 =US $ 0.79 (June 1990)

Measures 1 ft. = 0.305 meter 1 Bigha = 0.667 hectare (ha) 1 ana = 31.8 square meters 1 Ropani = 508.74 square meters 1ha = 20 Ropani (approx.)

xii ABBREVIATIONS

AD anno Domini (in the year of the Lord) ADB Asian Development Bank AIT Asian Institute of Technology Aust. Australian BC Before Christ BNP Bhaktapur Nagar Panchayat CBS Central Bureau of Statistics CDO Chief District Officer CEDA Center for Economic Development and Administration OF Capital Improvement Folio CNPS Central Nepal Power System CPI Consumer Price Index cum cubic meter DDA Delhi Development Authority DHBPP Department of Housing, Building and Physical Planning DOR Department of Roads EFI Electricite De France International e.g. for example ESCAP Economic and Social Commission for Asia and the Pacific et al. et alia (and other people) etc. etcetera ft. Foot/Feet GDP Gross Domestic Product GLD Guided Land Development GNP Gross National Product ha Hectare HMC Kathmandu Housing Management and Construction Company HMG His Majesty's Government (of Nepal) i.e that is IFHP International Federation for Housing and Planning IIPA Indian Institute of Public Administration ncA Japan International Co-operation Agency KDC Kathmandu Valley Town Development Committee km Kilometer KNP Kathmandu Nagar Panchayat kV kilovolt KVDA Kathmandu Valley Development Authority KVDC Kathmandu Valley Development Committee KVTPT Kathmandu Valley Town Planning Team Vday liters per day LMS Land Management System LNP Lalitpur Nagar Panchayat LP/R Land Pooling/Readjustment LRMP Land Resources Mapping Project

xiii m meter mglliter milligram per liter MHPP Ministry of Housing and Physie2l Planning MOF Ministry of Finance mm millimeter MSTP Management Support for Town Panchayat (Project) MW mega watt NEA Nepal Electricity Authority NEC Nepal Electricity Corporation NPC National Planning Commission NAR National Association of Realtors OBSP Occupancy, Building, Servicing and Planning p.a. per annum PADCO Planning and Development Collaborative International PBOS Planning, Building, Occupancy and Servicing PCB Policy Co-ordination Board p/ha persons per hectare PSBO Planning, Servicing, Building and Occupancy PTP Pokhara Town Panchayat PWD Public Works Department Rs Rupees (Nepalese Currency) SAARC South Asian Association for Regional Co-operation sq km square kilometers sqm square meters TDC Town Development Committee TESG Town Extension Study Group TIO Town Plan Implementation Office TPCCC Town Planning Central Co-ordination Committee TPIC Town Plan Implementation Committee UDC Urban Development Committee UN United Nations UNCHS United Nations Center for Human Settlements UNCRD United Nations Center for Regional Development UNDP United Nations Development Program us United States US AID United States Agency for International Development us$ United States Dollar VIP Very Important Person viz. videlicet (namely) WSSC Water Supply and Sewerage Corporation

xiv 1. INTRODUCTION

The essential thesis of this study is that Kathmandu Valley has problems of urban land development and land use, that the measures adopted so far by the Nepalese Government to solve/manage these problems do not work so that another more effective approach needs to be adopted, and that a land management system can be devised to provide such an approach. This study aims to formulate a land management system to guide future urban expansion in the Kathmandu Valley so as to achieve orderly urban development, planned urban land use, and an adequate urban land supply.

Some of the main development problems of Asian cities are land problems. They have assumed greater dimensions due to rapid pace of urbanization in the developing countries. The urban land problems in the Kathmandu Valley are similar to the land problems facing most other Asian cities. This study looks into the development problems found in most of the cities of Asia, the government responses to them, and their limitations, so as to learn lessons which may guide to formulate measures to handle problems in Kathmandu. This is partly accomplished through the literature review in Chapter Two. The organization of this Thesis and coverage of individual chapters appear at the end of this Chapter (refer, 1.11).

This introductory chapter briefly sketches the urbanization trends and problems in Nepal before moving on to outline the main components of the research in the Kathmandu Valley context. A short description of the growth and development of Kathmandu precedes the brief outline of the urban land development process and the resulting problems. This is followed by an overview of planning history of the Kathmandu Valley and government statutory planning response in the form of the 1976 Valley Plan. The focus then concentrates on the present urban development and land use problems in Kathmandu Valley, and is followed by the statements of rationale and objectives of the study. Lastly, the research design adopted to carry-out the study is presented before outlining the scope and limitations of the study and the organization of this Thesis.

1 1.1 Urbanization Trends and Problems in Nepal

Nepal, being a small mountainous country, does not present large figures relating to urban population size, land needs or the volume of the necessary investment in urban infrastructure comparable to its neighbors, such as India, but a rapid urbanization rate has put a challenge before the country. For example, although the urbanization level in 1981 was only 6.38 per cent, the urban population grew at 7.6 per cent annually, nearly three times faster than the national average of 2.66 per cent during the 1971-81 period (refer, Table 3.1). Historic trends suggest that the urbanization level in Nepal will be at 13.8 per cent in 2001 compared to 8.2 per cent in 1985, which would add some 3.2 million people to the existing urban centers (PADCO, 1984(a): 26-27). This is a net increase of 1.5 times over the 1985 population of 1.3 million. Providing serviced land for housing and other urban uses to accommodate this fast growing urban population will be a major problem, given the existing institutional, administrative and financial constraints in the country.

The rapid growth of urban settlements has caused considerable stress on the existing infrastructure and service systems and increased the housing problems. Urban services like water supply, sanitation, drainage, are already inadequate in most settlements and this crucial situation calls for the growth in management skill in urban development to handle future problems (PADCO, 1984(a): 44-47). At the moment, there is general weakness of the municipalities to address their own urban service requirements.

It is apparent that urban development problems in Nepal are not different from other developing countries. But the intensity of the problems are not uniform throughout the country, and urban land problems are more pronounced in the Kathmandu Valley than anywhere else in Nepal.

1.2 Kathmandu Valley Context

The Kathmandu Valley lies in the mid-hill region of Nepal (Figure 1.1). The Valley is roughly elliptical in shape having an area of about 597 sq km, with dimensions of

2 Growth A•n I Mid-Western I F11r-Western Development • I 'PVCiopmenl Motorable Road Region ' f1egion I Western Development Planned Development Center I Existing I Region Central f Development Region Eastern Development Region

. I Five Development Regions Mountain Reo•on . Hill Re9ion Blfatnagar aTeral Reg•on

Figure: 1.1 Kathmandu in Relation to Three Natural Regions of Nepal

Source: PAOCO, 1984(n) :2

3 around 25 krn east-west and 20 krn north-south. The floor of the Valley lies at an altitude of about 1,340 meters above the mean sea level from which mountains rise steeply on all sides. The perimeter of the Valley is defined by the ridgeline which forms the limit of its watershed. The Bagmati River, along with its tributaries, drains the Valley exiting via the Chovar Gorge.

Administratively, at the central government level, the Valley is within the Bagmati Zone (one of the 14 administrative zones for the country). The Valley accommodates three of the eight administrative districts of the Bagmati Zone, namely, Kathmandu, Lalitpur and Bhaktapur, each headed by a Chief District Officer (CDO) under the Bagmati Zonal Commissioner. At the local government level, the Valley contains the three municipalities (town panchayats) of Kathmandu, Lalitpur and Bhaktapur and over 100 other village panchayats (58 in Kathmandu, 22 in Lalitpur, and 21 in Bhaktapur Districts) (Figure 1.2). Important rural settlements include Kirtipur, Thankot, Balambu, Budhanilkantha, Sundarijal, Sankhu, Pharping, Chapagaun, Thecho, Bungamati, Thaibo, Harisiddhi, Lubhu, Thimi, Nagadesh, and Bode, some of which (e.g. Thimi, Nagadesh, Kirtipur, and Thankot) are gradually taking urban form. Among the three districts, only Bhaktapur is completely contained within the Valley, while Kathmandu and Lalitpur Districts cut across the ridgeline with almost half of Lalitpur District lying outside the Valley (Figure 1.3). In total, the three town panchayats constituted about 12 per cent of the Valley area in 1981.

The Kathmandu Valley accommodates one of the largest and rapidly growing populations in the country and it is becoming progressively urbanized. The Valley population is estimated to have been about 739,000 in 1981 (Rimal et al., 1986:1), while the combined population of the three districts was 766,000, with Kathmandu District accounting for about 55 per cent of the combined district population.

Kathmandu, the largest of the three urban centers, is located on the confluence of the two rivers, the Bagmati and Vishnumati Rivers in the western part of the Valley. Except for the River Bagmati, Kathmandu and Lalitpur (Patan) have physically merged into one and are frequently referred to as Greater Kathmandu. Bhaktapur, which is located

4 G)

KATHMANDU VALLEY LAND USE

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f:3 MUNICIPAL BOTTNJ"ARY

SGUICC - I.AttO lltiiSDUitCIES M~ Figure 1.2: Settlements and Land Use in Kathmandu Valley f'..c)JIICT , 1984 Source: PADCO, 1986:30 ...... , rtf- MDCO, ICAT--DU ,1985 .I 'I 'I .I .... Q

·~

t::::j nistrict Boundary

E·..:::..j '4unicioal Boundary

F====J ~ajor Roads

Figure: 1.3 Three Municipal Areas and Three Administrative Districts of Central Government in Relation to Kathmandu Valley

Note: Districts Boundary is Approximate on the elevated '.tar' land between Khasan Khusi and Hanumante Khola and situated at a distance of about 14 km to the east of Kathmandu, is not only distantly located, but also is disadvantaged by Greater Kathmandu's role as the seat of government.

In 1981, the town panchayats of Kathmandu with 235,160 inhabitants, Lalitpur with 79,875 inhabitants, and Bhaktapur with 48,472 inhabitants together accounted for 48 per cent of their district population and about 50 per cent of the Valley's population. As Table 1.1 shows, of the three towns, Kathmandu was growing most rapidly with an annual population growth rate of about 4.6 per cent between 1971 and 1981, followed by Lalitpur (3.1 per cent), while the population growth in Bhaktapur was relatively modest (1.9 per cent). The highest densities in each of the three town panchayats occur in the city cores. In Kathmandu, for example, densities of the order of 1,200 persons per hectare (p!ha) could be found in city core areas in 1981, while in fringe areas densities were as low as 14 to 50 p/ha (PADCO, 1986: 36-47). It is also apparent that the urban growth and urban development pressures have been more intense since the 1970's than the earlier decades.

Table 1.1: Population of Town Panchayats in Kathmandu Valley

Year % annual Town Area growth 1952/54 1961 1971 1981 1971-81 Kathmandu Town 106,576 121,019 150,402 235,160 4.6 Panchayat Lalitpur Town 42,185 47,713 59,049 79,875 3.1 Panchayat Bhaktapur Town 30,002 33,877 40,112 48,472 1.9 Panchayat Total Urban 178,763 202,609 249,563 363,507 3.8 Kathmandu Valley - -- 739,000 -

Source: Central Bureau of Statistics, Kathmandu.

7 Part of Kathmandu's rapid growth is due to boundary changes, whereby several village panchayats were annexed to the town in 1981, about 1,225 ha to the east and 848 ha to the west (PADCO, 1986:36). There was no major physical extension to the municipal boundary of Lalitpur, while the slow growth of Bhaktapur (less than the national average of 2.66 per cent during the 1971-81 period) was caused mainly by the economic decline of the town due to the Arniko Highway and migration to Greater Kathmandu area in search for jobs.

1.3 Urban Land Development Process

Most land in the Valley is privately owned and privately developed but the government participates in the development process through the provision of the network infrastructure (public roads, water supply and electricity supply) and through a statutory planning control system designed to regulate urban development in the Valley. This section briefly describes the landownership pattern in the Valley, introduces the key network infrastructural agencies, and outlines the major problems of urban land development.

1.3.1 Land Ownership Pattern

Land ownership in the Valley may be classified into five broad categories (PADCO, 1986:92-93), viz., (i) government, (ii) public, (iii) private (raikar land), (iv) private guthi, and (v) .G.uthi Corporation.

The government lands used for offices, education and health, police and military, etc. are largely concentrated within the town panchayat boundaries. Public lands include ponds, roads, walkways, playgrounds, courtyards, squares, gardens, parks and religious spaces. Public lands cannot be sold or used for any other purposes, nor can the land's shape and size be altered in any way. Government and public lands, however, are not the major tenure types in the Valley. The government and public lands each accounted for about 550 hectares or roughly one per cent of the Valley area, whereas private or raikar land, the most dominant tenure form, constitute 76 per cent of the Valley area

8 and 94 per cent of the cultivated land area. It is the only category of land subject to taxation, although rural lands are subject to a lower tax rate than the urban lands.

Gu.thi lands are those whose ownership or output was transferred to charitable, religious or philanthropic institutions. Two types of guthi lands are present: private guthi lands (of raikai class) and the .Guthi Corporation lands (lands which have been entrusted to the care of the government). Lands of the latter type make up about 5 per cent of the Valley area and 6.2 per cent of the cultivated land in the Valley. Most guthi lands are concentrated in the or near the town areas.

1.3.2 Key Network Infrastructure Development Agencies

The Department of Roads undertakes the construction and maintenance of roads in the Valley through its zonal and district offices. The district offices also construct many of the roads outside urban areas although some of such roads continue to be built by village panchayats in accordance with the 'Decentralization Program' initiated in 1982. The Water Supply and Sewerage Board under the Department of Water Supply and Sewerage is responsible for the provision of water supply and sewerage in the Valley. The Board is also implementing the internationally aided sewerage project in Greater Kathmandu area. The Nepal Electricity Authority is responsible for the generation and distribution of electricity throughout the country. These two agencies have zonal and divisional offices in the Valley which look after new construction or extension of service lines, distribution and maintenance of services under their jurisdiction.

9 1.3.3 Urban Land Development Process and Problems

Government land development in the Valley has always been limited and the bulk of the urban land and housing development has been undertaken in the private sector through numerous individual projects. Commercial (organized) land and house development agencies have yet to emerge in Nepal, so that most housing is built as individual units on small scattered land subdivision projects, and are carried-out for personal use and/or for rental purposes. Land development is not regulated by subdivision regulations. Usually the residential development takes place on elevated tableland called 'tar' land which gets access through a public road or a trail. The individual owner-developer applies for the building permit to the municipality. The availability of services, such as water supply and electricity, is not a requisite for the issuance of building permits as they can be provided later by the concerned agencies.

The problems related to this land development process stem from both the public agencies responsible for the key network infrastructure as well as from the private owner-developers. The extension and construction of the public roads, water supply and electricity supply is not planned, and they are provided on an ad hoc basis mostly in response to political pressures. The provision of services can hardly meet the needs of the growing urban population whereas the lack of funds and lack of inter-agency co-ordination on the timing and pace of their delivery have adversely affected the land development process. Since the land development activities undertaken by individual owner-developer is neither controlled nor regulated, the development usually takes place on poorly serviced land. The sites are scattered, isolated and may be of inappropriate shape and size for their full utilization. Of late, due to development pressures, increasing demand, and high land prices, land development is taking place on lowland and flood-plains. Incompatible land uses, encroachment onto agricultural lands, and haphazard urban growth have been the results of this land development process.

10 1.4 Government Response

Until about 1950, the urban population in the Valley was fairly stable and of small size, increasing mainly through natural growth. Following the collapse of the Rana regime (1846-1951) and with a view to prepare Kathmandu for its international exposure, the government attempted a number of efforts towards providing/improving infrastructure and services. However, the government's planning response to tackle urban and land development problems in the Valley did not begin until early sixties, but it was only in 1976 that the government formally approved the Valley Land Use Plan and set-up an agency to undertake regulatory functions. This was done under the :Imrn Development Plan (Execution) Act, 1973, which was specifically geared for application in the designated regional centers. An overview of the planning history of the Kathmandu Valley since 1951 is presented in Table 1.2 and the salient features of the government's planning response as outlined in the 1976 Plan is briefly sketched.

The Department of Housing, Building and Physical Planning (DHBPP) prepared another plan in 1973, to be based on the basic assumptions of the unadopted 1969 Valley Plan (DHBPP, 1969), which also never became operational. This 1973 Plan added the alignment of the proposed Ring Road around Greater Kathmandu. Three years later, a new physical development plan for the Kathmandu Valley was prepared by the Department and received government approval in 1976. This Kathmandu Valley Town Development Plan, 1976 (the 1976 Plan) consisted of a land use and transportation map, and land use regulations along with an organizational structure of a committee for the implementation of the Plan. This Plan "aimed at putting restriction on haphazard growth and urban sprawl so as to develop urban areas in a planned way" through the application of land-use control measures (KVTPT, 1984:3). The organizational structure of the Kathmandu Valley Town Development Committee (KDC) is shown in Figure 5.3.

Although the 1976 Plan covers the whole Valley, urban development was proposed to be confined largely to the Greater Kathmandu area, especially within the Ring Road (refer, Figure 5.5). Bhaktapur was supposed to retain its traditional character, and its

11 Table 1.2: An Historical overview of Planning in Kathmandu Valley

Year Events

1951 - Collapse of 104 year old Rana regime and opening up of the country to outside world with need felt to prepare Kathmandu for its international exposure

1962 - Partyless panchayat system succeeds parliamentary democracy - Promulgation of new Constitution of Nepal - UN assistance on physical planning begins - Town Planning Office set up within Building Department

1963 - Promulgation of Town Development Committee Act, 1963

1964 - Master Plan for Greater Kathmandu area prepared

1965 - Preparation of Draft Nepal Building Code

1969 - Formation of Department of Housing and Physical Planning - Kathmandu Valley Development Plan prepared

1970 - Establishment of Kathmandu Valley Town Development Board and Committee to implement the 1969 Valley Plan - Adoption of growth pole strategy of regional development

1973 - Promulgation of Town Development Plan (Execution) Act, 1973 (applicable to regional centers only, including Kathmandu) - Department prepares a new Valley Plan by modifying the 1969 Plan

1974 - Short-term UN consultants work on the Valley Plan

1976 - Preparation and approval of Kathmandu Valley Town Development Plan - Formation of Kathmandu Valley Town Development Committee, Planning Team, and Implementation Committees to implement the 1976 Plan - Zoning and building regulations framed

1979 - CEDA study on organizational and zoning aspects

1983 - Study on organizational aspects of Kathmandu Valley Town Development Committee

1984 - Draft Kathmandu Valley Physical Development Concept prepared

1986 - Study on organizational aspects of Kathmandu Valley Town Development Committee - PADCO study on Urban Land Policy in the Kathmandu Valley

1987 - Formation of Ministry of Housing and Physical Planning

Sources: Based on personal knowledge and Valley plan documents

12 renovation and restoration works were being carried-out with German Government co operation. Other rural settlements of the Valley were largely undisturbed by the Plan, which gave high priority to preserving the valuable agricultural land in the Valley and the places of archaeological and historical importance scattered throughout the Valley.

The Plan's objectives were to be met through the exercise of regulatory measures to control, regulate, and guide urban development activities in both the public as well as the private sectors. The KDC was to mobilize the sectoral powers of line ministries and departments towards achieving the Plan's objectives, priorities and targets by co-ordinating their plans, programs and investment decisions. It also framed development control regulations (the zoning and building by-laws) to regulate land use and building activities.

1.5 Present Urban Land and Development Problems

More than a decade has passed since the government adoption of the Valley Development Plan aimed at planned and orderly urban development, but, as discussed below, the present situation in the Valley appears to be contrary to what was intended. Incompatible land uses and violations of regulations are frequently observed. Unplanned urban sprawl is threatening to engulf the productive agricultural land in the Valley because the authorities are unable to control the haphazard growth and scattered development due to a number of factors. There is inadequate provision of urban infrastructure and services in the new housing areas. land values are rising rapidly, so that the affordability of land for housing is declining. The authorities frequently undertake their urban development works in a piecemeal and ad hoc manner. Some of these problems will now be detailed out.

1.5.1 Unplanned Land Use Pattern

Despite the government's plan implementation measures, urban land development in the Valley has not taken place according to the 1976land Use Plan. The provision and/or extension of urban infrastructure and services have not met the needs of a growing

13 urban population due to the scatter of development and limited finance. The lack of inter-agency co-ordination on the timing, pace, and direction in the provision of services has prevented urban growth from being guided to desired locations and directions. In some cases, the infrastructure has to cross empty pockets of land parcels while building development is taking place on unserviced lands at other places.

In addition to the shortage of technical man-power and financial resources, there is a lack of inter-agency co-ordination, resulting in duplication of works, unsynchronized urban development activities, and wastage of scarce resources. Examples such as opening and digging the road surface at the same place for road repairs, drinking water connections, and laying telephone cables all within a short period of time, are a common sight in Kathmandu. Other examples of lack of inter-agency co-ordination can be cited. The Rimal study (Rimal et al., 1986:56) reported that the former Department of Electricity constructed a high voltage power transmission line through the area already designated as Kuleswor Housing Scheme area. It also reported that various government and public agencies were initiating land acquisition for government projects in the Valley disregarding the 1976 Land Use Plan zoning.

The National Planning Commission (NPC) provided for the co-ordination and synchronization of services like water supply and electricity supply in the Kuleswor and Galfutar housing areas by making the appropriate allocation in the annual budgets, but the agencies responsible for these services performed in the most unco-ordinated way. For example, the Rimal study (Rimal et al., 1986:46-47) found that the Nepal Electricity Authority contended its inability to invest in the Kuleswor and Galfutar housing areas due to lack of funds but made a substantial amount of investment in the electricity distribution system in the New Baneswar area. Similarly, the Water Supply and Sewerage Board expressed its inability to invest anything in these housing areas for the provision of water supply but made heavy investments to provide its services in the newly developing areas of Maitidevi, Sanepa and around Dhobi Khola.

The organizational and management problems within the KDC are widely known in planning circles, and have received some documentation (Suwal et al., 1979; Shah,

14 1983; Rimal et al., 1986; Kaphle, 1987). The complicated organizational arrangement, as shown in Figure 5.3, has been responsible not only for a number of management problems within the organization, it has also hampered the KDC in achieving the intended inter-sectoral co-ordination. The KDC's actions on urban land and housing development have been severely limited, and its weak administrative capability is reflected by the experience of the three housing schemes at Dallu, Kuleswor and Galfutar (Acharya, 1986: 75; PADCO, 1986:84-87). The mandate of the KDC had been geared towards regulatory and control mechanism with less emphasis on active government involvement in urban development works and positive plan implementation.

Inadequacy of the regulations and their weak implementation have been the main causes of violation of regulations. On the other hand, incompatible and conflicting land uses have become a common place in Kathmandu due to ill-conceived, ill-drafted and poorly enforced zoning regulations. Cases, such as permission given for a timber sawmill at the vicinity of residential area at Thapathali, cinema hall on land likely to be required for extension of Government Zone, construction of a big telecommunication building in a residential area at Naxal, and occupation of Teku-Pachali Bhairab Temple area by the Coal Tar Plant of the Roads Department, are some of such examples (Suwal et al., 1979: 118-119). The CEDA report also notes the haphazard growth and ribbon development at the junction of Ring Road with the Arniko Highway in the Koteswar area (Suwal et al., 1979:120). Kaphle (1987: 58-59) has observed an increasing trend of violation of regulations and incompatible land uses. Examples, such as permission granted to build factories in agricultural or residential areas, incompatible buildings (e.g. plastered and reinforced concrete buildings) in the Monument Zone (i.e. Durbar Squares), and cases of converting residential buildings to workshop or carpentry purposes without official approval, have been fairly noticed. These are only some of the illustrative cases; virtually everywhere one finds examples of misuse of authority in planning permission and violation of regulations, even adjacent to the Royal Palace where special permission is mandatory from the Palace officials for the construction of any new building or addition or alterations to the existing ones.

15 1.5.2 Scattered Development and Haphazard Growth lack of adequate urban services, and the withholding of suitable land from development is giving rise to haphazard urban growth and scattered land and building development producing a pattern of random or 'leap-frog' type of suburban development. The authorities do not have effective control to regulate building development due mainly to inadequate regulations and inter-agency conflicts between town panchayats and implementation committees.

The CEDA report (Suwal et al., 1979: 111-112) observed that nearly 24 per cent (out of 1,417 cases) of the buildings having approved permits subsequently violated the regulations in one way or the other during 1976-77 in Greater Kathmandu area, although cases of violations reduced to some extent during the next two years. A later study showed a subsequent deterioration of the situation in Kathmandu (Kaphle, 1987). Based on two case studies, one in the city core and the other in the fringe, the study noted that the desire to develop more floor space through either vertical or horizontal encroachment was the main factor contributing to the repeated violations. As many as 40 per cent of all residential buildings deviated to some extent from the approved building permits (issued in 1984/85) in the fringe (i.e. Battisputali area), the main violations being observed in set-backs, land coverage and right-of-ways (Kaphle, 1987: 84-87).

1.5.3 Encroachment onto Agricultural Land

Valuable agricultural land in the Valley is rapidly being converted into urban use. At current rates of unplanned urban sprawl, all the prime (agricultural) land in the Valley (amounting to about 60 per cent of the entire Valley area) will be urbanized by the year 2020 (PADCO, 1986:32). The PADCO study estimates that, with a forecast urban population growth of nearly 517,000 by 2001, then even with proper planning some 40 sq km of agricultural land will have to be converted to urban uses in the Valley (PADCO, 1986:74-75).

16 Ranjitkar (1983:4) notes that the haphazard and unplanned growth of urban encroachment not only swallowed the existing agricultural land in the fringes, but in future it will also threaten to degrade the urban environmental quality. Pruscha (1973:7), having observed such growth and encroachment, has already warned that such urban sprawl will be detrimental to both environmental and economic development and ultimately result in the loss of natural beauty of the Valley. The situation has not improved since 1973. Existing regulatory measures could not encourage the creation of open spaces and the private subdivision and residential construction engulfed the urban fringe area threatening serious environmental degradation and ecological imbalance.

1.5.4 Rapidly Increasing Prices for Housing Land

Due to the inadequate provision of infrastructure and facilities, there is a gross shortage of serviced building land, especially for residential purposes. This is worsened by the speculative buying and holding of land that appear to have been increasing over the years (Arjyal, 1984:10) causing a rapid increase in land prices. The study by Ranjitkar (1983: 154-157) found that in Kathmandu, land prices increased in real terms by 633 per cent between 1964 and 1978 - a compound real growth rate of over 15 per cent a year. However, the land price increases have not been uniform in all important segments of the city (Ranjitkar, 1983:157-165). During the 1954-78 period, rapid increases in land prices (an increase of 28 fold) was noted in the eastern fringe areas of Kathmandu, such as New Baneswar and Min Bhavan areas. On an average, the land value increases in these areas have been 210 per cent during the 1954-1964 period and 803 per cent during the 1964-1978 period. The record high prices in all periods was observed in the northern corridor of Kathmandu, between Lazimpat and Bansbari. Land prices increased by 47 times between 1954 and 1978 in this zone, increasing from 285 per cent in the 1954-1964 period to 1,120 per cent in the 1964-1978 period. Similarly, in the western fringe of Kathmandu (e.g. along Tahachal and Kalimati areas), land prices increased by 42 times during this period, increasing from 333 per cent in the 1954-1964 period to 862 per cent in the 1964-1978 period.

17 According to data collected by PADCO (1986: 107-110) on the average land prices in different parts of the Valley, land was more costly in the eastern and northern suburban areas of Kathmandu, whereas land prices in village panchayats seemed to be a function of accessibility. The data show that between 1982 and 1985, land prices increased by about 26 per cent annually in nominal terms, but higher prices (over Rs 100,000 per ro_pani) were mostly confined within the Ring Road, except in a few locations along the Amiko Highway and Baudha Road.

With these high land prices, housing affordability has declined considerably, and poor households have to move further away from city centers to find affordable land (PADCO, 1986: 82-84). Although low-income households have been able to satisfy their shelter needs by rental accommodation mostly in inner city areas and in slums, the high population in the core areas have resulted in congestion and overcrowding. This factor coupled with inadequate urban services has also led to a deteriorated housing situation. In 1981, some 53 per cent of the housing stock in Kathmandu was over 50 years old, and the maintenance problem was severe (Pant, 1986:165). Based on population growth projections and current housing permits issued by Kathmandu and Lalitpur Municipalities, Schmitz (1986:21) estimated the housing deficit in Greater Kathmandu at 12,700 in 1986. The PADCO study (PADCO, 1984(a):50) has found that housing conditions among the low-income groups had deteriorated in recent years in the core areas of the large urban centers and squatter communities have started appearing on the urban fringe areas of Kathmandu, thereby showing the ineffectiveness of the existing land policy and its implementation.

1.5.5 Other Problems

Some of the other development problems include patchwork urban development activities of the KDC, low density land utilization in the public sector, and traffic and transportation problems.

1.5.5.1 Patchwork Urban Development: Most of the urban development activities performed by the KDC have been more of a patchwork nature rather than to

18 consistently implement the plan. Some of the often cited activities of the KDC have been: construction of bus park at Tundikhel, truck park at Teku, and one vegetable markets each in Kathmandu and Lalitpur (KVTPT, 1984:3-4). Although it took many years for the construction of these items of works, they are still incomplete. Other examples given by the same report include the preparation of inventory of inns and religious places, stone water taps and open fields. Besides, some ponds, such as Nag Pokhari and Kamal Pokhari, were also cleaned and renovated to the benefit of nobody. In reality, these isolated activities of KDC did not serve to provide better amenities and services to the expanding urban population of the Valley. It is also questioned how far such isolated activities can be expected to fulfil the Valley Urban Development Plan (Rimal et al., 1986:57). As the CEDA report notes (Suwal et al., 1979:128):

"To sum up, the developmental activities undertaken so far by KDC have been fragmented and executed solely on an ad hoc basis without due consideration to the broader physical and environmental issues let alone their social and economic aspects and implications".

1.5.5.2 Problems with Public Sector Development: In general, the public sector land utilization is of very low density by way of large open spaces with the construction of one or two storey buildings. Examples such as development within the Singhadurbar Secretariat Complex amply illustrates this point. The construction of one storey office buildings joined with covered corridors by the Department of Housing, Building and Physical Planning (DHBPP) at the center of office complexes at Babar Mahal is another case. The PADCO report (1986:118) questions the choice to build the Engineering Campus upon a valuable piece of land in central Lalitpur rather than in the poorly utilized Tribhuvan University Campus at Kirtipur. On the other hand, government developments in practice do not obtain building permits, so that they are not effectively regulated by the planning authorities. (This is mainly due to confusion as to whether the mandatory clauses for the requirement of development permission under the 1973 Planning Law is applicable to them (Arjyal, 1984:16-17)).

19 1.5.5.3 Traffic apd Transportation Problems: Grava (1974) observed that there was no major transportation problem in the Valley the way it would be presently defined by any large city in the world, but some of the local problems were acknowledged, such as lack of specific provision for bicycles, traffic conflict and obstruction due to a great mixture of modes and vehicles on most streets, encroachment of pavements and sidewalks by commercial interests, lack of parking controls, ineffective traffic control around the historic areas, and rapid rise in number of cars in Kathmandu. The number of vehicles may still be small but there was a three-fold increase in car number per 100 population between 1981 and 1971, rising to 2.97 in 1981 from 1.0 in 1971, while the corresponding figures for motorbikes were 2.96 and 0.6, respectively (Arjyal, 1984:12).

The public transport system in the Valley is poorly provided and inefficiently managed (Hubbard, 1987), with the result that a large number of local commuters are always seen patiently waiting for busses at busy spots, such as those at Ratnapark and Shahidgate. The limited private sector participation in public transport system has not been effective to reduce the people's burden. The traffic problems in Kathmandu are increasing due to poor traffic controls and maintenance of roads, most of which are narrow in width. Rimal et al. (1986:37) remark that there is a gross negligence in traffic management. The implications of this poor transport management are that the fringe areas are not adequately provided with services and there is inadequate supply of residential land due to inaccessibility, so that most of the poor households are compelled to find accommodation in the already overcrowded inner city areas.

These urban land and development problems in the Valley are serious and most of them have been officially recognized and acknowledged. The problems recognized by the proposed 1984 Draft Plan can be summarized as follows (KVTPT, 1984:20):

haphazard and substandard development in the metropolitan area; rapid and unbalanced urban growth resulting in extended communication lines and difficulty in providing municipal and social facilities; overcrowding, congestion and insanitary conditions especially in the city-core areas;

20 housing development not related to employment centers; and undesirable mixing of land uses and acute shortage of community facilities and municipal services.

1.6 The Challenge

The Kathmandu Valley consists of an area of about 597 square kilometers, which is unusual for its size and fertility in the mountains and hills of Nepal. The Valley is the seat of national government as well as the three districts and town panchayats (municipalities) of 'Kathmandu, Lalitpur and Bhaktapur. Because the Valley area is finite, agriculturally productive, and the size of a large and growing urban population, land issues are becoming more acute. The combined urban population of 364,000 inhabitants in the Valley in 1981 (some 38 per cent of the national urban population) is expected to reach 0.88 million by 2001 and 1.6 million in the year 2020 (Table 1.3). At current rates of unplanned urban sprawl, all prime (agricultural) land in the Valley will be urbanized by the year 2020 (PADCO, 1986:32). Clearly, the challenge before the authorities in Nepal is to determine the future layout of the Valley, and establish appropriate policies, plans and implementing arrangements to fully utilize the Valley's valuable land resources.

Table 1.3: Growth of Urban Population in the Valley

Year Population Annual growth rate % 1952/54 178,763 1961 202,609 1.58 1971 249,563 2.11 1981 363,507 3.83 2001 880,500 * 4.52 2020 1,630,000 * 3.29

Note: * -projections Sources: Central Bureau of Statistics, Kathmandu; PADCO (1986), 33.

21 1.6.1 Priority Issues

The priority issues needing attention with regards to urban development activities in the Valley, more specifically the land development activities, focus around the following three questions:

1. Recognizing the prevalence of the institution of private land ownership and development, what should the government do in order to encourage, to facilitate, and to guide the development activities of the private sector?

2. Recognizing that the government institutions responsible for providing the key network infrastructure of roads, water supply and electricity, also influence and contribute to urban land development, then how can the timing and location of their construction works be coordinated so as to achieve optimum utilization of scarce resources and also to give direction to urban land development?

3. Recognizing that some kind of planning and development authority is required for undertaking coordinating and regulatory functions in the Valley, then how can such an agency be strengthened (or set-up) with adequate legal and organizational powers and the necessary expert manpower and financial resources?

1.6.2 Need for a New Approach

The governments in mixed-economy countries usually seek to guide the growth and development of their cities and the use of urban land by setting up a land use planning control system in order to achieve the broad objectives of efficiency and amenity in the pattern of urban land use. But this has not proved to be successful and more effective measures are needed.

22 In the case of India, the policy of direct government intervention in the land market by bulk acquisition and development of land is the preferred approach for managing the development of urban land. It is usually initiated for the provision of basic utilities, social services and their expansion, development of housing and industrial sites, and for providing land for other government and public purposes. However, its general adoption in India has not been possible due to fmancial and administrative reasons. The experience of Delhi has also shown that this government land acquisition and development approach can lead to implementation problems even where the land development authority has strong powers and financial support (Howland, 1975; Datta and Jha, 1983; Acharya, 1987 (a)).

The other common land policy instruments currently in application in South Asia are the various regulatory measures to control the use of land and taxation instruments. However, experience to date has not been encouraging in this respect (UN ESCAP, 1985). Another approach used in India, an intervention in the urban land market by the application of a land ownership ceiling to socialize urban land, moderate land prices, control speculation, and-encourage low-cost housing, has failed to achieve these objectives (Mahajan, 1980; Wadhva, 1983; Arab, 1985; Acharya, 1987(d)).

In view of the demonstrated limitations of the existing land regulation approaches and public interventions in urban land market, there is a need for an alternative approach, an innovative land development technique(s) to achieve adequate land supply and planned urban development. However, any particular technique must be based on a viable urban land development system. Therefore, the possible packages of land management measures including the legal and administrative framework, the resources needed (finance as well as manpower), the political will to go ahead with implementation, and the land management techniques needs to be assessed.

Land management is concerned with the structuring and guidance of physical development and the provision of adequate land to accommodate urban development. Effective land management is essential for making an optimal use of scarce land resources and for securing an adequate level of urban infrastructure and services at

23 reasonable cost. Its general objective is to ensure the timely availability of land for urban development at affordable cost, so as to achieve an orderly urban expansion, an adequate urban land supply, and a planned pattern of urban land uses.

An innovative technique of urban land management, which has been much acclaimed in current literature and suggested as an alternative to large-scale government acquisition and development of land, is to undertake the land pooling/readjustment (LP/R) projects on a selective basis to complement private, government and cooperative land development projects (Doebele, 1982(a); Archer, 1984(b)). This technique is widely used in Japan, South Korea and Taiwan, and in some cities of Australia and Canada, and has been adopted in Indonesia.

LP/R involves the consolidation of separate private land holdings in urban fringe areas for their planning, servicing and subdivision as a single estate with the sale of some of the new building plots to recover the project costs and the redistribution of the other plots back to the landowners. Although there are some variations in the type and form of the schemes, and the respective implementing agencies, all LP/R projects are prepared with the co-operation and active participation of the landowners concerned and formulated for complete cost recovery within the project period through the sale of 'cost equivalent land' reserved in the scheme for that purpose.

However, the LP/R technique can be utilized most effectively in areas which are already opened-up for development with the necessary access roads and trunk utility mains nearby. Construction of public roadways is the most appropriate mechanism to open-up urban-fringe land for development and thereby augmenting its supply (Echenique, 1982). Therefore, LP/R must be incorporated with another approach which guides the land developers to desired locations by the forward installation of the key network infrastructure of public roads, water supply, electricity supply and drainage. The technique of guided land development (GLD) is one of such approach, which comprises of a mechanism for the forward provision of the key network infrastructure in designated urbanization promotion areas in the fringes. In this approach, the government provides the necessary trunk infrastructure extensions, recoups the costs

24 through some form of betterment charges, and the land subdivision and development is largely left to the private sector.

This study intends to formulate a viable system of land development and management to guide future urban expansion in the Kathmandu Valley based on the combined use of these two techniques (LPIR and GLD) of land management towards achieving the objectives of orderly urban development, planned urban land use, and an adequate urban land supply. The features of these techniques and measures, their potentials and constraints, and ways to make refinements in their use, will be discussed and assessed at greater length in the following chapter.

1.7 Rationale of the Study

Nepal has entered into a phase of rapid urbanization. Government efforts on rural development and emphasis on fostering the agricultural sector, and the decentralization policies have not been as effective as expected, and larger cities and towns have continued to bulge with migrants. The expanding urban population has created a number of urban problems, and put heavy pressure on urban housing, infrastructure, and social services and facilities. These problems have been greater in the larger urban centers, and in the Kathmandu Valley they are most pronounced. It has now being realized that one of the main reasons of failure in dealing with some of the main urban problems is the poor management of urban land (Misra, 1986 (b): 59). The existing policies and institutional framework for land management in the Kathmandu Valley reflect this.

So far in Nepal, there have been only a few efforts to look into the land management aspects of urban development and land supply. Most of the reports and research studies on urban development have a rather limited scope, and the land development and management aspects of the policy issues have not been adequately covered. The earlier reports prepared by short-term UN consultants during 1973-74 each focused on a particular sector of urban development, like transportation (Grava, 1974), planning legislation (Kaplan, 1974) and land use (Norton, 1974), but none covered the land

25 development process operating in the Valley. A study conducted by the Centre for Economic Development and Administration (CEDA) in 1979 did explore some of the weaknesses of the working of the KDC, but its main focus was on the administrative and organizational aspects (Suwal et al., 1979). Although it did point out the weaknesses of the existing zoning practices and building regulations, tht:ir integration with the overall framework of land policy, land development and supply was not covered.

Organizational and management problems were repeatedly identified as the key factors in the ineffectiveness of the KDC in two recent reports (Shah, 1983; Rimal et al., 1986), which recommended the formation of a high powered Valley Development Authority to solve these problems. However, these reports focused on the organizational aspects without formulating the necessary measures to show how the proposed organization could solve the urban development problems and ensure an adequate supply of urban land in the Valley. Another recent research study focused on the development control problems in Kathmandu and concentrated on cases of violation of building regulations (Kaphle, 1987), but did not elaborate on the issues of urban land development and management in the Kathmandu Valley.

The only relevant report on the subject matter is the one prepared by PADCO (1986) for His Majesty's Government (HMG) of Nepal and the United States Agency for International Development (US AID). The principal purposes of this "Kathmandu Valley Urban Land Policy Study" were 'to further the understanding of urban land policies in Nepal, and to provide framework for land use planning in the Kathmandu Valley'. Although this is a comprehensive report which covers various land policy and development issues, the report basically relied on negative regulatory measures of control to implement the development plan proposals. The study did not propose the adoption of active public sector participation in the urban land market or other positive plan implementation measures. It failed to show how the private and the government sectors could co-operate in the urban land development process, and did not to show how its recommendations would achieve the expected results.

26 Tackling the problems of urban land and development through a land management approach is currently arousing interest among urban researchers, policy makers, and officials. However, the use of GLD and LP/R in combination with a mechanism to recover the costs of providing infrastructure works through some form of betterment or development charge, has not been applied successfully in any city of the developing countries of Asia so far. Some attempts to experiment with this approach in Indonesia is receiving positive recognition lately, but operationalization of such policies is yet to begin. The proposals to use this combined approach in Jakarta (Devas, 1983) was never implemented, while no recent information is available on its application in Medan as proposed by consultants (DHV, 1985(a), (b)). As far as Nepal is concerned, this approach has never been applied in the Kathmandu Valley.

Therefore, it becomes appropriate at this juncture to consider the existing urban land development systems operating in the Kathmandu Valley, to assess the current legal, institutional and financial set-up of the planning and development authority, and then formulate measures for government sector to provide effective guidance of the development and use of urban land in the Valley.

1.8 Objectives of the Study

The aim of the study is to formulate an implementable land management system to guide future urban expansion in the Kathmandu Valley so as to achieve the objectives of planned urban development and adequate land supply in a situation of mainly private land ownership and development. The specific or operational objectives of the research are:

1. To review the land development system currently operating in the Kathmandu Valley, to identify its main features and to assess its strengths and weaknesses.

2. To review and assess the government involvements in this land development process and its existing measures for guiding/controlling urban development

27 and land use in the Valley.

3. To formulate a land management system that the government could adopt to guide the location and pace of urban land development, with emphasis on the government provision of the key network infrastructure and selective land development activities.

4. To assess constraints and opportunities in adopting the proposed system and to show how it could be modified to fit with local situation in the Valley.

1.9 Research Design

The main focus of the study is to formulate an implementable land management system to guide future urban expansion in the Kathmandu Valley. Any such system must strike a balance so that the interests of various participants in the land development process are safeguarded, and at the same time it should also provide a framework where both the public and private sectors could participate and co-operate with each other in the land development process . • In order to achieve orderly urban development, planned urban land use, and an adequate urban land supply, this study proposes to formulate a land management system based on the combined use of the GLD and LPIR techniques and funding adequate provision of infrastructure, to be implemented under an appropriate institutional arrangement with necessary co-ordinating mechanisms in place. To meet the objectives of the study, the approach of the research has to be of a general exploratory and evaluative in nature combined with a prescriptive part that is sensitive to the local situation.

The desired directions of future urban expansion in the Valley will have to be identified and the use of GLD and LPIR as two of the principal techniques of land management to guide urban expansion in desired locations will have to be explored. The study also needs to consider how various land development projects are linked to the general urban development programs and projects, to emphasize the phasing of urban expansion

28 and provision of infrastructure, and to assess the local situation in order to show how the techniques and measures proposed in the study work in real world situation.

The directions of future urban expansion in the Valley can be adopted from the PADCO 'Kathmandu Valley Urban Land Policy Study'. This is basically an exploratory study which gives good background material on the existing situation of land resources and land market supply information. It has also identified some corridors/fingers where future urban development should preferably take place. These fingers can be taken as valid locations for future urban growth areas in the Valley for the purpose of the present study.

The study reviews the land development system currently operating in the Kathmandu Valley in its broad legal and institutional setting. The PADCO (1986) study has been used as a starting point since it dealt with both informal and formal sectors of land and housing development and highlighted the role of real estate brokers in the subdivision of residential plots. Available cadastral records (field books and cadastral maps) were used for the purpose of this study and assessment. Project documents as well as evaluation reports of the three public housing schemes at Kuleswor, Dallu and Galfutar were collected and contacts with responsible officers were made for further information.

The study also reviews and assesses the government involvement in the land development process through the provision of the key network infrastructure and through the design of regulatory measures aimed at controlling urban development and land use in the Valley. The collection of information regarding the key network infrastructure (i.e., roads, water supply, electricity supply, and drainage) available in the Valley required study and assessment of current policies and programming with the help of the available project reports, maps and discussion with concerned engineers. This task focused around the following components:

institutional arrangements; organization structure and resources (human and financial) of the

29 responsible agency; existing situation (availability, broad distribution pattern, general condition, adequacy of works and backlogs); future plans and programs for their expansion; major shortcomings in their provision/extension, and how to overcome them; ways and means of co-ordinating their activities.

The study and assessment of land use controls required reviews of relevant laws and regulations, such as the planning laws, panchayat related laws, and land related laws. The planning documents and regulatory measures prepared by the Kathmandu Valley Town Planning Team were studied, and further consultation with planning and implementing officials at KDC, KVTPT, DHBPP, and the municipalities were made in order to assess their effectiveness.

During field visit in May-August 1988, it was discovered that the new Ministry of Housing and Physical Planning (which was formed in December 1987) was taking a number of initiatives in urban development in the Valley, such as announcement of conservation measures and undertaking of few GLD and LP/R projects. This is indicative of a positive recognition of the direction proposed in this Thesis and showed the existence of a political will to accommodate necessary changes. The political unrest, which began in late 1989, resulted in the collapse of the three decades old panchayat system and the re-establishment of a multi-party democracy in Nepal in April 1990. This provides an excellent opportunity for adoption of the proposed land management system (LMS), which relies on the active participation of all interest groups to implement its proposals.

The assessment of opportunities to modify the proposed LMS and its techniques and measures for adoption in the Valley required the exploration of Pokhara's experience with land pooling projects and identification of constraints and opportunities for implementing proposals of the Thesis.

30 The exploration of Pokhara's experience with land pooling projects was carried out so as to understand how the LP/R technique was used there and what lessons could be learnt from those projects for applying the technique more successfully in the Kathmandu Valley. However, this task appeared little difficult since the Pokhara Physical Planning Team (based in Kathmandu) had very little projects related informatin on record. During field visit to Pokhara, it was found that documented materials on land pooling projects were scanty, so that this writer had to rely on the little information available on paper, memories of the local town planning staff and project descriptions given by concerned landowners.

In order to identify obstacles to and opportunities for adopting the proposed LMS in the Valley, an assessment of proposed organizational changes and a review of recent Government initiatives on conservation measures and land development programs were made and further information was obtained from responsible officials. The designated project sites were visited and relevant reports were reviewed. Some landowners, tenants and land brokers in Gatthaghar area (one of the designated GLD sites near Bhaktapur) were contacted to ascertain their willingness to contribute to infrastructure costs in GLD and LP/R projects. The writer's knowledge of local situation, customs and tradition, and of planning and development problems of the Valley were useful in identifying constraints and modifying the techniques/measures to fit with Valley's situation.

Table 1.4 provides an overview of the objectives of the study, the tasks to be performed, and the necessary information to be collected and their sources. The undertaking of the various tasks, as outlined in Table 1.4, to meet the objectives of the research, was based on field work in Kathmandu Valley and Pokhara, and required the co-operation of the concerned agencies. Secondary data were collected from a variety of government offices, municipalities, town planning offices, project offices, National Planning Commission, Central Bureau of Statistics, research institutions and other agencies. Personal contacts and discussions were held with the responsible officials, private individuals and research personnel. In addition, some of the landowners and other residents in the Gatthaghar area and landowners in two land pooling project areas

31 Table 1.4: Overview of Objectives and Research Design of the Study

Objectives Research Topics Information and Source(s)

1. Review existing land - Formal land • PADCO (1986) report development systems development • Housing project documents • Evaluation reports - Informal land • Aerial photos and development cadastral maps • Consult planning & project officials and real estate brokers

2. Review government - lnfrastructural • Current policies & programs involvement in land provision (roads, • adequacy of works & backlogs development process water supply, • Institutional capabilities and existing electricity supply, and constraints controlling measures and drainage) • Project documents & maps • Consult concerned engineers

- Land use controls • Relevant laws & regulations • Valley Plan 1976 - Development control measures • Consult planning team, implementing officials and municipalities

3. Formulate a viable • Provision of key - Explore uses of GLD & LP/R land management network · Consult planning, implement· system infrastructure ing officers for feasibility - Consult landowners for their • Selective land cooperation & contribution development • Sectoral coordination activities • Alternative funding avenues govt. loans and grants • Additional capture land value gains funding additional taxes sectoral powers

4. Show how the proposed - Explore Pokhara•s - PADCO (1986) report LMS fits in with the use of land pooling - Field trip to Pokhara local situation and consultations with - Review recent govt. officials and landowners initiatives on - Documents from Town land development Planning Office and the Ministry • Identify barriers - Consultations with to adopting the officials and local system in Valley residents in Kathmandu

• Modify system for adoption

32 in Pokhara were also contacted. Given the existing situation of a weak data base, the unreliability of some of the available data (for example, land prices), limited research and documentation on urban planning and development in the Valley, unavailability of some of the information due to unwillingness and/or need to maintain administrative secrecy, and the broad based nature of the research, use of sophisticated statistical tools for analysis was not considered appropriate for this research. The research has relied mostly on descriptive methods of analysis and presentation. The writer's involvement in Valley's planning and development and knowledge of local situation were valuable in the analysis and assessment of planning activities in the Valley and in formulating proposals for reform.

This study was originally conceived at AIT (Bangkok), to be carried out in four phases with two field trips to Nepal. It was expected to be completed by late 1989. However, as noted in Preface to this Thesis, following the acceptance of its research proposal and field work in Nepal in early 1988, the study was discontinued for some time when this writer migrated with his family to Australia in late 1988. The necessity to adjust to a new environment in Australia, and to meet requirements of the University of New South Wales (where the scope of the study was also widened), more time was required for completing the Thesis. The lack of funds did not permit to make a second field trip to Nepal.

1.10 Scope and Limitations of the Study

The study of urban problems in Nepal presents methodological complications because of paucity of statistical information. Secondary data in most of the aspects of urban development is either absent or scarcely available, whereas doing the present research mainly on the basis of primary data generated through field investigation would have been prohibitive given the time and resource constraints. However, attempts have been made to limit the scope of the study on the basis of available information, field investigation and other constraining factor.

33 Ever since the 1969 Valley Plan was proposed, there has been a general consensus that land use planning in Kathmandu must be attempted at the Valley level. Thus, the urban development efforts in the Valley must encompass the whole Valley covering most of the three administrative districts of Kathmandu, Lalitpur and Bhaktapur containing three municipalities and numerous rural settlements. In such a setting, this study, which tries to address the land development issues at the Valley level, must be selective in its approach and narrow down the scope of research. The aim of the study is to formulate an implementable land management system to guide future urban expansion in the Kathmandu Valley. The focus is on new urban development rather than redevelopment of the established areas (i.e. urban renewal). This is not to mean that urban development problems in the established areas are not serious. The intention is to narrow down the scope of this study, since one study can not possibly cover all issues and problems of urban development, given the time, manpower and budgetary constraints.

New urban development (i.e. the conversion of urban fringe land from rural to urban uses) is a combined physical, economic, politico-administrative, and social process. The research focuses mainly on the physical process of urban development with significant coverage of economic, politico-administrative and social aspects.

Any complete urban land management package contains a large number of measures and techniques as listed in Chapter Seven. This Thesis covers all the eleven main components of the package, but focuses, particularly, on organizational and institutional arrangements, co-ordinating mechanisms, guided land development, funding adequate provision of infrastructure, and land pooling/readjustment. Other components and techniques are briefly discussed.

Discussion on the responsible organization to undertake the land management functions is attempted in the form of an assessment, because the proposal for creating a 'valley development authority' along the Indian 'urban planning and development authority model' has been under Government's consideration for some time. Thus, the various institutional aspects, such as organizational, legal, manpower and financial resources,

34 are briefly assessed and proposed arrangements to improve the situation are highlighted. The operation of the network provision bodies responsible for the provision of public roads, water supply, electricity supply and drainage, is assessed, and mechanisms and opportunities in the co-ordinated provision of their services in a phased manner are outlined to help achieve planned urban development and adequate land supply. A detailed study on any of these items would be a research topic by itself, and as such, is beyond the scope of the present study.

The government land acquisition for public, community and government purposes and for allocation/deveiopment for private purposes is an important component of the land management package. Although land acquisition and/or development under this category may cover only about five percent of the total urban land, it has significance in providing land for an array of public purposes and for promoting low-income housing and therefore needs attention. This component is covered under land policy instruments in the Valley. Topography plays a dominant role in determining planning strategies for urban expansion in the Valley. The current planning strategies, regulatory measures of land use controls, and co-ordination of government development activities are assessed along with the discussion on the organizational structure of the Kathmandu Valley Town Development Committee and the 1976 Land Use Plan of the Valley.

In order to formulate a framework for implementing innovative land development projects in the Valley, ways of encouraging participation from all interest groups in land development are discussed at some length. Considering time and resources available for the research, other supplementary measures, such as land supply programs, land information system, land values and price publication, and trained and skilled land managers, are briefly covered.

35 1.11 Organization of the Thesis

This Thesis is organized into two parts and eleven chapters. Part One deals with existing situation while Part Two deals with proposed arrangements.

Part One covers Chapters One through Six, inclusive, and discusses existing situation with respect to urban development, land use and land/housing development in the Valley. The emphasis of this Part is to provide background information on planning activities in the Valley, and to show how planning has been working, what are its problems and why measures currently adopted do not work.

Following this introductory Chapter One, Chapter Two provides a review of the relevant literature on urban development problems, trends of urban land policy, and land development systems, and focuses the study. This literature review provides a brief outline and analysis of the three major urban land development systems currently operating in Asian cities, their opportunities and limitations, and suggests ways which may be followed in the case of Kathmandu Valley.

Chapter Three provides a brief profile of the Valley and discusses urban expansion patterns. Both public and private sectors' land development activities are discussed, so as to understand how the land market is operating (in both formal and informal ways) and what implications it has on housing and planning.

Chapters Four and Five provide an overview and assessment of the effectiveness of the present institutional arrangements for planning in the Valley and the currently used land policy and regulatory instruments.

Chapter Six describes the operation of the key network provision bodies and assesses the adequacy of their services and facilities in suburban and urban fringe areas. This Chapter also looks how far these bodies have been able to give direction to urban growth and to provide guidance to both public as well as private sectors for urban expansion and land development activities.

36 Part Two covers Chapters Seven through Eleven, inclusive, and discusses the proposed arrangements to achieve the objectives of an orderly urban development, planned urban land use and an adequate land supply. The proposed land management system (LMS) is described, and obstacles to as well as opportunities for adopting the system in the Valley and its implementation aspects are discussed.

The general findings and conclusions of the study are presented in Chapter Seven, which also provides a brief summary of the existing situation with respect to land development and plan implementation in the Valley. It is argued that opportunities for implementing urban development plans in the Valley through conventional mechanisms are limited and that a new approach to urban development should be adopted. An improved land management system (LMS) aimed at orderly urban expansion, planned urban land use and adequate land supply is suggested. This Chapter briefly describes how the proposed system works, how the various techniques and measures are fitted in the system and how they operate. It also highlights how plan implementation in the Valley can be achieved by modifying the techniques for application and how the LMS can be adopted in the Valley.

The next three chapters of the Thesis describe the proposed arrangements necessary for adoption of the LMS in the Valley. They discuss constraints and opportunities in the adoption of the system and the various techniques and tools, and briefly show how the proposed arrangements fit with recent government initiatives in this regard and the local situation and how they improve opportunities for achieving plan implementation in the Valley.

Chapter Eight deals with co-ordinating mechanisms necessary to implement the proposed LMS, with emphasis on the provision of the key network physical infrastructure for achieving planned urban development and adequate land supply.

Chapter Nine deals with organizational aspects of the Kathmandu Valley Development Authority (KVDA), which has been under Government's consideration for some time. It also deals with other supporting institutional arrangements.

37 Chapter Ten discusses ways of encouraging participation from the main actors involved in land development and suggests a possible framework for implementing the innovative techniques of guided land development and land pooling/readjustment. This is expected to help address some of the main problems facing the Government in urban development, such as shortage of funds for providing infrastructure, weak implementation of plans, and inadequate supply of urban land.

Chapter Eleven, the final chapter of the Thesis, recapitulates matters covered in previous chapters to provide an overall summary, conclusions and recommendations of the study. This is done by reflecting on the three "Priority Issues" and the four "Objectives of the Study", and by highlighting implications of the recent political changes on the implementability of the Thesis's proposals.

The exploration of Pokhara's experience with urban land pooling projects is presented in Appendix A. It describes how the technique was used there and what lessons could be learned from those projects for applying the technique more successfully in the Kathmandu Valley.

Appendix B contains some tables showing data on Valley's land resources. A bibliography of references used in this study appears at the end of this Thesis.

38 2. THE STUDY IN PERSPECTIVE

Although land has always been an important issue in human history throughout the world, it has become a key issue in the present day developing world (Penalosa, 1982:15). Rapid rates of urbanization in developing countries are creating unprecedented pressures to provide basic shelter and urban services to expanding populations which in many cities are causing serious gaps between land needs and availability. Rapidly increasing land costs and the lack of effective means to control urban land use have also completely frustrated the efforts of many governments to manage the growth of their cities (United Nations, 1975: 4-5). The most seriously affected are the poor and the disadvantaged who are compelled to find their habitat in slums and squatter settlements. Lack of financial resources to fund the provision of urban infrastructure and facilities, and the inability of governments to capture some of the "unearned increments" in land values created by urban growth and community actions, have been primarily responsible for the increasing backlog in the provision of urban services resulting in a widening gap between urban population growth and the needed facilities. The solution to many issues related to the improvement of the quality of human settlements depends to a large extent on the land question (Penalosa, 1982:16).

This Chapter provides a review of the relevant literature on urban development problems, trends of urban land policy, and land development systems, and focuses the study. This is done, first, by highlighting the main dimensions of urban land problems in Asian cities and showing the failures and limitations of the urban land market. Second, by discussing the trends of urban land policy; third, by discussing the opportunities and constraints of the more general government responses to the problems of urban land development; and fourth, by arguing that a land management approach should be adopted to address some of the urban development and land problems facing Asian cities.

39 2.1 Urbanization and Urban Development Problems in Asia

Some of the main urban development problems are urban land problems. They have assumed greater dimensions due to the current rapid pace of urbanization in the developing countries. The major land problems facing many Asian cities are urban congestion, conflicting land use, slum and squatter housing settlements, urban sprawl and inadequate infrastructure, and land shortage and high land prices.

2.1.1 Asian Urbanization Pattern

The growth of world urban population has been much higher than the overall rates of population growth due largely to increasing rural to urban migration at nearly 32 per cent of all urban growth. In 1980, as much as 41.1 per cent of the world population was living in cities and towns, and every region of the world will be predominantly urban by the year 2025 (World Bank, 1984:4). While the population in developing countries grows at two to three per cent annually, many city populations grow at rates exceeding six per cent per annum, and slum and squatter settlements in urban areas commonly grow at 12 per cent per annum (United Nations, 1975:11). According to this UN document, the average percentage of urban population in slum and squatter areas is about one third and it is estimated that this portion of urban population will increase significantly by the year 2000.

Urbanization in Asia is relatively low at 30 per cent (in 1984) in terms of proportion of the population residing in urban areas, especially when compared with the Western nations. The range varies from 4 per cent in Bhutan, to 25 per cent in India, to countries and areas which are totally urbanized, such as Hongkong and Singapore (World Bank, 1986:240-241). In the countries with low urbanization levels, the rate of urban growth is roughly double that of the national population growth rate, but in some countries it is growing three times as faster (such as in Afghanistan, Bangladesh and Nepal). The urban growth also tends to concentrate in a few primate urban centers rather than spread amongst system of cities in each country. This is illustrated by Bangkok, Manila, Jakarta, Dhaka, Colombo, Karachi, and Kathmandu.

40 2.1.2 Urban Development Problems in Asian Cities

Nagamine (1986(b):53-55) has outlined some of the major problems plaguing most of the Asian cities under three broad headings of the institutional, financial and socio-economic dimensions of urban problems, as follows:

1. Institutional dimensions: Inadequate land use co-ordination arrangements and lack of inter-agency coordination in the timings of infrastructural investments; failure to control land hoarding, large amount of vacant urban lands, low level of property taxation; clouded land ownership titles and difficulty in introducing modem land registration system; and high development standards borrowed largely from the Western advanced countries.

2. Financial dimensions: Lack of finance for local authorities preventing the undertaking of bulk acquisition of land and providing services to the increasing urban population; and a weak local finance base because of low level of property taxation due mainly to the political pressure.

3. Socio-economic dimensions: Low income level of urban majority preventing many to afford a serviced housing site made costly by excessive standards; a low level of mutual trust and co-operation between the people and the government; lack of skilled professionals in the field of urban development, housing and land management; a low career development opportunity; and failure of training institutes to impart professional training geared towards the problems of Asian realities.

A recent ESCAP report providing a regional overview of land policies in human settlements has noted the accelerated urbanization trend, the insufficiency of necessary urban services, deteriorating housing condition, and the inability of governments to handle the situation due to a number of urban land related problems (UN ESCAP, 1985). The report notes that urbanization in the region as a whole is growing at a much faster

41 rate than the expansion of infrastructure and services to cope with it. Most of this growth is in major cities. Urban land prices are increasing at higher rates, and often investment in land is more lucrative than in other types of business projects. High and rising land prices have made the shelter needs of the urban poor households more difficult to fulfill, and low-income housing has received a rather low priority in most of the countries surveyed. In general, the government programs have not been able to influence the market due mainly to land scarcity, high land prices, difficulties in compulsory acquisition of land, and delays in construction.

2.2 Failures and Limitations of Urban Land Market

Most urban growth takes place by the outward expansion of the city through the conversion of urban-fringe lands from rural to urban uses. Thus, the urban development process involves the installation of network infrastructure, the subdivision of the land into streets, open spaces and building sites, and the building development on these sites. Archer (1984(a):2-3) suggests that although the new urban development in the formal sector is a combined physical, economic, politico-administrative and social process, it is best analyzed as an economic process, i.e., as the supply response to the market demand for new sites and buildings. The conversion process involves a large number of participants, and although it is based on private land-ownership under the land market, the public sector is involved in a substantial way by providing physical and social infrastructure and facilities.

The land market does not function as it should to ensure the efficient and economic urban development process due to its peculiar characteristics (Andrew, 1971:15-21; lloyd, 1970:3-4; Patterson, 1979:18-21; Pyhrr and Cooper, 1982:6-8; Weimer et al., 1972:232-241). Archer (1974:226-227; 1977:68-69; 1984(b):2-3) has traced a number of causes for this market failure, including the factors of external costs and benefits in decision-making, uncertainty for the decision makers, excessive land speculation, landowners inertia, unsound public utility pricing policies, and backlogs in the provision of public utility works. These points are interrelated; but the numerous separate individual decision- makers (due to the fragmentation of landownership in the urban-

42 fringe areas) making separate decisions in a situation of externalities and uncertainty is considered to be the source of the market failure. The problems resulting from their socially incorrect decisions are: excessive land speculation and land with-holding, scattered land and building development, and both idle and lack of infrastructure, leading to shortage of serviced plots in the market and higher land prices.

The speculation in urban land starts with the desire to mop-up the unearned increments in land values, and is supported by a number of other factors, including the short supply of land in comparison to market demand, availability of credit finance for speculative land purchases, inadequate alternative investment opportunities in the productive sectors, the flow of black money, and the fact that governments do nothing to check speculative dealings. The effects of the existence of black money in the land market have not been adequately explored in developing countries, but it is believed to have fuelled speculative activities on urban land, encouraged corruption, and inflated land prices, such as in India (Wadhva, 1983:84-85; Dutta, 1984:57).

However, land speculation is not that bad entirely. Speculation always exists in the land market and a moderate degree of land speculation may be socially desirable: such as to discourage premature and low-intensity land development, to reserve building sites at key locations for future development, to facilitate land assembly for development, and to provide future land buyers with a wider choice of locations (Archer, 1973:370). Land speculation may also increase the shelter affordability of many urban households by allowing them to sell part of their land-holdings at higher prices at a later date for meeting the building construction costs on the remaining portion of the original land parcels. This is a very common approach adopted by many urban households to finance self-help shelter construction. A similar approach, of converting 'use value' of self-help construction into 'exchange value', whereby the low-income households may participate in an inflationary land market and benefit from the rising land values by encouraging into speculative dealings, has indeed been proposed as a variation on the basic sites-and-services model for possible application in Mexico City (Ward, 1981).

43 2.3 Government Responses to Urban Development Problems

The governments in most mixed-economy countries have responded to the limitations and failures of the land market in guiding the urban development process by intervening in the process, mainly by introducing statutory planning control of land use and by undertaking public housing programs for low income urban households. But government activities are not limited to planning regulation and housing programs. They provide the network infrastructural extensions of roads and public utilities, they regulate and provide public transport services, governments own substantial tracts of urban land for government and community purposes, and they often undertake some development projects for private land uses. Government taxes, particularly property taxes, and government regulation of banking and the finance system also influence private decisions on urban land development.

2.4 Trends of Urban Land Policy

Any discussion on urban land management issues can not be made without considering 'land' first. Land is the key issue in any housing scheme, in any city plan and in any development work. With the growth of population and economic development there has been increased competition for land for all purposes, especially so in the urban areas.

Since virtually all societies have recognized the duel nature of land as both a private and a public good (Doebele, 1978: 106-107), the community reserves an equity in land and vests in an individual the right to own and use subject to the requirements for the general welfare of the community. The right bestowed by the community upon the individual for the development of land may be withdrawn or withheld when and if the individual violates the conditions upon which it is vested in him. The power of eminent domain, the power to tax real estate, and the power to restrict and regulate the use of land are an expression of this principle, and it provides the structure upon which the development of land is built (Gallion and Eisner, 1963: 236). Viewed thus it would appear that public intervention in land matters is not entirely a modem concept, because land-use control measures have existed in all societies as a necessary component of

44 spatial management.

2.4.1 Habitat (Vancouver) Recommendations

Recognizing the importance of 'land' and 'land policy' issues in any human settlements policy, the United Nations Conference on Human Settlements (Habitat) held at Vancouver in Canada in 1976 noted in the preamble to its Recommendations on Land Policy that:

"Land, because of its unique nature and the crucial role it plays in human settlements, cannot be treated as an ordinary asset, controlled by individuals and subject to pressures and inefficiencies of the market .... Public control of land use is ... indispensable to its protection as an asset and the achievement of the long-term objectives of human settlements policies_and strategies".

A global consensus was shown through the approval by 131 nations participating in the Habitat of seven land policy "recommendations for national action" (United Nations, 1976: 61- 71). The themes and summary statements of these recommendations were as follows:

"1. Land Resource Management: Land is a scarce resource whose management should be subject to public surveillance or control in the interest of the nation.

2. Control of Land Use Changes: Change in the use of land, especially from agriculture to urban, should be subject to public control and regulation.

3. Recapturing Plus Yalue: The unearned increment resulting from the rise in land values resulting from change in use of land, from public investment or decision or due to general growth of the community must be subject to appropriate recapture by public bodies (the community), unless the situation calls for other additional measures such as new patterns of ownership, the general acquisition of land by public bodies.

4. Public Ownership: Public ownership, transitional or permanent, should be used, wherever appropriate, to secure and control areas of

45 urban expansion and protection; and to implement urban and rural land reform processes, and supply serviced land at price levels which can secure socially acceptable patterns of development.

5. Patterns of Ownership: Past patterns of ownership rights should be transformed to match the changing needs of society and be collectively beneficial.

6. Increase in Usable Land: The supply of usable land should be maintained by all appropriate methods including soil conservation, control of desertification and salination, prevention of pollution, and use of land capability analysis and increased by long-term programs of land reclamation and preservation.

7. Information Needs: Comprehensive information on land capability, characteristics, tenure, use and legislation should be collected and constantly up-dated so that all citizens and levels of government can be guided as to the most beneficial land use allocations and control measures."

The seven recommendations on land are very broad and they can be interpreted to encompass both the issues associated with urbanization and agrarian 'land reform' (Gertner, 1978: 5). In the decade following the Habitat Conference, the world has been more aware of the importance of a good 'habitat' for man, and it has now been made clear by conference reports, country reports and comparative assessment reports of specific countries and international agencies that in most of the countries, the habitat conditions are unsatisfactory. Simultaneously, there has been increased concern to the need for formulating "a proper land policy" as the main instrument for tackling a large variety of habitat problems. The objectives and emphasis, however, has varied among nations, for instance (IFHP, 1981: 7):

to achieve a re-distribution of mainly agricultural land (e.g. Latin America); to assist, or even (partly) substitute traditional urban planning procedure in trying to cope with urban renewal problems (e.g. Europe) and problems of urban sprawl (e.g. North America); to be an important instrument of general socio-economic policy, for instance by making possible the upgrading of "bidonvilles", "squatter settlements", etc. (e.g.

46 Africa and Asia).

2.4.2 Goals of Urban Land Policy

The land question is a political question, since any form of active land policy will mean an interference in the way the land market is functioning in a country (IFHP, 1981: 9). Depending on political ideology, the instruments of urban land policy have ranged from regulatory controls over use of privately owned land to complete public ownership and control over land. In between these two extremes almost all combinations of private versus public 'profiles' can be identified. Whatever the approach, the public sector has the most important role to play in the administration of urban land. Viewed thus, it would appear that the main objectives of urban land policy are to ensure the best use of land, to make land available for private, public, and government purposes, to ensure a more equitable distribution of property, and to appropriate the benefits of betterment for the public at large.

At the risk of over simplification one could describe the aim of public land policy as to ensure the supply of serviced land in adequate quantity, at the right locations, at the right time, and at the right price (Planning Commission, 1983:142; UN ESCAP, 1985:2). These four considerations are obviously interrelated. For example, the price of land is greatly determined by its location. The price, in tum determines the intensity of building development that then takes place. Much concern is expressed to restrain the price rise of urban land in order to make it accessible for lower income groups (Walters, 1978: 67-72). But if the price of land is brought down too low by public control measures, extensive rather than intensive development is likely to take place and hence the demand for land is widened. Its logical consequence will be to then force the public authority to provide larger quantities of land with all the attendant costs. Urban land price control should, therefore, be aimed at inducing the 'right' price to prevail in the market so that they can lead to land supply in adequate quantity at the right locations. Similarly, urban land use control should, and can, influence the timing of development as well as the location of land development.

47 As the process of formulating and selecting the goals of an urban land policy is a political one, and as the differences in political, social, economic, administrative, historic, and legislative background among countries warrant different priorities, it would be impractical for a country to simply 'import' all or part of a land policy which have been successful in another country. But it is unwise not to learn lessons from the experiences of other countries so as to minimize the risk of making blunders, and to assess the relative strengths and weaknesses of the major policy instruments.

It is possible to use a "relevance tree" to describe three different urban land policy goals in a hierarchical way such that the lower level goals follow from and form a part of the higher level ones (IFHP, 1981: 13). In such a system, a goal can always be conceived as an "instrument" when seen from above (i.e. from the point of view of a higher level goal), and a "goal" when seen from below, however, the real instruments always form the lowest level in the hierarchy. With one overall objective "to minimize all problems related to land in the context of urban development" as a top level goal, a simplified form of a relevance tree has three first level goals and sixteen second level goals, as illustrated in Figure 2.1.

2.4.3 Instruments of Urban Land Policy

Various instruments are available to reach different goals as outlined in Figure 2.1. Like the goals, the instruments are also closely connected to the political, economic and other specific circumstances of a country. They can be grouped into various ways such as positive or negative instruments, and instruments based on taxation criteria (World Bank, 1972: 86-100; Courtney, 1978: 129). However, the following five major groupings can also be formed (IFHP, 1981: 19-21, 39-65):

Planning instruments, Taxation instruments, Market instruments, Financial support instruments, and Administrative instruments.

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49 The planning instruments are closely connected with actual land-use planning and with the legislation adopted to further this. Actions taken on the basis of planning decisions, such as building prohibition and land use restrictions are examples of planning instruments.

The use of taxation instruments as a means of implementing urban land policy varies considerably from country to country, especially because of differences in legislation and tradition. Taxation instruments include various taxes on land, land use and on the transfer of land ownership. They also include special charges or duties based upon land ownership or tenure. Action taken through the imposition of charges, such as taxes on real estate, taxes on building rights, land transfer duties and taxes, development charges and collection of betterment charges, are examples of taxation instruments.

Market instruments comprise those measures where the normal market mechanism plays a central role, especially in determining transfer prices. Actions taken in compensating the owners with usual market value following the rules of the free market, such as land acquisition on the open market, exchange of land, and advance servicing of development land are examples of market instruments.

Financial support instruments are those where subsidies or other financial support is given by the government in order to promote the acquisition of land and/or the leasing of land to developers. Typical examples are: land acquisition loans or subsidies to local authorities, land price conditions for housing loans, and compensation payment by state or municipal bonds.

Administrative instruments are related to the local authority's general tasks in land development and land use. This group includes also those instruments which are based upon special legislation and which need the active participation of local authorities. Some of the examples of administrative instruments are the nationalization of urban land, dedication of streets and other public areas to local authority without compensation, regulation of land prices, expropriation, pre-emption right, development control measures like zoning regulations, subdivision regulations and building

50 regulations, land banks, land pooling, and leasing of land. Maintaining a land register, the proper valuation of urban land by competent staff, and adopting effective administrative measures and programs of local authorities related to land policy, also come under administrative instruments.

2.4.4 Main Issues in Urban Land Policy

The management of urban land as a natural resources is a crucial issue but many governments have not yet accorded land policy issues the necessary attention in the formulation of their human settlements policies and programs (Naiker, 1983:11). Land policies are usually accorded low priority at all levels of government. The prevalence of traffic congestion, poor housing conditions, land speculation and higher urban land prices is indicative of the low priority attached to urban land issues. However, simply recognizing these issues is not enough; corrective action needs to be taken urgently because the problems get bigger every day (Penalosa, 1982: 21).

As indicated earlier, the major objectives of a sound land policy, particularly for a developing country, are to ensure a regular supply of urban land, its efficient use and equitable sharing of land values created by urban growth. These objectives involve a number of policy issues which are interrelated and need to be viewed in the context of the limited resources of developing countries. It has also often been felt that the experts have failed to offer the politicians an efficient and workable solutions, and that the politicians have lacked the political will to act upon whatever imperfect solutions were recommended to tackle urban land problems (Penalosa, 1982: 20). There is now a growing realization that the real issues in land policy management are institutional rather than technical (Naiker, 1983:9).

However, urban land issues are often not separable in principle or in practice from other urban development issues -particularly housing, transportation and public finance. In fact, the housing problem has been considered as the land problem, especially in developing countries, where the large majority of houses are self-built (Penalosa, 1982:18). The necessity to consider a number of other urban development issues in the

51 overall political, cultural, administrative, and socio-economic context of a given country at both the national and the local levels, makes urban land issues and problems very complex to deal with.

2.4.5 Concluding Remarks

Having stated the ambitious and idealistic land policy goals as outlined in Figure 2.1, it has to be stated again that the scope of this study is limited to two of the major priority objectives; these being, planned urban development and adequate urban land supply. The relevant policies for us to consider would focus around improving the operations in both the private and the public sector involvement in the land development process. This study recognizes that most urban land is privately owned, privately developed and privately used, so that it should aim to improve the operation in the private sector. Since the government is both a regulator and a facilitator in the land development process, this study also emphasis the need to improve the operation of the government sector by co-ordinating its land development activities. This approach is also reflected in the recent 'Vienna Recommendations on Shelter and Urban Development' (NAR, 1987:96-103).

There is a wide range of possibilities and measures for government involvement in the urban land development process. However, all such measures are not effective, and only a few of them have been successful. It has been fairly well observed that the regulatory measures of urban development have not worked. So have been the taxation measures. The 1985 ESCAP review paper has emphasized these points. There is no obvious example in South and South-East Asia where the taxation measures have provided a sound solution to a number of urban land and development problems. These measures have, at best, been positively assessed in some respects from only the financial point of view. Looking from an academic angle, the various fronts for government involvement and the measures it could adopt to influence the urban land development process, may appear to be quite impressive, but the approach taken in this study is only a selective government involvement in the process. The study would concentrate on: (i) government provision of the key network infrastructure, (ii) government exercise of land

52 use controls and regulations, and (iii) government initiatives in actual land development activities, which is not based on government land acquisition and development approach, but is based on the use of LP/R projects on a selective basis, especially to fill in the gaps left by the private sector.

2.5 Alternative Land Development Systems

The urban land development process in the formal sector operating in most mixed-economy countries of Asia can be broadly classified into three systems, on the basis of private and public sector roles in land development (Darin-Drabkin, 1977(b): 186- 187; Devas, 1983: 210-214; Archer, 1987: 1-4). These three systems are (i) private land development under the statutory planning system; (ii) large-scale government land acquisition and development; and (iii) private land ownership and government land development. A general review of the opportunities and limitations provided by these three alternative systems follows, together with a brief note on the informal land development process.

2.5.1 Private Development Under Statutory Planning System • This is the usual system of urban land development in most Asian cities. In this system, the government provides the major network infrastructure items of public roads, water supply, drainage and sewerage, and electricity supply while land subdivision and building development is mostly undertaken by the private sector subject to government land use controls.

2.5.1.1 The Concept: Under the statutory planning control system, an agency (within the city government or a new body) is established to prepare an urban development plan (land use and network plan) for the projected urban growth over the next two decades or so. The objective of the plan is usually to achieve efficiency and amenity in the future pattern of urban land uses. The standard land use controls have been zoning, subdivision regulations and building regulations. They are applied to guide urban development to implement the planned pattern of land use. However, it is clear that

53 regulatory measures for plan implementation in urban areas are insufficient unless they are complemented by organizational and administrative changes in public authorities (Misra, 1986(a):29).

Lack of social efficiency in private land-use decision making under the market mechanism is one of the primary reasons for public planning of land use. The general expectation is that with government intervention, most of the social inefficiencies would be avoided through reduction of certain negative external effects and provision of an optimal level of public goods and services (Ervin et al., 1977: 7-8). Thus, regulations for the use of land are administered in the public interest, at the same time protecting the interests of each individual who invests in the urban community. Under the police power, the state regulates the right of use on behalf of the public welfare (Gallion and Eisner, 1963: 170). But, even assuming that public intervention on land brought about a high level of efficiency, there is no assurance that such action would have a desirable distribution of impacts, i.e. benefits and costs. It is not enough to consider the efficiency criteria only, "the question of who receives the benefits and who incurs the costs is also vitally important" (Ervin et al., 1977: 5-30).

2.5.1.2 Major Limitations: Compliance with the regulatory provisions is handicapped by a cumbersome administrative procedure, favoritism and a corrupted bureaucracy (Bijlani and Balchandran, 1978: 27-34; Rao, 1979: 69-70; Malhotra, 1981: 69- 72; Gupta, 1984: 45-46; Acharya, 1985: 105-130). Nor does the statutory planning control system solve the problems of land speculation and scattered land and building development, although it does provide a means of avoiding some of the problems caused by the limitations of the land market. It also creates new problems such as excessive minimum regulatory standards, inequity between landowners, misuse of planning control powers, planning blight, and increased bureaucratic procedures and red-tapism. It also gives local planning authorities a monopoly control power over the supply of land for urban development, but without requiring them to ensure an adequate land supply to users at reasonable price (Archer, 1974:229).

54 Weak implementation of the regulatory measures results in unplanned growth of a city, umegulated structures, urban sprawl, and incompatible land uses, while strong implementation of regulatory measures forces the poor to find their habitat in slum and squatter settlements. The dilemma with regard to implementation of the regulatory measures to realize the objectives of a development plan are thus quite apparent. The development plan and the measures chosen to realize it are supposed to prevent both of these unpleasant situations. Despite these limitations and failure of the planning and regulatory measures, some degree of government control is necessary over the use of land in order to create some order to make cities workable (Courtney, 1978:131).

As the development of a better guidance system is essential, it is unlikely that zoning will be entirely abandoned but rather be incorporated in some modified form into such a system. The ESCAP report (UN ESCAP, 1985: 57) noted the difficulty in enforcing the planning and zoning laws because of the prevalence of mixed land uses in Asian cities, and the unsuitability of the Western model of land-use controls in the region, and then concluded that the structural plan approach could be appropriate to use in place of the rigid conventional master plan approach.

The key network infrastructural agencies have not been able to provide the necessary urban services to meet the needs of a growing urban population. Lack of resources on one hand and inter-agency conflicts and unco-ordinated efforts on the other have led to the unsynchronized provision of services in both their direction and timing. This has prevented the public sector from giving direction and structure to urban growth. Furthermore, the inability (or unwillingness) of governments to raise and allocate sufficient funds for the provision of needed infrastructure has caused serious inadequacy and backlog in urbanizing areas. Interference from political circles and the political and administrative corruption in most developing countries have also contributed to the weak or non-implementation of development plans (Lee, 1986).

2.5.1.3 Concluding Remarks: In fact, this system can not be expected to solve some of the main urban land problems, because they are physical manifestations of larger social problems. Arguing that the desired pattern of urban development, social welfare,

55 and equity can not be achieved under the existing market mechanism and statutory planning provisions in mixed-economy countries (Archer, 1977: 69-72), Archer (1986:157) suggests the adoption of land pooling/readjustment programs in order to reduce and manage the main physical problems.

With these limitations the following three approaches have been suggested for future directions: (i) implement the metropolitan development program through staged re-zoning of urban-fringe land for urban uses according to the development plan together with staged provision of key network infrastructure through sectoral co ordinated efforts; (ii) streamline administrative procedures, revise standards and codes to make them more realistic, and use concepts such as mixed land use zoning and flexible zoning; and (iii) guide rather than control private land development through measures such as regulated private sub-divisions, large scale development, guided land development and land pooling/readjustment projects.

2.5.2 The Government Land Ownership and Development System

In this system, the government acquires and develops land on a large-scale and provides all the network infrastructure. All or almost all the land subdivision work is undertaken by the government to provide sites for both private and government building development, such as in Delhi and Singapore. This can be thought of as one of the strongest systems for managing metropolitan expansion for a planned pattern of land use. As the experience of Singapore is unique in many respects because of its peculiarities and hence its success (Lim, 1983; Min, 1987), it has very little relevance to the land development process in most of the other Asian cities. Therefore, the lessons from the Delhi experience will be considered.

2.5.2.1 Potential of the Approach: It is believed that the effectiveness of government intervention in the urban land market depends a great deal on the extent to which land is publicly owned (Linn, 1979:240). If large tracts of public land are available, the government may act directly for various purposes like making land available to various housing programs, upgrading the slum and squatter settlements, and providing security

56 of tenure to squatters. But as most of the urban land in Asian cities is in private ownership, public intervention poses serious problems due to legal and financial constraints. Purchasing land at market prices would be costly. This can not be done to make land available to the urban poor as it involves a huge subsidy, so that compulsory land acquisition is sometimes proposed to governments. However, in mixed-economy countries the compulsory acquisition of land is considered one of government's most extreme powers, to be used only for specific purposes. Consequently, all legal measures for land acquisition recognize a landowner's right to property while applying the principle of eminent domain.

One of the boldest experiments in large-scale land acquisition was made in the development of Delhi as the national capital of India. Since 1961, the Delhi Development Authority (DDA) has acquired substantial tracts of land and made extensive use of them. The principle of this approach has been that all the land on the yet-undeveloped periphery of a growing city should be notified at an early stage and acquired by a public authority, at the prevailing agricultural price. This would prevent undesirable speculation and land dealings. A number of additional benefits are also attached to this approach. For example, it allows all increases in land values to be recovered for the public benefit; it can facilitate orderly planning and development of the city since the public authority has full (ownership) control over the urban-fringe land; full control can be exercised for equitable land distribution so that the aim of equitable wealth distribution can be advanced; and the development of the land is largely left to the public sector.

2.5.2.2 l&ssons From the Delhi Experience: The "Scheme for Large-Scale Acquisition, Development and Disposal of Land in Delhi" was announced in 1961 to implement the Master Plan (subsequently sanctioned in 1962). Under the Scheme, all the land required for urban development was to be compulsorily acquired and the metropolis was to be developed under a public land and leasehold system. It envisaged co-ordinated growth through an apex planning, land development and controlling authority together with a revolving fund, all of which implied the use of land as a resource for the common good. The Scheme aimed at preventing speculation and rapid

57 land value increases through the socialization of urban land and allowing an equitable distribution of land to all users. In addition, a sufficient quantity of plots were to be allotted to low-income groups which typically forms nearly two-thirds of the population in Indian cities.

The resultant experience of Delhi has been analyzed by many individuals and agencies (Howland, 1975; Arora, 1982; Shafi and Dutta, 1982; Jha and Datta, 1983; Planning Commission, 1983 (a); Dutta, 1984; Jha, 1984; UN ESCAP, 1985; Acharya, 1987(a)). It has been commonly observed that most of the stated objectives of land policy for Delhi could not be achieved. Land could not be acquired, developed and disposed of at the necessary speed, in sufficient quantity, in the right locations and at the right time. As a consequence, some of the more prominent visible effects were soaring land value patterns, skewed distribution of land ownership in favor of high income groups with very little land being allotted to low and middle income groups; the formation of a large number of unauthorized settlements; and pushing the urban poor further away in the periphery areas. Large benefits accrued to the high income groups and the elites, and the DDA's financial operation was highly successful by increasing its revolving fund many times.

There is now growing resistance on the part of farmers in Delhi to the compulsory acquisition of land, particularly for urban development, due to the meager compensation they receive and the windfall profits made by the public agencies (UN ESCAP, 1985: 18). In this context, it is often questioned how far the acquisition of land in the urban fringe at low agricultural-use prices to be used for high-income housing, commercial development or beautification of the city, can be justified under the heading of public purposes (Planning Commission, 1983 (a):xxiv). By depriving the peripheral landowners of their rightful prices and allowing most of the benefits to accrue to the elites and the public authorities, this large-scale land acquisition approach has given rise to a political debate, and it also contradicts the objective of equity given in the policy statements. An appraisal of the Delhi Case has shown through the formulation of a hypothetical model that under the present set of land policy objectives, the 'revolving fund technique' just cannot work, and it is not possible to distribute land according to the composition of

58 various income groups that is affordable to all those groups (Jha, 1984:62-78).

2.5.2.3 l&ssons from European Experiences: In mixed-economy countries, the possible success of municipal ownership of urban land through land banking programs, has been demonstrated by some European countries, notably the Netherlands and Sweden. However, the limited success with this approach in Britain and the United States shows that an approach highly successful at one place may not be quite so effective at another place. A number of economic, social, cultural, traditional, topographical, developmental, and political considerations influence the adoption and the effectiveness of individual policy instruments. Such special features which made effective land banking programs possible in the Netherlands have been analyzed by Needham (1985), and that of Sweden by Duncan (1985). The lesson from these experiences is that land policies must be formulated to support economic and social development programs.

2.5.2.4 Concluding Remarks: The ESCAP (1985) review paper notes that the application of this large scale acquisition approach was limited to Delhi and Singapore, because of a number of hurdles in acquiring land, mainly the lack of financial resources, frequent litigation, and procedural delays. The experience of Delhi in failing to moderate land prices and providing adequate land and shelter for low-income housing casts serious doubts about the merit of this approach in the South Asian situation where general income levels are low and people are poor, where the salaries of government employees are low, and where public agencies often have a monopolistic attitude and create an artificial shortage. The lands in public ownership have often been found to be inefficiently used (and therefore wasted), and there are a number of management problems.

Given the limitations of the region's bureaucracies, it is doubtful whether the substitution of the market mechanism by a government monopoly allocative process would result in a more equitable distribution of land use and benefits. In Indonesia, for example, although reserving land for future use by way of public acquisition is not a common practice, urban development agencies have found that land prices tend to rise rapidly in

59 areas where they start purchasing and developing land (DHV, 1985(b):III 14). Therefore, the large-scale public acquisition and development of land approach was not considered to be a viable method in Indonesia, and guided land development has been advocated for use in Jakarta (Devas, 1983), while the Medan Urban land Management Study recommends the wider use of guided land development along with land readjustment schemes for Medan (DHV, 1985(b)).

Despite these problems, the public ownership of land has a number of advantages as already indicated. Therefore, instead of a large-scale public ownership and development of land, an alternative approach of selective acquisition and development of land may be more feasible for many Asian cities.

2.5.3 Private Land Ownership and Government Land Development System

In this system, the government provides all the major network infrastructure while most of the subdivision of private land is undertaken by the government through use of the land pooling/readjustment (LP/R) technique for creating sites for private building development. Examples of Asian cities where this system is predominantly used are Nagoya in Japan, Seoul in South Korea, and Kaoshiung in Taiwan.

A brief introduction to the LP/R technique was provided earlier in section 1.6.2. The concept of LP/R is very simple. An urban-fringe area which is ripe for development is selected and a broad layout of the entire area is prepared as if all the lands were under one ownership. This layout includes the pattern of streets, parks, schools and other public uses. Remaining area is allocated to and subdivided into building plots. The total area used for public purpose as well as cost of services to be provided are calculated, and the total probable value of all serviced plots if put in market is estimated. Comparing these figures the percentage of plots that would fetch enough money to recoup the cost of infrastructure is calculated. This is called the "cost equivalent" area, and it is the proportion of serviced land to be contributed by the private owners over and above the land for public purposes and is sold for cost recovery. Thus the public authority becomes able to create new urbanization without

60 any net cost. The private owners get less land than their original holdings but these are serviced plots, and therefore, fetch more value than the original unserviced plots. The public authority plays the role of developer.

LP/R also provides a means of achieving the timely subdivision of land. Therefore, it can be seen that, if a number of LP/R projects are mounted in order to fill in the gaps between the private development projects and if these LP/R projects are carefully prepared and effectively implemented, then this system can be instrumental in implementing the city development plan proposals, resulting in a planned pattern of urban land use, and also in ensuring a regular supply of serviced land in the market. However, many implementing agencies have not adequately considered the need to ensure an adequate and regular supply of land, so that this system needs to be improved for its wider application to many Asian cities. The major strengths and weaknesses, and transferability of this technique is assessed in greater detail under Section 2.8 below.

2.5.4 Informal Land Development

Besides these three land development systems in the formal sector, many Asian cities also have a considerable amount of informal land development activity, mainly by the development of slum and squatter housing settlements. Paul Baross (1987: 9-14) has outlined the two distinct development processes of the formal and informal sector land development systems. The formal development process, identified as the PSBO model, follows the sequence of planning, servicing, building and occupancy, whereas the informal land development process, identified as the OBSP model, usually follows the sequence of occupancy, building, servicing and planning.

The PSBO model assumes that urban growth and land use is planned in advance; land in urbanization promotion areas are converted from non-urban to urban uses through the provision of necessary infrastructure and services; development controls measures are applied to regulate the building construction on serviced sites; and the new buildings are occupied. In most cases, however, the occupation of houses begins before the completion of construction activity. In the informal OBSP model, community

61 development usually begins with the occupation of land by low-income families who build houses incrementally; later, they attempt to create political pressure for municipal services, and these services are installed gradually; and finally, the need to legalize these communities and incorporate them into the main urban fabric gets intensified resulting in eventual planning tasks. However, the informal land development process involves "sacrifice, conflicts, social costs and higher long-term money costs" (Archer, 1987:4).

A third type of land development process can also be identified in situations where subdivision regulations are absent or poorly enforced so that private subdivisions are usually not regulated or required to install the necessary infrastructure before the sites are used for building development activities. This semi-formal urban land development process may be termed as the PBOS model which follows the sequence of planning, building, occupancy and servicing. In this process, private land (for example, land zoned for residential or mixed residential uses) is subdivided into building sites by the landowner, often with the help of brokers. The subdivision lay-out usually makes provision for a network of narrow roads giving access to individual plots, but open spaces and sites for community facilities and services are mostly absent. The roads are not metalled, nor are drainage facilities provided. The prospective owners/occupiers buy these sites, and build the houses gradually as their financial position allows. Finally, with the creation of pressure or demand on municipal services, these infrastructure services are provided over time.

2.6 Land Management Approach to Urban Development

Having outlined the major urban land development systems operating in Asian cities, it is now possible to briefly assess them together to highlight the opportunities and constraints in their use so as to find ways for formulating an improved system of land development for future application.

62 2.6.1 Limitations of Major Land Development Systems

First, it has to be recognized that most urban land in Asian cities is privately owned and privately developed, and any system which tends to heavily interfere with this established practice has to be viewed with great caution. Despite many limitations and failure of the urban land market, it has a number of positive points in guiding land development process through price signals. Charles Haar (1982) goes to the extent of suggesting that if there were no private land markets, we would have to invent them in order to get the benefit of the land-resource-allocation information that the action of the market provides. Therefore, private land development under statutory planning regulation is going to be the dominant form of urban land development system, although it was amply demonstrated earlier (refer, 2.5.1) that the system needs to be modified significantly to minimize its negative effects through the adoption of more positive plan implementation tools and realistic regulations and approaches.

The failure of the DDA to achieve some of the key objectives of the Delhi Master Plan, and the limitations and constraints inherent in government land acquisition and development on a large scale suggest that this system is not realistic and probably not desirable for most other Asian cities. The financial, administrative and political considerations, as well as the dispute and litigation over compensation amount and the management problems, make this system less attractive. So far, this system has been largely confined to national or state capital cities, and its application to other cities may not be feasible. But the alternative possibility of land banking on a limited scale and selective basis has merits (refer, 2.9.1).

Despite many positive points associated with the LP/R technique it has some important limitations, and its inability to respond quickly to market demand (due to a relatively prolonged production period) limits its large-scale adoption. Further, a virtual monopoly of government in the land development system, and its proven mismanagement of publicly held land (UNCHS, 1985) suggest that it may not be realistic to propose the general use of government LP/R projects to other Asian cities as is practiced in Nagoya, Seoul and Kaoshiung. A greater utilization of the LP/R

63 technique in combination with other land development methods is preferable. This writer has taken this approach in this study, and its justification will follow shortly.

The discussion presented above suggests that land use planners have a better chance of succeeding to improve the urban environment by co-ordinating and improving decision-making in both private and public sectors. However, defining the relative roles of the private and public sectors is one of the basic issues in mixed-economy countries. Therefore, proposals to restrict private property rights and to regulate the market so that over-all control and decision-making functions will be shifted from private to public sector, should be received with great caution. Such proposals may best be evaluated by making a direct comparison between the performance of both groups. It is not sufficient to demonstrate the shortcomings of the private sector, it has to be shown that the government can and is likely to do it better (Archer, 1984(a):20).

2.6.2 Public-Private Co-operation in Land Development

With the demonstrated limitations associated with the three major land development systems, particularly with the almost wholly private or wholly government land ownership and development systems, there may be possibilities to make real improvements by bringing the two opposite parties more closer towards the center. Thus, developing a strong public-private land development system should be feasible by combining the major strengths of both systems, and at the same time, by eliminating their major negative points. The possibility of this public-private co-operation in urban land development is currently receiving wider recognition, and many authors have advocated its use (Hodges, 1977; Haar, 1982:37-38; Archer; 1987:5). A UN report notes that public/private co-operation in land development schemes increases the efficiency and reduces the risk in implementing them (UNCHS, 1984(c):37). Because of bureaucratic constraints or lack of managerial capabilities, public authorities may not be in a strong position to develop land efficiently. In such cases, the land development process can be accelerated efficiently through the co-operation of the private sector. This may not only increase the confidence of government in land development, but also increase the supply of land in the market, which will have positive impacts in

64 moderating land prices. In such a situation, developed land can be made available to low-income groups through the application of cross-subsidies, if the schemes are operated in sufficiently large-scale.

This approach of public and private co-operation in land development is geared to developing land in locations the government thinks appropriate and desirable. At the same time, government formulates devices to recoup some of land value gains to finance infrastructure or other community welfare schemes. In the context of public-private planning partnership, Hodges (1977) argues that accepting broader responsibilities by each partner in the planning/development process can result in good quality land development. He suggests that both sides can benefit by developing procedures which reflect entrepreneurship by community and public consciousness by the developer. The Indian Planning Commission's Task Force on Planning of Urban Development recommended that instead of concentrating on regulating what may and may not be done, the authorities should concentrate instead on directing an orderly urban growth through greater community involvement and the exercise of private participation on urban development (Planning Commission, 1983 (a): 143-150).

This public-private joint venture in urban land development can take a number of innovative forms, such as land pooling/readjustment, plot reconstitution, regulated private subdivision, guided land development, planning agreements and conditional rezoning (negotiated development permit), planned unit development and transfer of development rights. The last three techniques are rather sophisticated, and experience with their use, especially in Europe and North America, has met with both successes and problems {Archer, 1977; Costonis, 1977; Mandelker, 1977; Schnidman, 1977; Patterson, 1979; Koegh, 1985; Loughlin, 1985). Regulated private subdivision can be viewed as a variant of subdivision regulations, and there are problems of finance, equity and co ordination of individual subdivision projects (Patterson, 1979:110). The plot reconstitution technique, as applied in some Western states of India, can best be described as a hybrid between land readjustment and betterment tax, and it is often criticized for long procedural delays and problems related to cost recovery (Acharya, 1987(b)). These techniques, therefore, are not discussed here because of their limited

65 relevance to the present study. As for the remaining two techniques, LP!R and GLD, they were introduced earlier in Section 1.6.2, but their potentials and constraints will be discussed further in the following sections. However these two techniques should form a part of an overall land management package rather than be used separately.

2.6.3 The Land Management Approach

Land management is concerned with the structuring of physical development patterns and the provision of land to accommodate urban development. Effective land management is essential for making an optimal use of scarce land resources and for securing an adequate level of urban infrastructure and urban services at reasonable cost. Its general objective in metropolitan expansion is to ensure the timely availability of land for urban development at affordable cost with a view to achieving an orderly urban expansion, an adequate land supply, and a planned pattern of urban land uses.

Whereas these objectives of urban land development were met in most new town/city development (e.g. British new towns) or urban expansion (e.g. Delhi) mainly by unified control of land development through bringing a large land area in a single ownership, this approach is not possible in most cities of developing countries where the urban-fringe lands are usually in numerous private landholdings. A land management approach can be adopted to improve the land development process in this situation with a view to improve and guide the operations of the various participants rather than attempt the wholesale government takeover of their functions. This approach also recognizes the necessity to shift from negative regulatory control measures to more positive measures to influence and guide their activities towards implementing the urban development plan. Some of the components of land management will be discussed at length while others will be only briefly covered.

2.7 Guided Land Development

In this approach, the urban-fringe land designated for urban development is provided with the network infrastructure mains (in advance of land subdivision) by the local

66 authority, the cost of which is recovered in the form of direct charge or a betterment levy on the benefitting landowners. Land owners are at liberty to develop, sell or subdivide their land. The cost of services can be kept low if a large area is covered and lower initial standards are adopted, so as to bring developed land within the affordability of low-income groups. Since the land is not actually acquired by government, a large area coverage under such schemes is possible even with limited public resources. Brazil has some experience with the use of this technique (Rivikin, 1983:187-188). Recently this method is receiving some positive recognition in Indonesia as this approach has been advocated for developing about 26,000 hectares of land in the outskirts of Jakarta (Devas, 1983:216-217). A special betterment tax, known as 'Pajak Khusus' was proposed to recoup the costs of infrastructure from landowners in proportion to the benefits they received. It has also been proposed to use GLD for structuring and guiding urban development in the Medan Metropolitan Area (DHV, 1985(a),(b)).

2.7.1 Advantages of the GLD

It would appear that the GLD technique can be used to induce urban development into selected areas that have been identified as preferable within the long range urban plan. It can also be used to physically structure urban growth by the construction in advance of private urban development of the principal elements, particularly the arterial and distributor roads. This method gives planning and development authorities a means of guiding the timing and direction of urban growth, so that a progressive and phased urban development pattern can be followed to implement the major proposals of the urban development plan. A phased program can be formulated for the provision of infrastructure and urban services in the identified and selected development corridors, which would allow an optimum utilization of manpower, finance and capital resources. By formulating mechanisms to encourage private development in such corridors according to target time periods and discouraging development out of sequence as well as outside such corridors, effective control can be exercised for achieving progressive and orderly urban expansion.

67 Public roadways have been recognized as a key element in opening-up peripheral land for development. Echenique (1982) goes to the extreme of suggesting a theoretical possibility that public investment in roads not only increases the supply of development land in the market, it has also a multiplier effect in generating social benefits many times more than the investment made. Large tracts of land can be made ready for subdivision and development by the installation of key network infrastructure. By increasing the urban land supply, by requiring private developers to include a proportion of low-cost sites and housing to cater to the needs of lower income households (as in Malaysia), and by initiating government housing projects especially to benefit the low income groups, there is the potentiality to achieve the goal of more equitable urban development.

Since the guided land development technique is accompanied with a mechanism of recouping costs of infrastructure through some form of betterment tax, there is the possibility to recirculate the funds to progressively service large tracts of land. This method, therefore, allows the authorities to finance infrastructural provision by tapping unearned increment in land value from beneficiary landowners.

2.7.2 Constraints and Limitations

Despite these potential benefits of this approach, there are a number of constraints and limitations to its successful application, particularly in a poor developing country like Nepal. This approach presupposes the existence of a long range plan of urban growth and development, and the political commitment to carry it through. Often such plans are not available or are not accepted by all the concerned government development agencies. Political interference and pressures from private or bureaucratic vested interests often distorts the direction and timing of growth to suit their preferences. There is generally a pronounced lack of inter-agency co-ordination in the provision of the key network infrastructure since these agencies have different statutes under which they are formed, so that their organizational hierarchy, priorities and funding pattern are different.

68 Although Taiwan's land value increment tax, the valorization charge of Colombia, and South Korea's taxes on speculative gains in land values have been positively assessed (Shoup, 1983), the methods of forecasting the effects of infrastructure provision and changes of use on individual properties is complex and subject to various interpretations. The British and American experience shows the difficulty of raising revenue from betterment levies (Prest, 1982:391). Studies have shown that there are significant problems of determining the area benefitted by the public expenditure, determining the total betterment to be recovered, and sharing the levy among the benefitted properties (Shoup, 1983: 141-142). Shoup's suggestion to use the deferred special assessment charges to deal with the cash-flow problems of landowners (Shoup, 1983:144-146), does not recognize the public sector's need for funds in developing countries and its limited administrative capabilities. For example, the determination and collection of betterment charges in plot reconstitution schemes in India has caused much litigation and court cases that delay both the formulation and the implementation of schemes (Acharya, 1987(b)). There are also possibilities that the ultimate consumers of land, i.e. new owners or occupiers, may be indirectly paying the betterment charges to public authorities. There also remains one theoretical hurdle to the justification of levying betterment charges on properties benefitted by public works, which is that compensation should be paid to those whose property values suffer from public works (Prest, 1982:390). In developing countries, there are additional limitations to the possible utilization of betterment tax, these being the shortage of skilled manpower, institutional constraints, initial burden on limited public sector financial resources, political interference, and corruption. The 1985 ESCAP report noted that the experience with betterment levies in the region was not promising, and it recommended the use of development charges which would be much simpler to administer as an alternative to finance the infrastructural investments (UN ESCAP, 1985: 58).

2.7 .3 Concluding Remarks

This approach has substantial benefits but in the context of poor developing countries its major limitations include, a huge initial public sector outlay to finance infrastructural works in a situation of scarce public funds, and problems of calculating the extent of

69 betterment and its collection from the benefitting landowners. However, recognizing the potential of this technique, some of its limitations and negative effects can be reduced by combining it with other techniques, such as land pooling/readjustment and excess condemnation. The financial hurdles can be overcome through the provision of a loan fund obtained from the central government or financial institutions, which can be promptly paid back when the revenues are received. The problem of inter-agency co ordination is a serious one that requires a strong political will at the highest level of the government to implement. Effective co-ordination in the formulation of medium term investment plans may be achieved through the National Planning Board and Finance Ministry. The 'Capital Investment Folio' mechanism applied in Metro Manila can also provide an alternative method (United Nations,1986:22-23).

2.8 Land Pooling!Rea

Given the financial limitations of most governments in Asian cities mentioned earlier (refer, 2.1.2), more specifically the shortage of finance for infrastructural works, the potential of the LP/R technique (refer, 2.8.1) for ensuring orderly urban expansion, for increasing urban land supply in the market, and for meeting most of the costs of new urban growth, can not be over-emphasized. However, the wholesale transplantation of LP/R to the developing countries of Asia is not only unrealistic but would also be disastrous without giving due considerations to the limitations of the technique itself, and the socio-economic and political factors which greatly vary among Asian nations.

Besides the Nepalese experience in Pokhara (refer, Appendix A), there have been attempts to apply this technique in India and Bangladesh. Recently, Kerala, a small southern Indian state, has experimented with the plot reconstitution technique in a scheme in Trichur. The Trichur experience is unique in that it incorporates significant improvement on the land readjustment method. Formulated for complete cost-recovery, the Kannankulangara Detailed Town Planning Scheme in Trichur involved the active cooperation of the landowners and officials, and is a time-bound program targeted to completing all land development and all the building construction works within six years of the finalization of the scheme proposal. An analysis of this pioneering experience

70 is given elsewhere (Acharya, 1987(c)). In Bangladesh, a hypothetical LP/R scheme under a landowners' co-operative was found to be feasible in the city of Rajshahi (Sarkar, 1986).

2.8.1 Major Strengths and Weaknesses of the Technique

LP/R provides for a compulsory partnership of a group of landowners in an urban-fringe area to consolidate their landholdings for their efficient and economical servicing and subdivision at no cost to the government, because the project costs are quickly recovered from land value increases generated by the project through the sale of some of the new land. Thus, the significance of land pooling as an alternative to private piecemeal land development can hardly be over-emphasized in developing countries where investment funds for urban infrastructure are a major constraint to proper urban development.

As LP/R provides a means of controlling the timing of land subdivision, it would be possible for the LP/R agency to formulate a program of LP/R projects (alongside the private and other land subdivision projects) towards the objectives of ensuring orderly urban expansion, countering excessive land speculation, and ensuring an adequate supply of land for housing development. Since this method can also be used to implement the urban development plan proposals, this means that most of the advantages of guided land development are inherently present in this technique.

Since the land reduction and the project costs and benefits can be shared among the landowners in an equitable way, it can eliminate the disproportionate land value gains to a few landowners due to land rezoning. LP/R can also reduce many of the other negative points associated with the statutory planning control system, such as externalities and scattered development. Its practical importance comes from its acceptability to landowners so that it is a politically feasible technique. Therefore, LP/R could be adopted in most of the mixed-economy countries of Asia to improve the development of their cities and to increase the supply of land for housing development. It could also be used to increase the supply of land at reasonable price for low income housing through some forms of cross-subsidy.

71 Compared to land banking or large scale acquisition which requires much finance and which often brings about management problems, the LP/R method can yield urban land supply which is already managed and which can open up new areas where and when they are required. Compared to bulk land acquisition, this method is less difficult and politically more acceptable, as the land owners do not lose their full land or their occupancy. It incorporates a form of betterment taxation which is easy to administer as it involves taking land rather than collecting money from landowners. Since LP/R projects can be formulated in a more open manner by involving the participant landowners at virtually every step of scheme formulation and implementation, it can also provide an effective mechanism to check the misuse of authority and ensure reasonably impartial treatment from the officials concerned.

Besides these advantages and public benefits of the technique, it also provides a number of the private benefits for the participant landowners which encourage them to support LP/R projects. As Archer (1987:16) notes:

"A well-managed LP/R project can provide each landowner with the opportunity: to gain a significant net increase in the market value of his land; to receive back land that can be easily sold; to develop landholdings that separately may not have been suitable for urban development; to have his land serviced and subdivided without having to contribute money to pay his share of the costs; to have a government agency use its governmental powers and status to benefit him; and to retain part of his original land after its conversion from rural to urban uses".

Despite these attractive advantages, it has to be remembered that many cities in Japan, South Korea and Taiwan do not use the LP/R technique to guide their urban development programs. Some of the major weaknesses of this technique are:

1. Land development carried through the LP/R process is generally not linked to the provision of housing for the poor, except for some of the recent initiatives in South Korea.

72 2. It is often a time-consuming process and may not cope up successfully with the land need and demand caused by rapid urbanization.

3. The landowners in the projects often hoard the serviced land for speculative motives so that the land supply in the market is reduced.

4. One of the most serious disadvantages of LPIR is that it depends for its success on creating higher prices for serviced plots, which can be a major obstacle to the provision of affordable land for housing for a high proportion of the city's poor households.

The theoretical dilemma with regard to LPIR as a high potential tool for urban land management is apparent from the last point above. LPIR cannot motivate private landowners to accept and support LPIR schemes unless there is a significant rise in their net land values, but higher land values makes the land less affordable and accessible to the urban poor. However, this dilemma can be resolved to some extent if it is realized that rise in urban land prices has been a historical phenomenon due to rapid urbanization and increased demand for serviced land alongside inadequate supply. The LPIR technique can be used to both achieve adequate land supply and to provide some sites for low-income housing through cross-subsidy (such as in South Korea, see, Doebele, 1982 (c)).

Although LPIR has important advantages over the usual land subdivision process, they are potential rather than automatic advantages and they have to be achieved by the appropriate and efficient application of the consolidation technique. LPIR has to be used selectively and each LPIR project has to be financially viable and efficiently implemented. Archer (1984(b):7-8) has listed the preconditions for the use of this technique, of which the major ones are:

1. The urban-fringe lands are to be physically and economically ripe for urban development with access roads and trunk utility mains nearby, and the lands are fragmented into numerous separate landholdings;

73 2. There are skilled and competent persons to manage, as well as legal and institutional set-up to undertake, LP/R projects;

3. Most of the landowners in a project understand and support the use of LP/R; and

4. The government LP/R agency is genuinely interested in achieving an orderly urban expansion for a planned pattern of urban land use, and is willing to use its compulsory land acquisition power against any minority of holdout landowners.

As the LP/R projects subdivide land for the planned pattern of urban land use and are self-financing and can be used for timely land subdivision, then LP/R can be seen as a powerful technique for the positive implementation of the official land use plan for new urban areas. As the landowners receive significant land value gains from LP/R projects, the majority of landowners usually support the projects. This landowner acceptability usually means political acceptability so that LP/R can be seen as both a powerful and a realistic technique for achieving planned urban development in mixed-economy countries.

However, from the general problems facing Asian cities as noted above (refer, 2.1.2), and the 1985 ESCAP review of the urban land policy situation (UN ESCAP, 1985), it would appear that some of the key conditions are either absent or inadequately available in South Asian countries. Major deficiencies can be observed in the areas of: inadequate legal and institutional set-up, shortage of competent staff, limited administration and management, lack of a land information system (land registration, cadastral records, land price publication), and the weak economic base of local authorities. In addition, there are some marked differences between the countries in South Asia and the Asia-Pacific countries where LP/R has been used with greater success.

2.8.2 Socio-economic Parameters

The countries in South Asia are marked by a low level of GNP per capita, a highly skewed distribution of wealth so that a high percentage (40-50 per cent) of the

74 population is below poverty level. In contrast, most countries in East Asia have a relatively high level of GNP per capita. Agriculture accounts for a major share of GOP in all South-Asian countries, and the majority of the people depend primarily on agriculture for their living.

With the exception of Sri Lanka, illiteracy in South-Asian countries is very high (such as 75 per cent in Nepal in 1981), and the people have a traditional attachment to land for economic, cultural and psychological reasons. This means that it could take a considerable time to persuade them of the pressures of urbanization, and the merits of LPIR and how it could possibly benefit them. In the more affluent East Asian countries, the literacy rate is very high, and the people's attitude to land is more influenced by land values. The available social welfare and social security measures in these countries act as a hedge against social and economic uncertainties, and the people are in a better position to grasp the relative economic benefits of LPIR projects.

There are many institutional and administrative hurdles to implementing sound land management practices in South-Asian countries. The property registration records are not modem and often there are legal complexities in the existing system, the innovations in planning laws guiding urban development have not been very progressive, and there is an acute shortage of professional land valuers, land managers and planners. In most East Asian countries, there is a well developed and advanced system of property registration records. The evolution of planning legislation has been progressive, and many innovative ideas in urban land management have been experimented with a fair degree of success. Expertise in land valuation, land management and urban planning and development is generally (but not universally) available.

2.8.3 Lessons From the Experience in Trichur and ~shahi

The significance of these socio-economic parameters are reflected in and supported by the Trichur (Kerala) experience (Acharya, 1987(c)) and the Rajshahi (Bangladesh) case study (Sarkar, 1986) [1 ]. The lessons to be learned from these two projects are:

75 1. The project areas were strategically located (opposite the central bus station and municipal market in Trichur, and on high land within the municipal area in close proximity to the developed area of the city in Rajshahi) and ripe for development with road network and utility mains nearby.

2. The total scheme areas were small enough to manage comfortably and the small number of landowners facilitated effective negotiation and persuasion (6.22 ha with nine owners in Trichur and 6.75 ha with 18 owners in Rajshahi).

3. The landowners in the Trichur project were relatively well-off citizens of the community with properties elsewhere in the town and in other parts of the state. They were relatively well educated, and did not depend primarily on agriculture for a living.

4. In the Rajshahi scheme proposal, only ten landowners supported the LPIR scheme and the remaining eight declined to participate. The landowners who did not support the LPIR scheme were mostly poor people who depended primarily on agriculture for their living. They realized the possible land value gains after the execution of the project, but maintained that such land value gains did not create any employment or income earning opportunity for them. The landowners who supported the proposals were members of the urban elites who had non-farm employment, who did not depend primarily on agriculture for their living, who owned landed property in other parts of the city, and who held land in the scheme area mainly for speculative motives.

5. There were significant land value gains to be made under the pooling proposals. The average increase in land value in Trichur had been 7.7 times between the initiation of the scheme in March 1983 and field investigation in October 1986, when the scheme was under implementation. The relative average land value gain in the Rajshahi project had been estimated at over 63 per cent. The very high land value gain in the Trichur case can be attributed to: the central location of the project site adjacent to the town center, the conversion of farm land to

76 high intensity urban use (the project area was just outside the municipal limits), and a three year break between the calculation of the original and the developed land values.

6. There was a strong political will and support for the Trichur project. The Department of Town Planning in Kerala and the Trichur Urban Development Authority played a significant and persuasive role in motivating and convincing the landowners concerned to join the pooling project.

The policy implications of these experiences are that : (i) there are higher chances of success in a project if the scheme area and the number of landowners is relatively small; (ii) a large land value gains motivates the owners to participate in pooling schemes; (iii) a genuine interest, and constant persuasion and motivation on the part of authorities is necessary; (iv) a strong political will is necessary to effectuate the necessary changes; and (v) urban land development policies must be formulated in relation to employment policies (so that there is creation of non-farm job opportunities and training facilities).

2.8.4 Transferability Considered

It would appear from the discussion above that in considering the transferability of the LP/R technique in South Asia, a number of policy implications at different levels and outside the LP/R project framework will have to be understood. The critical period in a LP/R project in urban-fringe areas, comes at the time of installing the infrastructural works when the farmers are likely to be interrupted in their farming activities. The slow construction pace in most of the countries of South Asia would further imply that this period may stretch for a couple of years. Some institutional and administrative support and guidance will have to be provided for those landowners in the project areas who would prefer to sell their land for cash and go to other places to buy more hectarage of agricultural land for practicing farming operations. The generation of employment opportunities for the less well-off residents of the scheme area is also necessary, and some form of training program for urban jobs should be initiated and integrated with the LP/R program as a whole. Similarly, the tenants and renters residing in the scheme

77 area need to be compensated in cash or kind through the project costs, and they should also have easy access to training and job opportunities.

This evaluation means that the transferability of this technique to South Asia needs to be considered in its broad socio-economic and political situation. The transfer is not automatic. A lot of institutional arrangements needs to be made before the technique can be applied with success on any general scale. However, this does not mean that the technique cannot be initiated unless the proposed institutional arrangements identified for its successful application are developed first. The only way to determine whether or not LP/R is useful to the countries of South Asia is to try it in the field.

Therefore, it would be appropriate to initiate a few pilot LP/R projects to see how it works in a variety of different situations, including those with a rudimentary legal and administrative institutional set up, and an inefficient property registration record system. In spite of the shortage of trained manpower, external technical support from abroad may not be necessary beyond a few cases. One of the chief merits of LPIR lies in the fact that despite its seemingly sophisticated nature, officials with local planning bodies can understand and learn the technique and adapt it relatively fast. For example, there was only one town planner in the Trichur Urban Development Authority, but he was handling five land readjustment projects with support from junior staff from architectural, engineering and other disciplines.

The most appropriate agencies to undertake such pilot schemes would be the relevant government bodies such as the urban development agencies and the housing authorities. These pilot projects should be meticulously prepared, soundly managed, and carefully monitored with a view to making necessary refinements in the use of the technique for its possible wider application in the future.

2.9 Other Land Management Measures and Techniques

Two of the major land management tools were assessed in detail in the previous sections. In this section some of the other components of the land management package

78 of measures and techniques will be briefly discussed. These are, land acquisition for public purposes, institutional and administrative arrangements, finance, a land information system, and land supply program.

2.9.1 Government Land Acquisition for Public Purposes

The Delhi experience showed that where acquisition of land has to be accomplished on a large scale, it is likely to be hindered by financial constraints, as well as by public opposition and legal and administrative problems. As a result, more limited land acquisition strategies, such as land banking and excess condemnation, are often advocated.

2.9.1.1 Land Banking: Land banking is a process whereby the land required for particular needs is purchased well in advance of those needs. It is the selective and limited acquisition of land to hold and allocate for urban development or redevelopment. By monitoring the demand and supply situations in land market and releasing adequate quantities of banked land at appropriate locations, this system allows to correct some of the deficiencies of the land market as well as to moderate lillld prices and speculation. Land banking can be effective where large tracts of undeveloped land are available and can be purchased at agricultural use value. In practice, however, it is rarely possible to acquire land at true agricultural value, since that would require acquisition very far in advance (Dunkerley, 1978:27). If land banking is effectively followed and

\ systematically programmed, it has the potentials to obtain public purpose land at cheap prices, reserve land in specific locations for planned public uses, and contribute positively to housing the poor.

Despite these potential advantages, a UNCHS report notes that land banking programs have been largely ineffective in developing countries mainly due to shortage of required funds, and the inefficiency and mismanagement of publicly held land by the concerned agencies (UNCHS, 1985:23).

79 2.9.1.2 Excess Condemnation: This is a technique to recover some of the land values created by public works, by which land adjacent to and in excess of that required for the provision of the infrastructure works is acquired in advance and later sold or leased at market value. This way, unearned increment in land values resulting from infrastructural provision can be captured to public funds and used to finance the costs of infrastructure. Alternatively, part of the land can be sold or leased at market value to cross-subsidize the allocation of part of the land for low-income housing. It is clear that this approach will work best where the adjacent land is largely undeveloped, providing that the acquisition is done swiftly and without undue publicity, and that a fair compensation amount is paid to landowners.

This is potentially an effective tool, and can also be used to initiate LP/R schemes. In the relatively developed areas, this tool provides a means to reduce many of the potential problems, if combined successfully with the LP/R technique (refer, 2.8).

2.9.1.3 Concluding Remarks: Both land banking on a limited selective scale and excess condemnation have significant merits. However, there are alternative possibilities to acquire land apart from compulsory purchase, such as purchase by negotiation through skillful bargaining or barter, and by providing incentives for private owners to sell land for public purposes, both of which involve government persuasion.

2.9.2 Institutional and Administrative Arrangements

The feasible land policy and management approaches would bear little fruits unless an adequate institutional and administrative machinery is set up to implement them. At the metropolitan level, a metropolitan planning and development organization needs to be designated as the land management body with responsibility to ensure planned urban development and an adequate urban land supply. This organization/authority must be empowered to promote co-ordination of the works and programs of the sectoral agencies and to stimulate and guide the private land and building developments. It would need additional funding and staffing to perform these tasks.

80 In view of the limitations of the large-scale land acquisition and development approach, this authority should not follow such an approach. Further, this metropolitan authority would adopt a land management approach rather than a regulatory approach towards guiding, stimulating and co-ordinating urban land development. The authority should also undertake land assembly and LP!R projects if necessary for both the private as well as government purposes.

2.9.3 Finance

Lack of adequate funds is the main reason for the inadequate provision and extension of the network infrastructure of public roads, hydraulic mains, and electricity needed in new urban areas. Governments should be able to tap at least a part of the large land value gains generated by urban growth and development, including public works. The possible measures to do this range from a general land value increment tax to a development charge levied on the benefitting landowners, to LP/R projects and large-scale private land development projects (in which the costs of infrastructure works are internalized).

Capital improvement programs provide the means to co-ordinate the works programs of the government network infrastructure organizations that are key agencies in servicing and developing land for urban expansion.

Governments may advance capital loans to create a revolving fund for the use of the concerned development agency for undertaking land development activities. As far as financing infrastructure through capturing 'plus values' is concerned, it is appropriate to conceive the system as a functional funding system of accounts and funds where the revenues raised has a direct relationship with the land development expenditures financed from these revenues, within each development area (Archer,1984(a):24).

81 2.9.4 Land Information System

An urban land information system is an integrated package whose main components comprise of: (i) land information maps showing the existing situation of necessary indicators, (ii) an organization equipped with necessary responsibility and resources to collect, monitor and up-date the existing information from time to time, and (iii) a mechanism for the analysis of the information thus obtained and its dissemination for the benefit and use of the common citizens as well as the public and government agencies in general and for land management purposes in particular.

As a first necessary step towards organizing land management, effective registration of the existing situation with respect to lands will be necessary. Development planning and their implementation at large require reliable and up-to-date physical and socio-economic data. Some basic information on land will be mandatory for the purpose of establishing even positive control of actual physical urban growth. Furthermore, for specific land management purposes, additional, and regularly updated, data and maps on tenure, ownership, price and market values of land in and around urban areas will have to be made available.

The objectives of such an integrated urban land information system can be as follows (DHV, 1985(b): 111-118):

1. To assist the government in preparing, reviewing and developing an urban land policy and strategies;

2. To improve the government agencies' services to the society in matters of urban land information;

3. To create a framework for effective supervision and monitoring/evaluation of urban land activities from both private and public sectors, which should also allow the government to access their involvement and expenditures on land development; and

82 4. To enable the government in creating and maintaining a reliable, firm and up-to-date base for the formulation and administration of urban land taxation policies.

2.9.5 Land Supply Program

One of the principal tasks of the land management approach to urban development is to ensure an adequate land supply, particularly for public facilities and for housing development. This can be achieved by setting up a metropolitan land management system designed to monitor and co-ordinate the various land development projects being undertaken and to initiate such additional projects that are needed to fill the gap. This requires the preparation and implementation of a land supply program for the metropolitan area.

Since the aim of a sound government housing policy should be to ensure that all family households have access to legal, adequate, acceptable and affordable housing by either purchase, self-build or rental (Archer, 1987:5), the land supply program must be formulated to cater to households at all income levels. This can be achieved by preparing and implementing two programs on a rolling five year basis; these being, firstly, a general housing land supply program designed to meet the market demand for housing plots and secondly, a program to increase the supply of land for low-income housing.

After having forecasted the housing requirements considering the backlog needs, future population growth, household formation, income levels, design and development standards, availability of credit finance, etc. as some of the main components of the demand side, the supply side components, such as the phased urban expansion of the metropolitan area, the trunk infrastructure expansion programs and the various existing land and housing delivery systems, have to be considered to identify the shortfall needing appropriate measures to overcome them. In this connection, the land and price information system referred to earlier (refer, 2.9.4) will be helpful in monitoring the demand and supply situation in the land and housing markets and identifying the gaps

83 there-in.

Experience in the South and South-East Asian countries demonstrates that direct public sector intervention can not alone meet the need to achieve large increases in the supply of urban land in order to both lower prices and improve the access of lower income groups to serviced land. A more efficient strategy would strive to facilitate a much greater supply of developed land by both the private and the public sectors and, at the same time, ensure that this is done equitably and with interests of less privileged groups protected. Such a strategy would include measures to make land more available for both public and private sector development. In such a situation, the role of the government sector would be: (i) to provide trunk roads and utility mains to designated urban development corridors so as to open-up the peripheral land for development, (ii) to facilitate the private sector to undertake most of the land and housing development by creating the necessary conditions and environment, by providing incentives, and by removing major obstacles in the development process, (iii) to undertake some demonstration land and housing projects of innovative nature, and (iv) to focus attention to meet the land and housing requirements of low-income households.

2.18 Future Directions

Despite the encomium for LPIR made above and the suggestions offered on some of the critical areas where timely refinements are desirable for its successful transplantation in South Asia (refer, 2.8), it must be remembered that LPIR is not the panacea to solve all urban land development and management problems, nor the exclusive reliance to this technique can be expected to meet all urban land requirements in the face of rapid urbanization. What may perhaps be a realistic approach to consider is to identify a suitable mix of various strategies (e.g. private and public land subdivision projects, LPIR projects, site-and-services and low-income housing projects, etc.) towards regulating urban development and increasing urban land supply. In this context, the GLD mechanism provides a framework whereby both the public and private sectors could participate in the land development process. This approach thus recognizes the importance of encouraging private land and housing development with significant public

84 sector contribution towards regulating private sector development and initiating government land development projects (e.g. low-income housing) including LP!R schemes. This would provide a healthy competition to prevail in the land and housing market, and at the same time, offer a wide range of choice (by location, type, size and price) to households for obtaining their housing. A recent Bangkok Land Management Study found that besides the public sector housing contribution, as many as 55 per cent of households in Bangkok could afford a private-sector house in 1986, compared with only the top 15 per cent in 1980 (PADCO, 1987:91-93). This was made possible by extending the range of commercially developed housing in the private sector.

Finally, it may be appropriate to remark that unless there is a strong political will and determination to go ahead for effectuating the necessary changes and to regulate the urban land development process along the desired manner, and unless ways and means are found to solicit and encourage public participation and involve landowners, developers and the government as partners in the development process, no amount of technical sophistication can be expected to bring about the intended results.

85 1. The relationship between the landowners' main occupation and their attachment to land is well illustrated by a study done in the North American context (Brown et al., 1982: 119-145). The study showed that there was significant variations on the attitude of urban-fringe landowners towards participation in the real estate market. The long-term rural owners who primarily used land for family use or for farming purposes had more personal attachment to their land, and generally intended not to sell their land but to continue farming. The farm land was usually their chief asset. On the other hand, the new owners, who had entered the urban-fringe areas as speculators or investors, wanted to sell their land either immediately or within a few years. They had properties in other forms and places, and they were found to be a mixture of syndicates/corporations, owners motivated by investment or development, those who did not use land actively, young owners and those of retirement age.

86 3. URBAN EXPANSION AND LAND DEVELOPMENT SYSTEM

Kathmandu Valley, comprising the three municipalities of Kathmandu, Lalitpur and Bhaktapur with over 100 other village administrative units (i.e. pancbayats), is the study area of this Thesis (refer, Figure 1.2). This Chapter briefly introduces the administrative and urbanization patterns in the country before profiling the study area. The general setting of the Kathmandu Valley, demographic trends and density patterns are briefly outlined before discussing the Valley's land resources and the urbanization pattern, which is expanding the built-up area in Greater Kathmandu engulfing valuable agricultural land in the process. Lastly, land prices, land transactions and present land development systems are discussed so as to understand the operation of the land market in the Valley and its impacts on housing and planning.

3.1 Administrative and Urbanization Patterns in Nepal

With an area of 147,000 sq km, the Kingdom of Nepal had a population of 15.02 million in 1981, estimated at 17.13 million in 1986 (CBS, 1986(a):11-20). The major part of the country comprises high mountains and rolling hills (refer, Figure 1.1); it accounts for about 83 per cent of the land area but houses only 51.3 per cent of the country's population (1981), whereas the remaining 17 per cent of the country is occupied by the flat lands of the Terai which houses 48.7 per cent of the population. This Section briefly describes the administrative and urbanization patterns in Nepal.

3.1.1 Administrative Pattern

The country is subdivided into more than 4,000 communities that are governed by a Pancbayat. The structure of the Pancbayat System is made up of three tiers - Village or Town Pancbayats at the lowest level, the District Pancbayat and the Rastriya (National) Panchayat. All these consist of elected representatives. The Town and Village Pancbayats form the base of the panchayat structure, and are the executive bodies of the Town and Village Assemblies respectively, whereas the Rastriya

87 Panchayat, the apex of the Panchayat Pyramid, is a unicameral legislature.

Politically and from an administrative point of view, the country is divided into 14 zones and 75 districts. In 1970, the country was broadly divided into 4 development regions and in 1982, a fifth development region was added. Despite the Village and Town Panchayats being the grass-root units of administration, the basic unit of administration as such starts from the district level. The district administration is headed by the Chief District Officer (CDO) who works under the general guidance and supervision of the zonal administration, headed by a Zonal Commissioner. The CDO exercises the law and order functions helping to create a positive atmosphere for easing development works.

The zonal commissioners and the COOs play a leading role in development works in districts, from land acquisition, project implementation, transfers and promotions of civil servants to heading town planning and development boards. Local panchayats are local government bodies and provide local political color in the planning process (elaborated in Chapter 4).

3.1.2 Urbanization Pattern

Nepal has a widely dispersed settlement system which has developed in response to its physical setting and economic requirements. The settlement system has only recently begun to experience rapid growth. Though Kathmandu still dominates the settlement system, its primacy has been slowly decreasing due mainly to the emergence of many new urban centers in the Terai.

Leaving aside the semantic issue attached to an "urban" center, all town panchayats are assumed to be urban areas. The urbanization level in the country increased from 2.80 per cent in 1952/54 to 6.38 per cent in 1981, and to 7.00 per cent in 1983 with 29 centers (20 in the Terai, 9 in the hills and none in the mountains) having a combined population of 1,052,000 (Table 3.1). The urban population grew three times as fast as the national average of 2.66 per cent during the 1971-81 period. Without accounting

88 Table 3.1: National and Urban Population

Nepal Urban Areas Year Total pop. Annual Popula % of total Average in 1 000 growth tion in population annual rate (%) 1 000 growth rate (%)

1952/54 8,473 237 2.80 1961 9,412 1.57 336 3.57 4.46 1971 11,293 2.07 462 4.00 3.24 1981 15,020 2.66 957 6.38 7.55 1983* 1,052 7.00 4.85 * Figures for 1983 are based on 1981 census data. Source: Central Bureau of Statistics, Kathmandu.

89 for the effect of change in administrative boundary or status, the current urban population growth rate may be estimated at 4-5 per cent per year. A high level of rural to urban migration, annexation of rural areas to urban areas and designation of new urban areas have been the main reasons for the accelerated growth of urban population. Recent projections based on historic trends suggest that with a base urban population of 1.36 million (8.2 per cent of the national total) in 1985, the population in the existing town panchayats will increase by 585,000 and 2,633,000 persons respectively between 1985-90 and 1985-2000 which would put the urbanization level at 13.8 per cent in 2001 (PADCO, 1984: 26-27,44). Housing this growing urban population and improving the conditions in the existing settlements has become a challenge for the country.

The population pressure on urban areas and their growth rate suggested the necessity to re-evaluate the major economic policies of the Sixth Plan (1980-85). The rapid growth of urban settlements has caused considerable stress on existing infrastructure and service systems and increased housing problems. Considering the dimension of problems as a result of urbanization, the need was felt to formulate an 'Urbanization and Housing Policy' in the context of national development. Thus, in the Seventh Plan (1985-90), a multi-sectoral approach was envisaged for urban development with the following objectives (NPC, 1985: 207-208):

To develop urban areas of the Kingdom in a planned and systematic way; To create opportunities for increased productive employment and income in the context of growing urbanization; and To develop urban areas as complementary to rural development.

To realize these objectives some working policies were also defined (NPC, 1985:208). It may be appropriate to remark that it is too early to make any sort of evaluation of the 'Urbanization and Housing Policy'. Future government programs, priorities and project evaluation will have to be watched carefully.

90 3.2 General Setting of the Kathmandu Valley

Kathmandu Valley, the capital of Nepal and one of the principal tourist centers of South Asia, is nationally important from political, historical and economic view points. Located in the middle of the north-south linking growth axis of the Central Development Region, geographically, the Valley lies in the mid-hill region of Nepal (refer, Figure 1.1). The Valley is roughly elliptical in shape having an area of about 597 sq km, with around 25 km east-west and 20 km north-south (refer, Figure 1.2).

The Bagmati is the'main river of the Valley, whereas the Vishnumati, Manohara, Dhobi Khola, Hanumante and Nakhu are its tributaries. These river systems drain the Valley in a centripetal pattern converging on the center and exiting via the narrow Bagmati Gorge near Chovar. The general gradient of the Valley is towards the center and then towards the south-west.

Kathmandu Valley has a seasonable but equable climate (CBS, 1982: 3-4, 32-35). Winter in the Valley is cold and relatively dry. Summer is hot and wet. May and December are the hottest and coldest months respectively (the extreme maximum temperature is 36.6 degree Celsius and the minimum temperature is -3.3 degree Celsius). The average range of summer temperature is 29.5 degrees Celsius (May) and 18.8 degrees Celsius (July-August), while the average range of winter temperature is 18.6 and 1.5 degrees Celsius (January). The average rainfall in the Valley is 1,431 mm, about 80 per cent of which is confined to the monsoon period (June to September).

The Valley contains the three districts and three principal urban centers (town panchayats) of Kathmandu, Lalitpur and Bhaktapur. Besides these town panchayats, the Valley accommodates over 100 other village panchayats.

91 3.3 Demographic Trends and Density Patterns

In 1981, Kathmandu (235,160 inhabitants}, Lalitpur (79,875 inhabitants), and Bhaktapur ( 48, 4 72 inhabitants) Town Panchayats together accounted for 48 per cent of their district population and about 50 per cent of the Valley's population. As Table 1.1 shows, of the three towns, Kathmandu was growing most rapidly with an annual population growth rate of about 4.6 per cent between 1971 and 1981.

The existing density patterns in all three towns show very high densities at the core while the fringes are thinly populated (PADCO, 1986:36-47). In 1981, most of Kathmandu's core area had densities in the range of 400 and over 1,200 persons per hectare (p!ha), while in the fringe areas, densities ranged between 14 and 100 p/ha. In most of the fringe areas, which were annexed to the municipality in 1981, densities were below 50 p/ha. Although between 1971 and 1981, significant increases in density occurred in the northern suburban as well as eastern and western fringe areas, more increases can further be expected in these areas.

In 1981, densities in most of the core areas of Lalitpur ranged between 200 and 800 p/ha, while at the fringes, densities varied between 17 and 200 p/ha. Between 1971 and 1981, densities have increased in virtually every ward in Lalitpur. Since more infill development is not possible as very little open space is left in the core area at present, the existing housing stock may be subject to further densification.

Compared to Kathmandu and Lalitpur, Bhaktapur has been slow in population growth and density changes during the last two decades, but its gross density was high at 314 p!ha in 1981 while those of Kathmandu and Lalitpur were 130 and 51 p/ha respectively. In Bhaktapur, no ward had density less than 100 p/ha in 1981, while most ranged between 200 and 600 p/ha. Bhaktapur's suburban growth has been practically nil except for some development outside the Town Panchayat area along the Amiko Highway to the south of the town.

92 3.4 Kathmandu Valley Land Resources

The most reliable source of land resources data for the Kathmandu Valley is the Land Resources Mapping Project (LRMP) carried out by the Department of Survey, Topographical Survey Division, with Canadian aid. The data is based on 1979 aerial photographs and extensive ground verification which was undertaken during 1983 and 1984. This section presents information on land systems, land capability, and land utilization for the Kathmandu Valley, and projects the trend of agricultural land loss due to urbanization pressures.

3.4.1 Land Systems

The LRMP data (Table B.1 in Appendix B) show that about 17 per cent of the Valley is occupied by alluvial plains lying mainly along the principal water ways. These are agriculturally very productive. A considerable portion of the Valley area is occupied by mountainous terrain, which are most suitable for forest coverage.

Until recently, all settlement areas were largely located on non-dissected tar lands, such as the three cities of Kathmandu, Lalitpur and Bhaktapur, and other important settlements like Thimi, Bode and Kritipur. As the towns have expanded, the low land areas, such as Kamaladi, Tukuche, Baneswar, and Kupondol, are constantly being encroached upon in proximity to Greater Kathmandu (refer, Figure 3.1).

3.4.2 Land Capability

Out of about 597 sq km of the Valley land, the Class I land (as defined by the LRMP) consists of alluvial plains and un-dissected tar areas which constitute about 35 per cent of the Valley area (Table B.2 in Appendix B). Most parts of expanding Kathmandu, Lalitpur and Bhaktapur urban areas occupy Class I land amounting to 2,850 ha (14 per cent) of the total Class I land of about 20,700 ha in 1979. Land capability in the Valley is quite high: arable areas consisting of Classes I, II, and III land, make up about 85 per cent of the Valley area.

93 3.4.3 Land Utilization

The LRMP land utilization data (refer, Figure 1.2 and Table B.2 in Appendix B) show that urban areas occupy about 4.8 per cent of the Valley area and about 14 per cent of Class I land, while about 63 per cent of the Valley area is utilized for agriculture. Forests and shrub areas make up about 30.6 per cent while grazing lands occupy only a marginal percentage of the Valley area. The LRMP data indicate that the cultivated area of the Valley is reaching the limit of available arable land and has already surpassed the limit in Bhaktapur District.

3.4.4 Urbanization and Land Loss

The Valley is one of the most fertile and agriculturally productive areas in Nepal. It also houses the largest and rapidly growing urban population and economies in the country. Since the Valley's urban areas are mostly located upon prime land (Class I land), more loss of agricultural land is likely to occur as urban areas expand, resulting in growing conflicts between land utilization for urban and agricultural uses.

The Valley's yields of major food grains are significantly higher than national averages (PADCO, 1986:17-20). Until1971, the three districts of the Valley produced a food surplus of about 3 per cent. By 1974/75 and 1980/81, the districts produced 98 per cent and 97 per cent of their needs.

Between 1971 and 1981, the built-up area of Greater Kathmandu increased by about 88 per cent (6.52 per cent per annum), resulting in a loss of about 1,500 hectares of agricultural land (refer, Section 3.5). Relatively little agricultural land was converted to urban uses in Bhaktapur. Although the urbanization process is rapidly engulfing the Class I lands, more than 90 per cent of valuable agricultural land was intact until1979.

Valuable agricultural land in the Valley is rapidly being converted to urban uses. At current rates of urban expansion, PADCO (1986: 32-33) estimates that by the year 2001 and 2010, respectively 56 and 100 per cent of Class I land or 35 and 60 per cent

94 of Class I and II land will be urbanized. At this rate, no prime agricultural land will exist in the Valley in the year 2020 when almost 60 per cent of the entire Valley will have been urbanized, with 1.63 million urban population occupying some 34,000 hectares of built-up area. Prime agricultural land is more likely to be urbanized than secondary arable land simply because the prime land is located on the fringes of the existing urban areas while lower quality land is located on the edges of the Valley away from the cities (refer, Figure 1.2).

3.5 Urban Expansion

Although the Valley towns were founded during the 6th and 9th century AD, it was only after the collapse of the Rana Rule in 1951 that the Valley underwent a rapid phase of urban expansion.

3.5.1 Spatial Expansion of Kathmandu

Ranjitkar and Manandhar (1980-81) have studied the historical expansion of Kathmandu, but the conclusions of the study are valid for Lalitpur as well. Based on tht> nature of development, the spatial growth of Kathmandu was divided into four distinct time periods. These being: (i) Development of the core area before the Rana period (up to 1846); (ii) The Rana period: slow and sporadic development (1846-1951); (iii) The period of steadily accelerating growth (1951-1964); and (iv) The period of rapid development (1964-1978).

Before the Rana period (up to 1846), Kathmandu benefitted from the entrepot trade between India and Tibet, but the growth of the city was confined within the fortified walls. With the unification of the country in 1768, some development took place outside the core area. The Rana period (1846-1951) was characterized by slow and sporadic expansion of the urban area. Large residential palaces constructed by the Rana aristocrats outside the core area set the pattern for later development, and urban sprawl. The need for accommodating administrative and military functions and for housing a large migrant population which came to the Valley in search of jobs, also helped in

95 urban expansion outside the core areas.

Following the collapse of the Rana Rule in 1951 and the opening of the country for outside world, the need for establishing new political, economic, diplomatic, and cultural ties resulted in new construction and the expansion of the city. The city went through a phase of rapid development during the 1964-78 period, when the development of economic activities and provision of urban facilities in the city's outskirts took place and a large number of migrants began arriving in Kathmandu. The expansion of the city was encouraged by growth in foreign aid and tourism and by the construction of the Ring Road in 1977 which continues to have dominant impact on the present-day expansion.

However, the city's expansion during the latter period was not uniform -the growth has largely taken place only towards the north. Urban growth was broken by Dhobi Khola in the east, beyond which high and middle class residential development took place in Baneswar, while institutional expansion occurred between Babar Mahal and Baneswar along the Amiko Highway. Although the flood-plains of the Bagmati river have constrained the urban expansion in the eastern and southern portion of the city than the Vishnumati river in the western portion, but more development has evolved in the east of the core area due largely to the construction of many public facilities there.

3.5.2 Expansion of Greater Kathmandu's Built-up Area

Kathmandu and Lalitpur exhibit similar characteristics and have physically merged into one to form Greater Kathmandu. Unlike Bhaktapur, Greater Kathmandu continues to expand at the cost of its hinterland encroaching upon the fertile agricultural land in this process. The expansion of Greater Kathmandu between 1954 and 1981 is illustrated in Table 3.2, and Figure 3.1 shows the built-up areas in 1971 and 1981. In 1954, most of the built-up area of greater Kathmandu was comprised of the core areas, Rana palaces, and linear development along the main roads. At that time, all development had taken place on '.tar' or elevated lands, thus preserving the fertile, low-lying areas.

96 Table 3.2: Built-up Area of Greater Kathmandu by Town Panchayat

Year Description 1954 1964 1971 1981

Kathmandu (4,744.7 ha) Built-up area (ha) 849.3 970.8 1,411.9 2,648.3 % of total area 17.9 20.5 29.8 55.8 change in ha 121.5 441.1 1,236.4 change in % +14.3 +45.4 +87.6

Agricul. Land (ha) 3,709.8 3,588.3 3,147.2 1,910.8 % of total area 78.2 75.6 66.3 40.3 change in ha 121.5 441.1 1,236.4 change in % -03.3 -12.3 -39.3 Forest (ha) 57.5 57.5 57.5 57.5 River (ha) 128.1 128.1 128.1 128.1

Lalitpur (1,578.9 ha) Built-up Area (ha) 211.4 216.7 340.0 643.4 % of total area 13.4 13.7 21.5 40.8 change in ha 5.3 123.3 303.4 change in % +02.5 +56.9 +89.2 Agricul. Area (ha) 1,252.1 1,246.8 1,123.5 820.1 % of total area 79.3 79.0 71.2 51.9 change in ha 5.3 123.3 303.4 change in % -00.4 -09.9 -27.0 Forest (ha) 3.2 3.2 3.2 3.2 River (ha) 112.2 112.2 112.2 112.2

Source: PADCO, 1986:50, Tables III.5 and III.6 (with modifications).

97 Figure 3.1: Greater Kathmandu Built-up Areas (1971-1981)

\ -· , '

. •I I I I ~ !~~~b ., j ~\./''1

D 6•5 t 1 E I I I 3... ED

~ 1971 Built-Up Area iii 1981 Built-Up Area • Forest

Source: Aerial Photographs 1971/1981, prepared by PADCO, Kathmandu, 1985. : Pradhan, 1988: 208

98 However, by 1964, some low lands, such as Kamaladi, were encroached upon by the construction of public buildings.

Between 1964 and 1971, expansion of the built-up area took place primarily towards the north (Maharajgunj) and east (Dillibazar and Old Baneswar). It was not until after 1971 that the low lying areas of Dhobi Khola and Bagmati river were encroached upon and that urban expansion to the west of Vishnumati river began to take place. During this period, the residential expansion of built-up area in Lalitpur took place largely in Jawalakhel, Kupondol, and Pulchowk. However, after 1971, and with the construction of Ring Road, the expansion of urbanized area was more alarming. Most of this expansion in Kathmandu occurred along the transport corridors in the direction of Bansbari, Chabahil, Baudha, Baneswar, Dallu, Kuleswor, and Kalimati. At the same time, somewhat haphazard infilling has been simultaneously occurring with some encroachment of low-lying flood-plains of Dhobi Khola in the east and Vishnumati river in the west. In Lalitpur, expansion of built-up area took place towards the northwest, west, and south including Kupondol, Sanepa, Jawlakhel and Lagankhel areas, but encroachment of flood-plains at east and northeast was not serious due mainly to a lack of access roads . • As Table 3.2 shows, the built-up areas of Kathmandu and Lalitpur were only 849 and 211 hectares respectively in 1954 or roughly one-third their areas in 1981. The expansion of urbanized areas of these towns between 1964 and 1971, by 45 and 57 per cent respectively, was far greater than their respective growth between 1954 and 1964. Accelerated growth took place between 1971 and 1981 by nearly doubling the urbanized area of Greater Kathmandu (from 1,752 to 3,292 ha), when built-up areas in Kathmandu and Lalitpur increased by 88 and 90 per cent respectively.

Large increases of 135 and 94 per cent in residential land use occurred during the 1971-81 period in Kathmandu and Lalitpur respectively due to low density (about 40 p!ha) of urban sprawl (PADCO, 1986:53). Comparatively, the gross densities in suburban and core areas in 1971 were respectively 20 and 285 p/ha in Kathmandu and 21 and 287 p/ha in Lalitpur. The corresponding gross densities in 1981 were 40 and

99 387 p/ha in Kathmandu and 32 and 341 p/ha in Lalitpur. It can be observed that besides accommodating a larger share of net additional urban population (85,000 i.e. 79.4 per cent out of the total107,000 inhabitants), Kathmandu is getting more densely populated than Lalitpur.

Commenting on the general trend of urban expansion, the PADCO report (1986:57)

11 noted that the trend had been one of ••• infill within the Ring Road, expansion along major transport corridors and roads; eastern, western, and northern expansion in Kathmandu; western and southern expansion in Lalitpur; and infill and densification of the city cores and suburban areas. 11

3.6 Land Market

This Section discusses changes in land prices and land transactions in the Valley so as to review the operation of the land market.

3.6.1 Land Prices

Rapid urbanization in the Kathmandu Valley over the past three decades has been associated with a significant escalation in land prices. The PADCO (1986:109) study reported that between 1982 and 1985, increase in land prices was 179.8 per cent compared to the CPI increase of 122 per cent (CBS, 1986(a):172), thereby suggesting that land prices increased in real terms at a compound rate of over 16 per cent between 1982 and 1985. Generally, land prices in the Valley decline with increasing distance from the city centers (Table 3.3 and Figure 3.2). Locational specific attributes, such as road access, topography, and proximity to facilities, also influence price differentials between parcels. The study also found that compared to investment in interest bearing bank accounts and bonds, investment in land produced a better return.

The PADCO (1986) report also noted that land prices outside the municipal boundaries depended largely on road accessibility and agricultural productivity of rural lands, while those along paved roads were usually 300 per cent higher than along jeepable roads

100 Table 3.3: Land Prices in Kathmandu Valley

(Constant 1985 values) *1) One-Mile------Rs (000)/ Rsjsq m us $/ Number of Rings *2) Ropani sq m Observ- *3) at ions ------1 1,191 2,340 130 7 2 446 876 49 32 3 288 566 31 23 4 146 287 16 27 5 76 149 8 15 6 52 102 6 18 7 40 79 4 17 8+ 37 73 4 12

Total 151 Notes: *1) Data in constant 1985 Rupees. *2) Concentric rings of one-mile radius with mid-point at Durbar Square in Kathmandu. *3) At US $ 1.00 = Rs 18.00.

Source: Compiled by PADCO from records of various real estate brokers; PADCO (1986:112).

101 i ~1 II .. .~ I· ••.. , 0 g § 'II... I ·' ocC • g t a I p.. fl. v I I I 0 it 0 .. l i .. • ' i.. ! Q) I' 0 ' . ~ r' ~<1~oeuo• ~ ; !a.' 0 ' {./) II

•

102 and much lower where no road existed at all.

As mentioned earlier (refer, 1.5.4), the study by Ranjitkar (1983:154-157) found that in Kathmandu, land prices increased in real terms by 633 per cent between 1964 and 1978- a compound real growth rate of over 15 per cent a year. However, the price increases were not uniform in various segments of the city. These high and increasing land prices have caused a decline in affordability of housing land for low and moderate income earners, who are virtually excluded from entering the land market in proximity to towns (PADCO, 1986:107; refer, 3.7.1).

3.6.2 Land Transactions

Table 3.4 shows that the number of land transactions in the Valley districts increased by 26 per cent between 1980/81 and 1984/85, with municipal and rural areas recording similar increases. But all increases in this period happened in Kathmandu District, which recorded nearly 48 per cent growth in land transactions, with transactions declining in Lalitpur and Bhaktapur Districts. In Kathmandu District, transactions in village panchayats increased by 72 per cent compared to 37 per cent in town panchayat areas over the 1980/81-1984/85 period.

Although the share of village panchayats in total land transactions in 1984/85 was only 44 per cent compared to 56 per cent of the town pancbayats, village panchayats in Lalitpur and Bhaktapur Districts had significantly higher percentage of their respective district transactions.

Overall, land transactions in Kathmandu and Lalitpur Districts accounted for 92 per cent of the total land transactions in 1984/85, with Kathmandu municipal area dominating the statistics. In Greater Kathmandu area (Kathmandu and Lalitpur town pancbayats), the number of land transactions increased by 26.1 per cent, from 7,104 in 1980/81 to 8,960 in 1984/85. Further breakdown of data indicates that, although transactions in Kathmandu's core area increased while that of Lalitpur declined over the period (PADCO, 1986: 99-102), increases in suburban and fringe areas were very

103 Table 3.4: Land Transactions in Valley Districts

------1980/81 1984/85 % Change Land Transactions (80/81------No. % ------No. % 84/85) ------Kathmandu District 7,904 60.5 11,682 70.9 47.8 Village Panchayats 2,530 32.0 4,347 37.2 71.8 Town Panchayat 5,374 68.0 7,336 62.8 36.5 Lalitpur District 3,624 27.7 3,417 20.7 - 5.7 Village Panchayats 1,894 52.3 1,793 52.5 - 5.3 Town Panchayat 1,730 47.7 1,624 47.5 - 6.1 Bhaktapur District 1,542 11.8 1,382 8.4 -10.4 Village Panchayats 1,326 86.0 1,128 81.6 -14.9 Town Panchayat 216 14.0 254 18.4 17.6

Total (3 Districts) 13,070 100.0 16,481 100.0 26.1 Village Panchayats 5,750 44.0 7,267 44.1 26.4 Town Panchayat 7,320 56.0 9,214 55.9 25.9

Notes: 1. For Bhaktapur District, data refers to 1982/83 not 1980/81. 2. District percentage share is in relation to total of three districts. 3. Percentage distribution in village and town panchayats refer to their share in the district transactions.

Source: Data compiled by PADCO through District Land Revenue Offices in 1985; PADCO (1986:100-103) with modifications.

104 high, with some outer municipal wards recording increases up to 159 per cent. These data are indicative of areas where land transactions are taking place and where intense development pressure can be expected in the short-term.

There are indications that vacant lands in core areas are rapidly being built upon, and substantial urban expansion is taking place in suburban and fringe areas (refer, 3.5). The village panchayat areas of Kathmandu and I.alitpur Districts can expect more development activities in the coming years. However, as observed by many researchers and organizations, such as KVTPT (1984), Rajbhandari (1984), Tuladhar (1985), and PADCO (1986), this rapid growth has not been accompanied by the improvement and extension of urban services, creating a wide gap between needs and provision of services and facilities.

The PADCO (1986) study reported that land purchases were made mainly for construction of houses, but quite a few purchases were made for speculative purposes (i.e. purchase of land as a profitable investment). It is probable that the land transaction numbers appearing in Table 3.4 contain some re-transacted parcels.

3.7 Urban Land Development

This Section briefly highlights housing situation and affordability problems in the light of high and increasing land prices, as noted above, and discusses residential land supply mechanisms and land development systems operating in the Valley.

3.7.1 Housing Situation

With high values of residential land and their rapid increases over the years (refer, 3.6.1), low and moderate income groups (households earning less than Rs 1,000 per month), comprising of about 60 per cent of the households in the Greater Kathmandu area, cannot afford land less than 6.4 km from the center of Kathmandu even if credit finance is available (PADCO, 1986: 82- 84). Compared with similar urban areas elsewhere, this distance does not appear to be so problematic, but with the weak and

105 inefficient public transport system operating in the Valley (Hubbard, 1987), even this distance can be unacceptable to the majority of the residents who are in a very poor condition.

The sources of housing finance are limited in Nepal. Apart from a very few, such as the Provident Fund (providing finance to its members, which include most of civil servants) and banks (which generally provide soft term loans to their staff), other organized lending institutions do not exist. People use their savings to obtain their housing, and often get financial help from friends, relatives or other family members. Loans obtained from individual lenders in the private market attract high interest rates.

The report of the 1983 seminar on "Urbanization and National Development" stated that in Kathmandu, some 53 per cent of the housing stock was over 50 years old, and the maintenance problem was severe (Pant, 1986:165). It was also reported that the existing housing shortage in Kathmandu and Lalitpur increased from 5,000 units in 1971 to around 10,000 units in 1981, but only about 680 dwelling units were being constructed annually in the Greater Kathmandu area. Based on population growth projections and recent housing permits issued by Kathmandu and Lalitpur Municipalities, Schmitz (1986:21) put the housing deficit in Greater Kathmandu at 12,700 units in 1986. Recent figures on household occupancy ratio (i.e. average persons per habitable room) is not available. Based on 1971 census data and the 1973-75 'Household Budget Survey' by Nepal Rastra Bank (the central bank), the following pattern emerges: the occupancy ratio of 1.47, 2.14 and 2.17 persons per room respectively for the three municipal areas of Kathmandu, Lalitpur and Bhaktapur in 1971 (Arjyal, 1984:Table 3, p.ll) increased to corresponding figures of 2.4, 2.7 and 2.9 persons per room respectively in 1973-75 (PADCO, 1984(a):53). The PADCO study (PADCO, 1984(a):50) found that housing conditions among the low-income groups had deteriorated in recent years in the core areas of the large urban centers and squatter communities have started appearing on the urban fringe areas of Kathmandu. A study of squatter settlements by a group of Norwegian students (Backe-Hansen et al., 1985) indicates the magnitude of the problem (a total squatter population of about 3,800 at 17 different locations of Greater Kathmandu).

106 Although low-income households have been able to satisfy their shelter needs by rental accommodation mostly in inner city areas and in slums, the high population in the core areas have resulted in congestion and overcrowding. This factor coupled with inadequate urban services has also led to a deteriorated housing situation. This is a reflection of the difficulty in the supply of serviced land and housing in the fringe areas.

3.7.2 Land Supply Mechanisms

The availability of serviced land is a major determinant of housing supply. The following three ways of land supply mechanisms can be identified in the Valley (PADCO, 1986; Schmitz, 1986; MHPP, 1988 (b)):

Land supplied under informal land development process, in which land brokers play a pivotal role in establishing internal road networks. Such networks provide a basis for extending other infrastructure, such as water, drainage, electricity and telephone; Land supplied under formal or organized land development process, in which a formal agency, government or a private company, acquires land, develops it, and sells the plots to buyers. Experience in formal public land development is limited to three sites-and-services schemes at Kuleswor, Dallu and Galfutar. As yet, there is no example of a major private land development project, although some initiatives by Kathmandu Housing and Management Construction Company (HMC) at Kisipiri and that of housing development by Rijal-Tashi groups (Schmitz, 1986; Malia, 1987) can be noted; Land occupied under the squatter development process, in which poor families occupy public or non-registered land illegally to build simple shelter.

The experience with informal and formal land development are discussed below.

107 3.7.3 Informal Land Development

A road extension program carried out in and around a town by the Government or the panchayat makes adjoining land suitable for development. The degree to which the adjoining land is developed for urban use, generally, depends on the development of feeder roads and the area's proximity to built-up areas. In practice, because of a lack of co-operation among landowners (due to absenteeism, lack of acquaintance, different needs and aspirations, personal disputes, and tenants refusing to agree), such feeder roads are not adequately and efficiently developed. The result is an extremely irregular growth that is also quite costly to service with infrastructure.

Land brokers help to overcome some of the difficulties in opening up adjoining land for urban use. Their operation generally starts once a public agency decides to undertake a road extension program in an area.

This informal land development process occurs largely outside the purview of official planning initiatives. Land brokers and buyers, the two principal actors in the process, help in opening new land for housing and in bringing about various services in such areas. In general, the role of brokers is limited to providing access to inner parcels and materializing transactions between owners and buyers. This they do from their intimate knowledge of the land market, buyers' preference to lot sizes, and land ownership. They are aware of official legal procedures to complete transactions, and also help in resolving conflicting interests among landowners and/or tenants.

In this process, the brokers control the direction of feeder roads and access to other land areas. The subdivision and sale of plots in other areas along the projected path of the access road takes place progressively; and it may take up to five years for a targeted development area to be completely subdivided and sold by the brokers.

The ownership of access roads is held in the name of brokers to avoid encroachment. It also enhances their bargaining power with landowners. Such roads become a public property when a new cadastral survey is prepared. The new plot buyers on each side

108 of the access road cede the road right of way to the broker. Once the access road is demarcated in official records, further extension of the road and development takes place.

As more plots are sold, brokers continue to search agreement from next subsequent landowners. Depending on which landowner agrees, feeder roads get extended left or right along the cadastral boundaries resulting in an extremely irregular and unpredictable layout of roads. Moreover, plot shape and sizes vary greatly as parcels are subdivided according to the wishes of a buyer on a first-come first-serve basis. This results in a cnrious mixture of plot sizes and irregular development. Brokers derive profits from the increased value of land caused by the access road.

Once the area is reasonably developed, residents form an interest group to pressure servicing agencies to bring in services in the area. Since there is no mechanism to develop an area within a given time, house constructions are scattered leading to a serious difficulties in servicing the area. As pressure on the land gets built up, infilling between houses begins without much planning support. This haphazard and incremental development exerts tremendous pressure on servicing agencies to address the problem of service deficiencies.

The expansion of the Greater Kathmandu area over the past two decades has occurred mainly through this process. Although, this informal land development is a pragmatic approach to open up inner parcels for urban use and to cater to various needs and purchasing ability of buyers, it has the following major defects:

Since both landowners and brokers want to maximize their profits, the access roads are narrow in widths and contain numerous bends; and there is a lack or an inadequate provision of land for essential services, such as parks, playground, open spaces, and schools; There is a lack of systematic layout, which not only impedes the extension of services, but also makes it more expensive to do so;

109 Improvement in public services, which gets reflected in land prices, can not be recovered, partly due to ineffective recovery system, but mainly because of incremental and disjointed nature of development itself; and Urban extension under this process occurs without due regards to topography and land capability. Consequently, flood plains are developed, thereby creating drainage problems, and valuable agriculture land is prematurely opened up for urban use leading to urban sprawl.

3.7.4 Formal Public Land Development

The Government's experience in public land development for housing is limited to three sites-and-services schemes, which were launched by the Kathmandu Valley Town Development Committee (KDC) soon after its establishment in 1976. Only two projects, Kuleswor and Galfutar, have been implemented (though not complete), while the Dallu scheme had not been implemented until mid 1988. The salient features of these schemes are presented in Table 3.5.

The Kuleswor Project, with the aim to develop and sell serviced plots to civil servants, is the most advanced of the housing projects launched by the KDC. There was no financial provision for plot buyers for plot purchase or dwelling construction. Lending institutions provided loans to the KDC for land acquisition, and plots were sold on an installment basis. Because of major project delays, the evaluation of Kuleswor project was done in 1985 (Mathema and Kissick, 1985).

The project area covers some 26.5 ha of land, which yielded some 715 plots of various sizes and was expected to house nearly 4,300 people (Malla, 1987:25). The project started in mid 1977 with compulsory land acquisition; however, there have been delays in acquisition, creation of titles for new plots, distribution of titles to buyers and servicing the area. The KDC issued temporary titles, and building construction has commenced on some plots. The compensation rate of Rs 12,000 to 18,000 per ro_pani (Rs 24 to 36 per sq m) was considered well below the prevailing market rates at that time (Muller, 1981; Schmitz, 1986; Malla, 1987). The average selling price of plot was

110 Table 3.5: Profile of Public Housing Schemes in Kathmandu

Items Kuleswor Dallu Galfutar Year initiated 1976 1976 1980 Project area (ha) 26.5 15.2 11.0 No. of plots 715 779 511 Target group Public Low income No fixed target cit~ residents group size of plots 128 (100%) sq m (% dist.) si~ant~~~=~ 256 10% 1911~7 ~~~=j25% 352 33% 318 16% 480 4% Existing landowners 109 NA 151 Land acquisition eminent domain eminent domain eminent domain Price Rsjropani 12,000-18,000 10,000 17,000 Est. project cost Rs ~~ll~o~ (year) 12.33 (1976) 41.40 (1977) 11.90 (1982) Sell1.ng P:fl.Ce 12,500-951 ooo NA 72!.000 RsLropanl. (1978} (1~82) Funding source(s) Loans from Bank loans Pre-selling of banks and plots at full Provident Fund value Infrastructure and services NA NA Roads Gravelled Water supply Piped Sewerage Inaividual septic tanks Draina9e Sur"face drains Electr1.city Yes Open space Yes commun1.ty facil. Yes Schools Yes Project status Under Not implemen Under (1987) i~plementation ted yet; some i~plementation s1.nce 1977 co~pensation s1.nce 1982 pa1.a Major problems • Legal prob • Institution • Fixing of encountered lems in land al, financi compensation assembly and al and amount delay in management • Delay in distribution problems implementa of titles Marketing tion • Poor project of plots management resulting in cash-flow problems • Delay in prov+ding serv1.ces Note: NA - Data not available. sources: Muller (1981); Pradhan (1982); Manandhar (1982); PADCO (1984 (bY); Mathema and ~issick (1985); Tuladhar (1985); PADCO (1986); Pant (1986); Malla (1987); Kunwar (1989).

111 three times the land acquisition price in 1978, and was increased by 1.2 times in 1986 to cover a deficit of some Rs 6 million in the project.

The major problem faced by the KDC in Kuleswor was the creation of titles to new plots. Issuing of title and changing land registration is complex in Nepal. The new registrations must be based on the original plot boundaries. Thus, there is no way to erase existing boundaries and start fresh with a new plot and road layout until new cadastral survey is carried out.

Other difficulties faced by the project were largely due to poor planning and management of the project. These include, a project deficit of Rs 6 million by April 1985; unsystematic approach to project design, implementation and monitoring; difficulty in getting co-operation of other sectoral agencies in the timely provision of services; and internal functional conflicts within the KDC.

The Galfutar Housing Project was initiated in 1980, but started only in late 1982 with the compulsory acquisition of 11 ha of project land. Unlike the Kuleswor project, this project had no fixed target group - plots were sold in advance on 'first-come first-served' basis with full payment. The selling price of the developed plot (Rs 18,000 per plot of 128 sq m) was about four times the then acquisition price. Delays in distributing compensation amount and implementing other project proposals were noticed in the project (Pradhan, 1982).

3.7.5 Formal Private Land Development

The Valley's experience in formal private land/housing development is limited to two projects, the Rijal-Tashi Housing Project and the Housing Management and Construction Company's (HMC's) proposed Kisipiri Housing Scheme.

The Rijal-Tashi condominium project consisted of three blocks of six units each. Schmitz (1986) reported that the constructed units were on sale for a few years, but the market was probably not ready to receive this innovative venture.

112 The HMC's Kisipiri Housing Scheme proposal covered some 67 ha of land near Thankot, west of Kathmandu (Schmitz, 1986). The project was expected to yield over 1,800 serviced plots of various sizes within five years and could accommodate more than 12,000 people. The project cost was estimated at Rs 192.2 million (1986 prices) with the first phase cost of Rs 137.2 million. A wide range of community facilities were envisaged in the project, which was expected to offer significant benefits to the local community and to the Government in addressing some of the problems caused by the shortage of residential land.

In order to implement the scheme proposals, HMC requested the Government to support the project by:

Assuring planning permission as per the scheme proposal; Assembling the project land of 67 ha consisting of nearly 2,000 parcels through compulsory purchase on behalf of the HMC; Imposing the land registration tax only once, either during the acquisition of land or at the time of final sale of plots;

- a Amending the cadastral records within the project period; Waiving ceiling on land holding, currently at 2.5 ha in a single ownership, for the scheme to proceed; and Connecting the site infrastructure to city's trunk mains and requiring electricity and water supply and sewerage authorities to take charge of the facilities within the project site.

Although the Government seemed to have taken a sympathetic view to the HMC's requests, this writer is not aware of any formal decision taken in this regard (refer, Chapter 10).

113 3.8 Chapter Conclusions

This Chapter presented a brief profile of the Valley, its urbanization trend, urban expansion patterns, the operation of the land market, housing situation, and the current land development systems operating in the Valley.

Although the Valley towns were founded during the 6th and 9th century AD, it was only after the collapse of the Rana Rule in 1951 that the Valley underwent a rapid phase of urban expansion. The urban population and urban expansion have been rapidly accelerating since 1971; the population in the three municipal areas increased by nearly four per cent per annum between 1971-81, during which period, the built-up area of Greater Kathmandu nearly doubled. In the past, settlements were located on elevated table lands, which had low agricultural value. Due to urbanization pressure, especially since early 1970's, urban expansion has began to engulf agricultural lands by spreading on low-lands and flood prone areas, thereby creating servicing problems and threatening environmental degradation.

The housing situation is deteriorating and there is a huge backlog of dwelling units. Land prices are increasing rapidly, thereby adversely impacting on housing affordability, especially for low-income households. Squatter communities have started to appear in some parts of Greater Kathmandu.

Most land development and supply since 1970's have been taking place in an informal way through the activities of land brokers. Although, a pragmatic approach, this informal process is unregulated, so that land development takes place at random, even on flood plains, without any systematic layout. This has led to the development of a low density urban sprawl and encroachment onto agricultural lands, and created additional problems for servicing new residential areas.

The development of residential land through the formal process has been quite limited in the Valley. Although, there are indications of the private sector's interest in this field, it has yet to embark on any major land development project. The experience

114 with public sector residential land development has been limited to the three sites-and-services schemes at Kuleswor, Dallu and Galfutar, which were initiated by the KDC since its formation in 1976. Although still incomplete, these scheme cover about 53 ha of land and provide some 2,000 residential lots of various sizes. Thus, out of the total residential expansion of 1,075 ha in Greater Kathmandu between 1971 and 1981, the public sector's role in residential land development accounted for 5 per cent of the total.

115 4. PlANNING IDSTORY AND lAND POUCY INSTRUMENTS

This chapter reviews the main land policy instruments in an effort to assess the effectiveness of the current planning system. It presents an overview of the planning history of the Valley before moving on to land policy instruments. A comprehensive assessment of planning legislation appears before the review of public land acquisition and land taxation as policy instruments. The assessment of regulatory and development control measures and of the planning agency operating in the Valley is taken up in Chapter Five.

4.1 Planning History of the Kathmandu Valley

Much of what has been recorded as the history of Nepal has been the history of the Kathmandu Valley, since this Valley has been the traditional seat of the commercial, administrative and political power. Until the early 1950's, the name of the Valley was synonymous with the name of the Kingdom. The presentation in this section is largely based on material from Suwal et al. (1979:70-96), Ranjitkar (1983:8-10), Acharya (19i5:10-13), Chhetri (1986(a):39-47), and Rimal et al. (1986:9-12).

Though the Valley's earlier period is more associated with mythological tales, historical development of the Kathmandu Valley has been traced to the Lichhavi Period (first to eighth century AD). During this period, Devpattan (founded in 250 BC), adjacent to the Pashupatinath Temple, emerged as the main center while most of the other parts of the Valley remained rural. It was during the Malia dynasty (1257-1768 AD) that the Valley went through rapid stages of socio-economic and physical development. Although the existence of a capital city in the Valley is not referred to until the eleventh century, the three principal towns are believed to have been founded between the sixth and ninth century, Lalitpur as the oldest and Kathmandu as the youngest among the three. Kathmandu achieved urban status at the end of the tenth century. The division of the Valley into separate kingdoms after the death of Yaksha Malia (1482 AD) finally paved the way for the emergence of the three main towns of the

116 Valley as the main urban centers.

Though urban planning in the modem sense is a recent phenomenon in Nepal, pre-industrial societies have always been concerned with the best possible use and management of land. In the Kathmandu Valley, settlements were planned on the elevated flat table land called 'tar' and extensive agriculture was practiced on the fertile soils of the river valleys below these settlements. All settlements were built compactly with a strong trend for vertical expansion, partly for defensive reasons but most importantly to spare fertile land. Settlements were located close to arable land, running water and markets, while forests were considered as sacred communal property and were protected against boundary encroachment.

With the end of the Malla period in 1769 and the unification of the country by Prithvi Narayan Shah (an ancestor of the ruling monarch), Kathmandu became the capital of the country and the Valley emerged as the seat of political and economic power which greatly influenced its subsequent development. During the Rana reign (1846-1951), the emerging urban forms of the Valley towns, especially Kathmandu and Patan, were contributed to by the locations of new palaces (sited mostly in elevated and low agricultural value areas) in and around these towns with a network of access roads.

The year 1951 marked the end of century old Rana reign and the beginning of a new era of modernization in Nepal. With this the need for improvement and modernization of the urban fabric and physical infrastructure of Kathmandu was beginning to be realized, which was further reinforced by the necessity of preparing Kathmandu for its international exposure. Thus, efforts were made to improve its physical infrastructure and urban facilities in the 1950's and early 1960's. This led to the undertaking of many premature planning and development tasks under the banner of some hastily formed development bodies, such as the Coronation Committee (1955), a development committee prior to the State Visit of Queen Elizabeth II to Nepal (1961), and the high powered Kathmandu Valley Construction Committee (1963), on an ad hoc and piecemeal basis. However, the need for planned development of towns and settlements in the Valley in an integrated manner was gradually being realized, and in the early

117 1960's, the United Nations (UN) was requested to give technical assistance in physical planning.

After the arrival of the first UN advisor in town planning, Lefvert in 1962 {Lefvert, 1964), town planning activities started to gain momentum and the first planning legislation, the "Town Development Committee Act, 1963" (the 1963 Act), was promulgated. Following Lefvert's mission in Nepal, a succession of UN experts and consultants made significant contributions in the planning field, and the need for comprehensive regional development also began to be recognized. Thus, the Kathmandu Valley Development Plan 1969 (the 1969 Plan), was prepared along these lines and a wealth of material was published as a book (DHBPP, 1969). This regional approach in planning was made a matter of national development policy and in the Fourth Five-Year Plan (1970-75), it was officially recognized and spelled out (NPC, 1972:281-282). The creation of four regional centers in 1972, and the Government's commitment to develop the country along growth pole strategy lines implied the investment of resources in selected centers, and this opened a new chapter in the history of modem town planning in Nepal. Since 1982, there have been five regional centers: Dhankuta in the Eastern, Kathmandu in the Central, Pokhara in the Western, Surkhet in the Mid-Western, and Dipayal (Doti) in the Far-Western Development Regions. Almost simultaneously with the growing need for town planning works, the original joint PWD nucleus Building Department expanded its scope and size to become the 'Department of Housing, Building and Physical Planning' (DHBPP), and is entrusted with the responsibility for preparing physical development plans for different centers (NPC, 1975: 543-545).

To implement the 1969 Valley Plan, the government used the 1963 Act to establish a Kathmandu Valley Town Development Board in 1970 under the chairmanship of the then Minister of State of Works, Transport and Communication. The function of this Board was to supervise, guide and manage all functions of the 'Kathmandu Valley Town Development Committee' which was established at the same time under the chairmanship of the Chief Zonal Commissioner of Bagmati Zone (with other heads of departments related to urban development as members) in order to implement the 1969

118 Plan. This Committee designated area around the Hanumandhoka as a 'Monument Zone', and framed and implemented regulations for development control in this zone with a view to preserving the monuments of archaeological and historical importance. It also attempted to undertake the unsuccessful Kalimati Housing Scheme (refer, 4.2).

The absence of an exclusive institutional arrangement with adequate staff created problems in implementing the Committee decisions from the beginning. As the line agencies were expected to carry out the respective part of the programs to implement the 1969 Plan proposals, it could not materialize due to their different work programs and priorities. Despite these constraints, the planning efforts made so far did succeed in drawing national attention to the increasing problems of urban growth in the Kathmandu Valley and the need for a planning mechanism to guide its development and growth. The Board and the Committee were later dissolved in view of their ineffectiveness to carry out plan implementation tasks, and to pave way for creating new institutional arrangements under a separate planning law.

In the meantime, the Department (DHBPP) was actively involved in the preparation of physical development plans of different centers, and attention was focused to prepare plans for the regional centers right from the beginning of their designation in 1972. Consequently, the Government formally approved the plan for Surkhet in 1973, and along with it another new Planning Law, the "Town Development Plan (Execution) Act, 1973" (the 1973 Act) was also promulgated in the form of an ordinance. The plans of Dhankuta and Pokhara were approved later in the same year, whereas the general development plan of Dipayal was approved in 1984. Considering the new development and imperatives in the Valley, a few alternatives schemes were proposed by modifying the 1969 Plan. During 1973-74, a team of short-term UN consultants also worked on the Kathmandu Valley Plan. However, in spite of continuing efforts from both local and foreign experts, it was only in 1976 that His Majesty's Government (HMG) of Nepal finally approved the Kathmandu Valley Town Plan. A Board was established under the chairmanship of the Minister of Works and Transport in order to oversee the plan's implementation and to make necessary decisions related to planning and implementation. It is important to note that the Government used 'the 1973 Act' for

119 approving the plans for the five regional centers. The plans for all other urban centers, however, were approved under 'the 1963 Act'.

To sum up, planning activities in the Valley since late 1950's until 1976 were characterized more by planning and very little by action (Chhetri, 1986(a); Kaphle, 1987). The major bottle-neck was considered to be the non-existence of a formal mechanism for plan implementation. The institution of Kathmandu Valley Town Development Committee (KDC) and the other Committees at planning and implementation levels were expected to fill up the gap (refer, Chapter 5).

4.2 l&gislatiye Framework for Planning

Various laws enacted at different dates for various purposes have an impact on urban planning. For example, laws related to land, town planning, pancbayats, environment, tourism, industry, and utility services, influence the built environment. Besides these, a number of regulations, by-Jaws and executive decisions also affect urban development. In this Section, the main provisions of the planning laws, and panchayat and land related acts are reviewed, along with gaps, overlaps and confusion in their provisions. The use of public land acquisition as an instrument of urban land policy is also discussed.

4.2.1 Planning Laws

The two Planning Laws, the 1963 Act and the 1973 Act, were drafted at different periods to serve different purposes. The 1963 Act authorizes urban planning and town development works to an autonomous and corporate body, the Town Development Committee {TDC), by mobilizing local resources. However, the 1973 Act entrusts such responsibility to the Town Plan Implementation Committee (fPIC), a government body, and the Government provides all necessary resources, human as well as financial, required for town development in the designated regional centers.

120 The TDC acts through a management 'board' to perform vaguely defined planning, control and development functions. Although the committee is authorized to formulate systematic plans for town development, to execute them and to pay compensation for restriction of construction activity on any land or zone, most of the provisions of this Act are imprecise. For example, the Act says nothing about the process of plan preparation and sanctioning, and the "plan" and its components are not defined. Furthermore, the relationship between the TDC and the panchayat is not defined, urban development functions of the committee are limited, regulations on the use of land are not mentioned, and control powers are confined to building construction.

As compared to the 1963 Act, the 1973 Act is more comprehensive and is further supplemented by the 1976 Rules. A committee formed under it is authorized to perform all functions relating to town planning and there are powers for zoning, regulating construction of buildings and the use of land. The committee has powers for land acquisition, and its permission is mandatory for all land transactions, mortgage, subdivision or registration of immovable property of any kind. The Cabinet Decision approving the general plans for Surkhet (one of the five regional centers) was rendered simultaneously with the initial adoption of 'the 1973 Act'. Since this Act was formulated in a hurry, there appear to be some gaps in the Act which limit its successful implementation (refer, Acharya, 1985 for details). Some major deficiencies are: confusion about the geographical scope of the act; absence of explicit provision on the specifics of plan preparation; silence about the procedures for plan review and sanctioning as well as for plan revision, detailed planning and ongoing planning procedures and practices. These aspects are elaborated below in conjunction with the assessment of other related acts.

4.2.2 Panchayat Related Acts

Some of the provisions of the Town Panchayat Act, 1962 and the Decentralization Act, 1982 related to the preparation of development plans, building permits, provision of infrastructure and plan approving authority are examined here.

121 4.2.2.1 Provisions of the Acts: The municipality or the Town Panchayat derives its power from the Town Pancbayat Act, 1962. Its main duty is to work towards the general welfare of the people and to undertake development works, provide utility services and look after their maintenance. It is also authorized to prepare periodic plans for orderly town development and to issue building permits.

The Decentralization Act, 1982 has categorized all development works into two levels, national or regional level to be handled directly by the Government, and local or district level to be undertaken by local pancbayats. The Act enables local pancbayats to take active participation in the decision making process, implementation and evaluation of local development works by mobilizing local resources. The Act and the Rules of 1984 specify detailed procedural matters for the preparation of town development plans. Accordingly, a plan prepared by the town pancbayat would be approved by the town assembly.

The 1973 Act does not mention who is responsible for making development plans, it simply grants power to TPIC "to perform all functions relating to town planning". However, HMG has entrusted physical planning teams to prepare all necessary plans during the planning process, whereas the national planning documents have expressly authorized the department (DHBPP) to prepare all land use and town development plans. The 1973 Act further maintains that all plans to be implemented through its provisions must be approved by HMG. The Act specifies that all kinds of development works, including the provision of infrastructure, need planning permission from the TPIC and consequently, a building permit must be approved by the TPIC. After the introduction of town planning in the regional centers, the TPICs have been directly involved in providing some basic infrastructure, services and facilities, although district offices of the line ministries are entrusted to carry out this responsibility.

4.2.2.2 Duplication and Confusion: Thus, there appears to be duplication of roles between the TPIC and the town panchayat in relation to the preparation of development plans and granting of building permits. There is also confusion of roles played by municipalities and other line agencies in the provision of infrastructure. This matter

122 is further complicated by the provision of the 1973 Act which requires TPIC's planning permission for construction of infrastructure. There also seems to be some conflict (in relation to plan preparation and approving authorities) in the provisions of the Decentralization Act, 1982 and the 1973 Act, as noted below.

Since the definition of 'Town Development Plan' is missing in the Decentralization Act, there is confusion on the scope of the plan and it is not clear at which level it is placed - locaVdistrict level or the regionaVnational level? As the Act is silent on its relationship with both the planning acts, the role of various agencies like the TPIC, TDC and municipaiities is missing. There is the possibility of confusion arising on the question of legal validity of various town development plans for a particular place prepared and approved under the provisions of different acts.

4.2.3 Land Related Acts

The provisions of the Land Act, 1964, Land Administration Act, 1967 and Land Acquisition Act, 1977 related to ceiling on land holdings, division of land and transfer of immovable property, land acquisition process and compensation, are examined here.

Various provisions in Nepalese legislation put some restrictions on land. Restrictions on sale and transfer of land is provided for in the Land Act, 1964 and the 1973 Act. Similarly, restrictions on land development and use have been provided for in both the planning laws, the Town Panchayat Act, 1962, and various development control measures in force in the regional centers and other urban areas of the country.

In regard to ceiling on land holdings, the Land Act, 1964 limits the maximum land holding in a single ownership, to 25 .higha (16.9 hectares) subject to some stipulations (Table 4.1). Thus, a ceiling of 25 .bigha in the Terai, 50 ropanj (2.5 ha) in the Kathmandu Valley and 80 ro.pani (4.0 ha) for other hill areas have been fixed mainly for agricultural purposes. The ceiling on land holdings has implications for undertaking organized private sector land and housing development (refer, 3.7 and 10.2). There is no ceiling on land owned by government agencies or .Gu.thi Corporation. The presence

123 Table 4.1: Land Ownership Ceiling (in ha)

Region Agricultural Additional land for purpose residential use Rural Urban Terai 16.9 2.0 0.68 Kathmandu Valley 2.5 0.4 0.25 Other Hill Areas 4.1 0.8 0.51

Source: Lands Act, 1964, Section 7.

of a sizable amount of .Gmhi land, some five per cent of the total land in the Valley (PADCO, 1986: 93), is indicative of the strong influence of religious and cultural institutions in the socio-economic structure of the Valley. The Act also gives a tenant right to permanent tenancy and a share of 25 per cent of the land value in case the land parcel changes ownership, if the tenant so wishes. Tenancy rights are hereditary (to sons only) but not saleable. Any legal transfer of an immovable property should be duly registered with the District Land Administration Office.

The 1973 Act is silent on land ceiling but specifies that TPIC's permission is needed for the transfer, mortgage or subdivision of any immovable property. However, Nepalese laws prior to 1973 do not contain any provision regulating the subdivision of land into smaller portions. Thus, the subdivision provision of the 1973 Act appears to be in conflict with the traditional practice of dividing the property among heirs without any restriction.

Legislation in many countries contains provisions for compulsory purchase by the government of land for some public purposes. The definition as to what constitutes a 'public purpose' has always been a debatable issue and has varied with place and time. The Constitution of Nepal guarantees 'Right to Property' to every citizen. Article 15 of the 1962 Constitution states, "No person shall be deprived of his property save in accordance with the law".

124 The Government is enabled to acquire land compulsorily for some public purpose on the basis of many Nepalese laws. The Land Acquisition Act, 1977 prescribes detailed procedures to be followed in this regard, and authorizes the Chief District Officer (CDO) of each district to carry out land acquisition. Compensation is usually determined by a committee chaired by the CDO. Compensation must be in cash, or if the owner wishes, in other government land if it is available. No time frame is prescribed in the Act within which compensation must be paid. The Act specifies that tenants, on expropriated land, are entitled to receive 25 per cent of the total compensation paid. Tenants also receive the full value of any house they may have constructed. The Act contains a 'quick take' provision (Section 25) empowering HMG to occupy a parcel in special circumstances simply by issuing a notice. Section 27 authorizes HMG to acquire any land through negotiation and for this purpose other procedural matters specified in the Act need not be followed. The Act specifies that for land to be acquired for the purpose of the Government or the panchayat, the criteria to determine compensation would be the directives issued by HMG from time to time in this regard together with any loss likely to be incurred by the owner due to dislocation. For other purposes, the amount of compensation would be based on the current market price of land, the value of improvements and crops, and potential losses incurred by the owner due to dislocation. However, the Act does not mention how the current market price of land is to be determined. The vagueness of the Act in this regard permits lower than market prices to be paid, often resulting in legal disputes which seriously impede planned development programs (Muller, 1981; Chhetri, 1986(b)).

Records from CDO offices show that, between 1977 and 1984, the government acquired 123 ha of land in the three districts of the Valley of which 63 per cent was acquired in Kathmandu, 28 per cent in Lalitpur and only 9 per cent in Bhaktapur (PADCO, 1986:116-117). On a town panchayat basis for this period, 8 per cent of the total district land acquisition took place in Kathmandu, 19 per cent in Lalitpur and 7 per cent in Bhaktapur. The acquisitions were carried out mainly for institutional purposes, such as housing schemes and extension or widening of roads.

125 Prior to 1977, the most prominent public land acquisitions made include the Tribhuvan University Campus at Kirtipur, Balaju and Patan industrial estates, Tribhuvan International Airport extension, the Ring Road, and the Kuleswor and Dallu housing schemes sites. Although public land acquisition for institutional use has not been particularly well planned or efficient, the PADCO report (1986:118) notes that land acquisition for road construction in the Valley has facilitated development and led to higher land prices in the proximity to the roads, such as those at the Ring Road and the link between Nagpokhari and Narayan Chaur at Naxal.

The interpretation of 'public purpose' as a rationale for the compulsory acquisition of land by the government has changed over the years. Two extreme cases from Kathmandu illustrate this point (Acharya and Kammeier, 1986/87). The Government could not implement the Kalimati Housing Scheme prepared in 1971 because the court ruled in the mid-seventies that 'taking property from one person and selling it to others does not constitute a public purpose'. However, a similar scheme, the Galfutar Housing Scheme, was planned in 1980 and is under implementation.

The time taken for government acquisition of land and the rate of compensation paid to persons concerned have also changed considerably over the years. Whereas in the earlier years it used to take a long time before a public agency could get hold of land (because of lengthy procedural matters and litigations in the courts) as illustrated by the Kalimati Housing case, the new act of 1977 has made it possible to acquire land faster. In case of emergency and in special circumstances, the Act makes it possible to get hold of land in even two weeks. Discussions with planning and municipal officers revealed that present rates of compensation were more adequate than in the past when the Government used to acquire land at practically throw-away price as compared to the current market value (Muller, 1981; Malia, 1987). However, there are complications in estimating the amount of compensation. These being: lack of experts on real estate valuation in Nepal; confusion created by the Government by establishing separate rates for the valuation of the same property for different purposes; and, the usual time lag between the preparation of the budget estimate and the payment of compensation after the acquisition of land.

126 Besides problems associated with the determination of compensation amount, there are other limitations of the Land Acquisition Act of 1977. As the time limits within which compensation must be paid is not fixed in the Act, it can cause considerable financial hardships to landowners, and development programs may get delayed due to legal and administrative disputes. On the other hand, a landowner loses the right to compensation if he fails to receive or to accept the compensation within the time limit prescribed and/or extended by the CDO.

As noted above, since land acquisition currently takes place through negotiated purchase rather than expropriation, the main problems stem from high and rapidly increasing land prices and the vagueness of guidelines determining the amount of compensation (Chhetri, 1986(b)). It hampers land acquisition, because of the financial implications to the HMG to buy land even at lower than market prices, and the delays would inflate the project costs while depreciating the compensation amount, leading to disputes. These latter problems have also compounded the implementation problems in the Dallu and Kuleswor housing projects. Further, the process of land acquisition is complicated by the inadequacy of cadastral records (Chhetri, 1986(b); PADCO, 1986; Malla, 1987). The city core areas of Kathmandu and Lalitpur have been resurveyed recently for cadastral purposes, but cadastral records for other areas within the municipal boundaries and outside them are decades old. Land registration system are not well organized or up to date, so that every land parcel may be potentially problematic in determining the ownership and property rights, which eventually makes land assembly a difficult task.

In addition, as each district administration office has the authority to make decisions regarding acquisition of land for their respective projects, there is little co-ordination among different agencies and land acquisition programs (Chhetri, 1986(b)). Since there is no legal requirement that land be acquired in accordance with a comprehensive plan, land acquisition has taken place in a rather haphazard manner and also making landowners subject to arbitrary expropriation.

127 4.2.4 Concluding Remarks

The 1963 Act was meant for local resources mobilization while the 1973 Act was drafted for application in the regional centers only with HMG's direct involvement. HMG's direct participation in the development process of the regional centers clearly indicates that this program is considered to be of regional importance in accordance with the Decentralization Act, 1982. However, such an intention is not reflected in the composition of the TPICs and their programs in the Valley, which reflect local character, and programs in other parts of the Central Development Region (Kathmandu being the regional center) have neither been executed nor co-ordinated through the KDC.

The 1973 Act is silent on the specifics of plan preparation, and the procedure for plan review and sanctioning. The various stages of formulation of plans and procedure for citizens' participation are missing. The involvement of panchayats in plan preparation is also not mentioned. Similarly, procedural matters related to plan revision, detailed planning, enforcement of plans, hearing of the appeals, and exercise of the penalty provision are not mentioned in the Act. This has led to considerable uncertainty as to adequate and correct procedures.

The provisions of some of the other laws considered here are overlapping and at times conflicting with the 1973 Act. The relationship between the KDC and the TPICs on one hand and the panchayats as well as the Land Administration Office on the other hand have not been clearly defined. This has created confusion as to which agency is responsible to perform certain jobs, such as preparation and approval of plans, granting of building permits, provision of infrastructure and registration of land. Similarly, it is unclear whether the land acquisition procedure has facilitated the acquisition of land for urban planning purposes. The Decentralization Act has made additional confusion especially in the scope of the plan, relation among various agencies and the powers of local panchayats for the preparation, approval and implementation of town development plans.

128 4.3 Land Taxation

This section reviews land taxes currently used in Nepal and briefly assesses their application in the Kathmandu Valley. The taxes reviewed include the Land Tax (or Land Revenue Tax), the Land Registration Tax, and the House and Compound Tax (or Urban Property Tax), all collected by the Central Government.

4.3.1 The Land Tax

This tax is levied on rural as well as urban land, and is governed by the Land Tax Act of 1978 and the Land Tax Rules of 1980. In rural areas, the tax is assessed on the productive capacity and quality of land. Land is graded according to soil quality and access to irrigation facilities, with different standards for upland and lowland land systems.

The grading of urban land for Land Tax purposes has begun only recently. The Land Survey and Measurement Rules of 1975 give a general framework for a system of six grades, based on proximity to a hierarchy of roads, paths, lanes, and availability of infrastructure. The Rules are not clear on grading urban land, and the District Land Revenue Offices have been slow to adopt and apply the Urban Land Tax, but they have developed a simple classification system for land within municipal areas in the Valley. But it was unclear how much land had been graded or how much revenue was being collected.

Data for the period 1980-81 to 1984-85 for the three districts of the Valley show that the amount of tax collected is low and the revenues are not growing (PADCO, 1986:134-135). Although the Kathmandu District accounted for nearly 67.8 per cent of the total land tax collected in the Valley in 1984-85, the total for the Valley (which contains the most fertile land and the most expensive urban land in Nepal) has remained stagnant at around one million rupees since 1980-81. The possible explanations are: (i) properties smaller than 20 ropanis (about one hectare) are almost totally exempted from the land tax, which covers the vast majority of privately owned

129 parcels in the Valley (Dhungana, 1974); and (ii) the rate of Land Tax (Rs 31 to 51 per bigha (0.67 ha)) has remained unchanged since 1974, with the result that, nationally the revenues from this source have not been growing in recent years, and in 1984-85, this tax generated Rs 77 million, accounting for 2.4 per cent of the total tax revenue for that year (Ministry of Finance, 1986:50).

4.3.2 Land Registration Tax

The cadastral survey was introduced only in early 1970's in Nepal. One of the objectives was to define the rights, interests and physical possession of land, not only in respect of landowners but also of tenants (Pradhan, 1984). The survey has covered almost all districts. All transactions in property have to be registered with the registrar mainly for the purpose of paying stamp duty. Pradhan (1984) noted the following defects in the registration system: registration of deeds stands without investigating and it is the deed and not the register that proves the title; and it is costly and cumbersome and not a guarantee of the legality of the transaction or title to the deed.

The registration system simply records all transactions involving a parcel and there is, at least in theory, a continuous record of rights held and any change which may occur in them. The record of transaction does not in any legal sense provide a title to the property and can only act as a witness in case of a dispute.

The Land Registration Tax is levied on most land transfers (with some types of public sector transactions exempt), and nationally, it generates the greatest amount of revenue of the three types of land taxes. The Land Registration revenue grew annually at 13.9 per cent (compound rate) from Rs 65 million in 1979-80 toRs 142 million in 1984-85, which is about 4.5 per cent of the total national tax revenue for the year (Ministry of Finance, 1986:50).

The tax is levied as a percentage of the selling price of the land parcel (currently 12 per cent). In rural areas, only the buyer pays the registration tax (seven per cent of the selling price), while in urban areas, both pay the tax (buyers pay five per cent of

130 selling price, and sellers pay seven per cent). Since the officially declared sales prices (as recorded on the registration deeds) tend to be unrealistic to save the tax, District Revenue Offices in the Valley have begun to set official minimum land values since 1982 to guide collection of this tax, although the land value schedule in Bhaktapur is not as detailed compared with the other two districts. Between 1980-81 and 1984-85, the revenues collected from this source increased annually at 16.1 per cent, from Rs 17.2 to 36.2 million (PADCO, 1986:135). The revenues collected from this source in the Valley have been much greater than those collected for the Land Tax. In 1984-85, for example, revenues from the Land Registration were Rs 36.2 million compared with only Rs 1.08 million from the Land Tax (PADCO, 1986:135-136). Higher revenues were collected in Kathmandu District which accounted for 76 per cent of the Valley's land registration revenue in 1984-85. On the basis of land transactions, on an average, Rs 2,372 and Rs 1,846 per transaction were collected in the Districts of Kathmandu and Lalitpur respectively in the year 1984-85.

The administration of this tax appears to be easier than for other land taxes because the payment of this tax is a requirement for carrying out a legal land transfer.

4.3.3 Houses and Compound Tax

This tax (i.e. the urban property tax), conceived in 1959-60 but introduced in 1963 and currently governed by the Houses and Compound Tax Act and Rules of 1963, is basically aimed at generating revenue from private residential property. The real estate belonging to HMG, Royal Family, panchayats, foreign governments, warehouses, housing for workers, and compound used for hotels and factories and mills are exempted, while properties devoted to commercial uses are not mentioned in the Act.

This tax is levied annually on the basis of capital value of the property determined by considering construction cost of building, locational and access advantages, and average land price in the area. The tax schedule remained unchanged from 1975 until 1988.

131 The method of valuation for the purpose of this tax is simple and easy to apply. But the valuation schedule suffered from low land values and construction costs, which also omitted facilities available in a building in computing its valuation.

The PADCO (1986) report noted that the revenue potentials of this tax were constrained by a low tax rate, a low coverage of urban properties for tax purposes, and its weak administration. Nationally, its contribution to the total tax revenue had been very small, only 0.3 per cent in 1986-87, but it doubled from Rs 6.5 million in 1979-80 to Rs 13.4 million in 1986-87 (Ministry of Finance, 1988(a):54). The Valley's share of this tax revenue increased from 30 per cent in 1973-74 to 60 per cent in 1978-79 (Devkota, 1980:36).

Its revenue potential was also hampered by very high exemption levels imposed in 1985, whereby, practically, properties of up to one ro.panj (508.7 sq m) in size, which constituted more than 85 per cent of all house compounds in municipalities (Dhungana, 1974), were exempted from the tax.

In his budget speech of July 1988, the Minister for Finance announced that the valuation of land and houses would be upgraded in 1988-89 to reflect current prices, and the additional revenue from this tax was estimated at Rs 20 million in 1988-89, although a property with a taxable value of up to Rs 200,000 was exempted (Ministry of Finance, 1988(b):17).

4.3.4 Concluding Remarks

With the exception of the Land Registration Tax, revenue generation from taxes is poor. High rates of exemptions allowed on the Land Tax and Houses and Compound Tax have resulted in a very low ratio of actual to potential revenue. The land taxes are all administered by the Central Government with no local government participation. Only 60 per cent of the land tax revenues are returned by the HMG to respective districts. The centralization of tax administration also limits the potential for using land taxes as policy instruments. The high rate of Land Registration Tax should be a matter of great

132 concern to the policy makers, because it tends to encourage corruption (by undervaluing the property for registration purposes), inflate land values in subsequent transfers, and motivate buyers and sellers to engage in land transactions outside the legal frame, as shown by experience elsewhere (UN ESCAP, 1985: 59).

It is clear from the above discussion that land taxation has not been used as an instrument of urban land policy in Nepal. Apart from the generation of revenue (current situation), land taxation can also be used to redistribute wealth or income, check land speculation and encourage development of vacant urban land, recapture some of the land value gains to finance infrastructure provision, promote retention or conversion of certain land uses, and help establish claim to land ownership. As noted by Dhungana (1974), PADCO (1986) and Pradhan (1988), the tax administration suffers from many deficiencies, such as: (i) property records are generally disorganized, out dated and limited coverage; (ii) property valuations are not reassessed periodically; (iii) tax offices are grossly understaffed, underequipped, and the personnel lack training in administration; and (iv) tax evasion is widespread and bribing of tax officers is frequent. Besides strengthening the existing tax administration to fully utilize the current tax potentials, the PADCO report (1986) suggested the introduction of the betterment tax (or special assessment) with a view to assist in cost recovery and 'capture' of land value increases caused by public investment.

4.4 Chapter Copclusjons

This Chapter presented an overview of the planning history of the Valley and reviewed some of the main land policy instruments (e.g. planning laws, panchayat and land related acts and land taxation) in an effort to assess the effectiveness of the current planning system operating in the Valley.

This assessment shows that current planning efforts have not been very effective in guiding urban development to desired locations in the elevated table lands, as was the practice in traditional land management. As a consequence, haphazard and unplanned urban sprawl began encroaching onto low lands and agricultural belts, especially since

133 early 1970's.

The planning laws, the 1963 Act and the 1973 Act, appear to contain numerous gaps in their coverage and procedural matters. There are overlaps and conflicts in their provisions and with those of the other laws considered in this Chapter. The unclear relationship among various public agencies and the duplication of responsibility for major planning activities, such as plan making, plan sanctioning, plan implementation, resources mobilization, ongoing planning and revision of plans, issue of planning and building permits and provision of infrastructure, have created a lot of confusion in the planning process. Similarly, the land acquisition procedure is complicated; there are problems in determining and payment of compensation amount within a reasonable time frame; land acquisition is not related to a definite site development plan; and such programs are not co-ordinated. This has resulted in haphazard acquisitions being carried out and making landowners subjected to arbitrary expropriation.

The assessment of taxation instruments shows that, in general, land taxes generate little revenue due mainly to low tax rates, low valuation of properties, lack of periodic review of property values, high level of exemptions, limited coverage of the taxes, and their weak implementation. All land taxes are collected by the Central Government with no participation from local governments. Land taxes have not been used as land policy instruments in Nepal; their primary purpose has been to generate revenue.

134 5. PLANNING MACHINERY IN ACTION

This Chapter assesses the effectiveness of the planning system operating in the Valley. It provides an overview of the institutional arrangements for planning and introduces major agencies involved in Valley's urban development. The operation of the Committee responsible for urban planning and development is assessed before discussing land use and planning in the Valley. And finally, a review of the effectiveness of regulatory and development control measures, as instruments of land policy and plan implementation, is taken up.

5.1 Agencies Involved in Urban Development

There are various government as well as semi-government agencies involved in the formulation of plans and their implementation. Through their various activities, these agencies can make significant impacts on the urban development process. Figure 5.1 illustrates the present institutional arrangements of urban agencies in Nepal and their linkages. This section briefly introduces some of the major agencies involved in urban development in the Kathmandu Valley.

The 1963 Act was the first attempt to make legal institutional arrangements for planned development of urban centers. With the introduction of regional economic development planning in the early 1970's, necessary legal support for the planned physical development of the regional centers was provided via the 1973 Act. Thus, the Kathmandu Valley Development Plan, 1976 was prepared (DHBPP, 1976(a)) and approved by the Government in August 1976, and an exclusive institutional arrangement was made to implement the plan proposals. The Kathmandu Valley Town Development Committee (KDC) at the Valley level and three Town Plan Implementation Committees (TPICs) at the district levels were formed in 1976.

The KDC is the most important organization created for the implementation of the 1976 Plan and for the enforcement of land-use control measures and regulations in the Valley.

135 Figure 5.1: Principal Relationship of Urban Sector Institutions in Nepal

UR~AN------··------·-··------PLANNINB AND DEVELO~HENT COORDINATION ltNO F ltiANCE MUNICIPAL ADHINISTRATION, SERVICES AND MAlNl~N~NCE ------~------NA f 1UNAL t•ANCiiAYAT r-- T I COUNCIL OF MINISTERSl

.. .. CDNTROLLINB MlNJSTRtES FOR cl MINISTRY OF WOR~S AND PUDLIC .. CENTRAL SECRETARIAT r > TRAN~ORT I DELIVERY OF URBAN SE~VICES Ul ~ NATIONAL PLANNING l .. AND INFRASTRUCTUnE CE.G. ~ DtPnRTMENT OF 1-fOUSJNB, -11"1 COMI1JSSION r ROADS, WATER SUPPL V• POt..'ER, ~ BUILDINB AND PHYSICAL TRANSPORT 0 EDUCATI01ol 0 ETC.) ~ PLANNJNB CGH8PP) - -1- i URI:IAN PLANNJtg .... ~ CENTRAL COORDINATION ·w COMI'IIliEE 0\

------~------· ------.,.r ZONAL COMHISSION~RS ~ _.. " I ZONAL ASSE'Hl'LIEO DHEIPP TOWN DEVELOPMCNT I LOCAL ~ PLANNING AND ~ DISTRICT Of'F'ICERS I ...~ Of"Fit;fS IMPLEMENTATION ! > COf'lriiTTEES I DISTRICT PANCHAVATB ~ Ul

I VILLAGE P~HAVATS lf-J ------·------Source: World Bank, 1982: 12 However, the actual field work is carried out by the three district level TPICs in Kathmandu, Lalitpur and Bhaktapur (refer, Figure 5.3). A detailed comment on the organizational structure of the KDC and other committees or agencies under it and their relationship with each other is presented separately in the following section (refer, 5.2).

As mentioned earlier (refer, 4.1), the Department of Housing, Building and Physical Planning (DHBPP) widened its activities over the years, and is entrusted with works related to housing, physical planning and urban development (NPC, 1975: 543-545). Separate physical planning teams were created to perform urban planning jobs in the regional centers. A Kathmandu Valley Town Planning Team (KVTP'I) was established in 1976 under this department to work on the 1976 Valley Plan. The DHBPP's organizational linkages and its role in urban development in the Valley for project planning and implementation procedure is shown in Figure 5.2. A separate Solid Waste Management Project was established under this department, through bi-lateral aid from the Federal Republic of Germany, for improving the urban environment in the Valley by managing and disposing of solid waste.

Within this overall framework, the principal responsibility for urban planning lies with the KDC. As shown in Figure 5.2, based on policy guidance received from the KDC, the KVTPT prepares master plans, land use and zoning plans, detailed plans for specific areas for development, and redevelopment or renovation (e.g. markets, sites and-services schemes, public parks, historical areas and housing schemes). After these plans and land use regulations are approved by the KDC, these are forwarded to HMG for approval, following which they are enforced by the Town Panchayats. The TPICs, under the guidance of the KVTPT, also prepare action projects which after approval by the District Panchayat are forwarded to HMG for final approval and funding.

Under the Town Panchayat Act of 1962, town paochayats (municipalities) are entrusted with the responsibility of overall town development. The 1976 Plan has put additional responsibilities on the municipal mayors in relation to implementation of control measures. Since the mayors issue building permits, they are required to follow land use regulations and building by-laws while granting the permits, to co-ordinate with the

137 Figure 5.2: Project Planning and Implementation Procedure - Kathmandu Valley

IS MAJESTY • S OOYERIIM

1rant1 pro ect fundi requeiLI fundi for 1pprove1 le1i1lation action project• 1nd preeentl draft planninl lelillation for approval

KAniiWIDU VALLEY TOWN DEVELOPMEin' COMMI1TEI (KDC)

approve• project ,uidelinel and prepare• ea~ter plant for iepleeentation objective• buildin, re,ulationl approve• le1i1lltion action project plan• fol' enforceaent

TOWN PAHCHAYAT 1 I MEMBER·CUM·SECRSTARY KATHMANDU VALLEY TOWN JOlin' ZONAL COMMISSIONER PLAHHIHO TEAM (KPT) I 1 1 1 1 1

KAniHANDU KATHMANDU KATHMANDU PUBLICITY ADIIINJSTJIATION LAW BRANCH DEVELOPMENT VALLEY TOWN VALLEY TOWN BRANCH AND ACCOUNTS lMPL.EMEin'ATlOH DEVELOPMENT DEVELOPMENT COMMI1TEB, IMPLEMENTATION IMPLEM£NTATION KATHMANDU jcoMMITTD, COMM11TEE, LALlTPUR BIIAKTAPUR I, __j L ieple• ent1 act on proJecte

Source: Katheandu Town Planninc Office. : Pradhan. 1988: 204

138 TPICs, and to take full responsibilities for the permits. With the introduction of the Decentralization Act of 1982, the role of town panchayats in town planning and development have become more important (refer, 4.2.2). The municipalities are now expected to prepare and implement their town plans in co-ordination with central planning agencies. Even while the KDC undertakes the overall planning functions in the Valley, the municipalities being local bodies, naturally play an active role in the plan formulation and implementation, and generally provide a local political color in the planning process.

At the central level, the authority for housing and urban planning rests with the Ministry of Housing and Physical Planning (formerly with the Ministry of Works and Transport), and through this, to the executing department of DHBPP (refer, Figure 5.1). The National Planning Commission (NPC) works under the guidance of the National Development Council, which is chaired by His Majesty the King. Besides formulating various plans, the NPC also makes development policies and periodic reviews, and co-ordinates the plans and programs of the line ministries and departments. According to the Cabinet Decision approving the Valley Development Plan, the Vice-Chairman of the NPC is charged with the responsibility of making necessary arrangements, through concerned departments, of funding, personnel and furthering of development projects arising in the planning process in accordance with the objectives of the approved Plan. He is also to solve problems arising out of the enforcement of controls through the co-operation of the people's representatives. Co-ordination of the policies of the line ministries and their embodiment in the investment programs is expected through the Council of Ministers and the Central Secretariat. The Town Planning Central Co-ordination Committee (TPCCC), chaired by the Minister of Works and Transport (with secretaries in various ministries as members), was created to co-ordinate the activities of various town development committees formed under the 1963 Act by offering necessary suggestions to HMG. In practice, however, the KDC and the other four TPICs formed in the regional centers under the 1973 Act have also been co-ordinated through this TPCCC.

139 Kathmandu, being the national capital, not only houses various ministries and departments of state, but many other regional, zonal and district level offices are situated here. A large number of government and semi-government institutions are involved, directly or indirectly, in the development process in the Valley (refer, Table 5.1). More specifically, active roles are played by the Departments of Roads, Water Supply and Sewerage, Telecommunications, Health, Industry, Forestry, Archaeology, Tourism, Transport, and Local Development, the Electricity Authority, the Tribhuvan University, and the District Panchayats.

Recognizing difficulties in making progress in planned urban development in a co-ordinated manner without any mechanism to co-ordinate development activities of sectoral agencies, the 1969 Plan recommended the establishment of an implementation committee consisting of all concerned development agencies in order to implement it (DHBPP, 1969). However, as noted earlier (refer, 4.1), the Development Committee, established to implement the 1969 Plan, did not receive the required sectoral co-operation, and had to be dissolved. In view of this experience, the Cabinet recognized that co-ordinating sectoral works could become a difficult task. Consequently, the Cabinet Decision also asked the chairman of the KDC (i.e. Minister of Works and Transport) to make available co-operation and co-ordination of various line agencies to the KDC. Therefore, the 1976 Valley Plan requires all concerned sectoral agencies to prepare their development programs (such as, those related to industry, investment, loan, donation as well as roads, electricity, water supply, drainage, telephone, and tree-plantation) on the basis of the approved land use plan through the co-ordinated efforts of the KDC (Valley Proposal, para. 17, p.5).

5.2 Institutional Arrangements

The actual structure of the KDC and its supporting organizations have been created through Cabinet Decisions, not through passage of a separate law, since the 1973 Act provides only a very general and ambiguous framework for urban planning. The KDC has very wide powers for conducting urban and regional planning in the Valley. A special planning team of the DHBPP was created within the KDC for this purpose. The

140 Table 5.1: Existing Urban Service Agencies in Kathmandu Valley Region

REGULATION PLANNING CAPITAL CONSTRUCTION CAPITAL COST- MAINTENANCE MAINTENANCE NORMS FINANCING IMPLEMENTATION RECOVERY COST-RECOVERY STANDARDS BY: I FROM: BY: I FROM

INFRASTRUCTURE

Roads - Kath. Valley MWT MWT MWT NONE Town Panch. Panchayat Town Dev. DOR Octroi Comnittee Governnent - MWT DHBPP - MWT DOR

Water Supply wssc wssc wssc wssc WSSC Tariff wssc wssc & Distribution WSSD WSSD WSSD WSSD Panchayat .... Panchayat Panchayat Panchayat ....~ Public Stand wssc wssc wssc wssc NONE wssc wssc Pipes

Sewerage wssc wssc wssc wssc WSSC Tariff wssc wssc Tariff

Drainage NONE NONE NONE NONE NONE NONE None

Electricity NEA NEA NEA NEA NEA Tariff NEA NEA Tariff

Street Lighting NEA NEA NEA NEA NEA Tariff NEA NEA Tariff

Refuse Disposal Town Pan. Town Pan. Town Pan. Town Pan. NONE Town Pan. Pan. Octroi Solid Waste SWMB SWMB SWMB SWMB Man. Board

Telecomnunication NTC NTC NTC NTC NTC Tariff NTC NTC Tariff Table 5.1 Contd.

REGULATION PLANNING CAPITAL CONSTRUCT! ON CAPITAL COST MAINTENANCE MAINTENANCE NORMS FINANCING IMPLEMENTATION RECOVERY COST-RECOVERY STANDARDS BY: I FROM: BY: I FROM

PUBLIC SERVICES Parks TDIC TDIC TDIC TDIC - Town Pan. Town Pan. Town Pan.

Schools Min. Ed. Plann. Unit School School School School Min. Ed. Conmittees Conmittees Conmittees Conmittees Min. Ed. Min. Ed. Min. Ed.

..... Health Centres Min. Health Min. Health Min. Health Min. Health - Min. Health tlllo N Traffic Pol ice Pol ice Police Pol ice - Pol ice Management KDC KDC KDC KDC DORIMIIT

HOUSING

Res. Land DHBPP DHBPP DHBPPIKDC KDC KDCITDIC Development KDC Pvt. Sector Pvt. Sector Pvt. Sector

Housing DHBPP DHBPP DHBPP Pvt. Sector KDC/TDIC KDC KDCITDIC Pvt. Sector Town Pan. Pvt. Sector KDC

DHBPP Department of Housing, Building and Physical Planning (in MilT) SIIMB Solid Waste Management Board DOR Department of Roads (in MilT) IISSC Water Supply and Sewerage Corporation KDC Kathmandu Valley Town Development Conmittee IISSD Water Supply and Sewerage Department MilT Ministry of Works and Transport NEA Nepal Electricity Authority NTC Nepal Teleconmunications Corporation TDIC Town Development Implementation Committee (in TDC)

Note: Changes resulting from the creation of Ministry of Housing and Physical Planning in 1988 are not included.

Source: Adopted from Pradhan, 1988: 214-216 (with modifications). KDC also has broad powers to regulate physical development within the Valley; however, major development works are expected to be handled through the respective national government ministries or agencies. Suwal et al. (1979) and Rimal et al. (1986) found that the KDC's actual capital works programs had always been small and, in recent years, had been declining. This Section discusses the existing organizational structure of the KDC and its limitations.

5.2.1 Organizational Structure of the KDC

The organizational structure of the KDC is shown in Figure 5.3. The KDC is chaired by the Minister of Works and Transport (a separate Ministry of Housing and Physical Planning was created in December 1987 to oversee works related to housing and urban development. The Departments of Housing Building and Physical Planning and the , Water Supply and Sewerage, the Water Supply and Sewerage Corporation and the Solid waste Management Board were incorporated into this ministry). The Vice-Chairman of the NPC is the Committee's vice-chairman and secretaries of various ministries (Works and Transport, Home and Panchayat, Water and Power, Communications, Finance, and Forest) are its members. Other members of the KDC include the Zonal Commissioner of Bagmati zone, the Chief Engineer of the DHBPP, a legal expert from the Attorney General Office, District Panchayat Presidents of Kathmandu, Lalitpur and Bhaktapur, and the Chief Planner of the KVTPT. The member-secretary of the Committee is the Joint Zonal Commissioner of Bagmati Zone, who acts as the executive head of the Committee and exercises police power to enforce development decisions.

Such a wide representation was deemed essential in order to achieve proper co-ordination among the various development agencies engaged in the Valley. All the policy measures and plan and programs are decided by this Committee while the KVTPT, which is under the DHBPP, prepares plans for implementation. The KVTPT, created simultaneously with the approval of the 1976 Plan, is headed by a Chief Planner responsible for preparing plans and their implementation, and preparing land use regulations. The KVTPf also monitors the works of the three TPIC Offices.

143 Figure 5.3: Organization Structure of Kathmandu Valley Town Development Committee

+------+Kathmandu Valley Town Development Committee (KDC) <------+ +------+Department of Housing, +------+ Building and Physica +-- Planning (DHBPP)

+------+Member-cum-Secretary Kathmandu Valley Town (Joint Zonal Commiss <------> Planning Team (KVTPT) ioner) ------+ +------+ +------+

+------+ I I I I I I +------+Kathmandu +------+Kathmandu +------+Kathmandu +------+Publicity +------+Administra- +------+Law Valley Valley Valley Branch tion and Branch Town Deve Town Deve Town Deve Accounts lopment lopment lopment +------+ +------+ +------+ Implemen- Implemen Implemen tation tation tation Committee Committee Committee Kathmandu Lalitpur Bhaktapur +------+ +------+ +------+ I I I +------+Town Imp. +------+Town Imp. +------+Town Imp. Office Office Office Kathmandu Lalitpur Bhaktapur (TIO) (TIO) (TIO) +------+ +------+ +------+ +------+------+------+I I I source: suwal, R. et al. (1979), Kathmandu Valley Town Planning and Its Impact, Kathmandu: CEDA, p.129 (with modifications).

144 The three TPICs (one each in the Districts of Kathmandu, Lalitpur and Bhaktapur) are chaired by the member-secretary of the KDC (i.e. the Joint Zonal Commissioner) with the Chief District Officer (CDO) as its vice-chairman, and the Chief Planner, the respective municipal mayor, town controller, and the legal advisor as members. The Office of the Town Plan Implementation Committee (TIO) is entrusted with the responsibility to carry out the actual plan implementation in each district of the Valley. It is headed by a town controller and consists of four sections - administration, technical, legal and accounts.

5.2.2 Institutional Limitations

A number of studies have identified several institutional problems with the KDC, which were believed to be the main bottle-neck for its ineffectiveness in promoting planned and orderly urban development in the Valley. Based on field investigations and secondary material, such as Suwal et al. (1979:130-137), PADCO (1984:73-74, 186-187), Shah (1983: 14-38), PADCO (1986:126-127), and Rimal et al. (1986:30-47), a discussion of KDCs major institutional limitations follows.

5.2.2.1 • .Jurisdictional Problems: The KDC draws authority and power through the 1973 Act which seems to bestow on it responsibility for the overall urban planning and development in the Valley (e.g. urban planning and development, housing, water supply, transportation network, forestry, preservation of archaeological and historical places). However, there exist a large number of government and semi-government agencies having their own jurisdiction in urban development activities. In addition, the three municipalities in the Valley are engaged in some minor development works and in granting building permits. The linkages between the KDC and other agencies engaged directly in urban development works in the Valley are not clear, which narrows down the scope of KDC's operations considerably. The lack of clear-cut demarcation of authority between various agencies and the KDC has resulted in a gross lack of co-operation and co-ordination between them.

145 The KDC has given more emphasis to regulatory than development functions, but in this limited role, the jurisdictional problems have caused constant friction with the municipalities with regards to building permits (refer, 5.4.5).

5.2.2.2 No Locus Standi: The KDC has no locus standi (i.e. it can not stand alone to implement its work programs) and has to depend upon other government and semi-government agencies for getting works done. Lack of resources does not permit it to undertake development works on its own and its current functions make its role unclear. For example, the 1976 Plan requires the Planning Team (KVTP1) to prepare housing schemes in accordance with the Plan and after getting approval from the HMG, the KDC is to get them implemented through concerned agencies (Valley Proposal, para.16, p.S). However, institutionally, the KDC is linked to the Ministry of Works and Transport, and its budgets are channeled through this Ministry.

5.2.2.3 Violating Unity of Command: The organizational alignment completely violates the concept of 'Unity of Command'. The alignment of the planning team (i.e. KVTP1) is unclear, because it is supposed to prepare plans for KDCs implementation, but is kept under the Department (i.e. DHBPP), whereas the relationship among KVTPT, KDC and DHBPP is not clearly spelled out. Under the present institutional arrangements, it is not possible for the member-secretary of the KDC to bring co ordination between planning and implementation of various development programs as expected of him.

The town controller appears to be sandwiched between the Chief Planner and the Member-Secretary and has to report to two bosses. His job description keeps him under the supervision and guidance of the Chief Planner. But, being an implementor of various plans and programs, he works directly under the Member-Secretary, who is the chief executive of the KDC and the chairman of the TPICs.

5.2.2.4 Unclear Functional Relationship: The functional relationship between the KDC and the three implementing agencies under it is unclear. Both member-secretary of the KDC and town controller of the TPICs function as implementor but their

146 jurisdiction is not clear, resulting in a lot of confusion. Until recently, there was a high powered Bhaktapur Development Board implementing the development plans, programs and regulatory measures in Bhaktapur. Its relationship with the KDC and the TPIC was unclear, but it was largely functioning independently of the KDC by reporting directly to its line ministry.

5.2.2.5 Lack of Internal Cohesion: Within the KDC, the duties and responsibilities of various persons are duplicating and at times confusing. The Chief Planner is entirely responsible and accountable for the implementation of programs, and is expected to bring co-ordination' between planning and implementation of development programs. Since he is merely a plan formulator while all execution is done by the Chief Executive (the Member-Secretary), his roles are confusing. He seems to share authority with the Chief Executive, and their duties frequently overlap. The relationship and allegiances of the Chief Executive are complex and confused. These two officers are of the same status, one comes from the administrative side while the other from the technical side but they belong to different ministries. Often, there is a gross lack of understanding and rapport between them resulting in poor information flow and co-ordination in works and programs between the two units which they head.

5.2.2.6 Problem of Accountability: Generally, responsibility, accountability and authority should go together otherwise it becomes difficult to pin-point who is accountable for what. Under the existing arrangements, the KDC is expected to get its development programs implemented through sectoral agencies. Lack of clearly defined functional relationship between various agencies and their individual plans, programs and priorities, have hampered the scheduling, implementation and completion of KDC's programs. In this context, it is not clear who is supposed to be accountable for this sort of a situation.

5.2.2.7 Undefined Linkages: The Member-Secretary and the Chief Executive of the KDC is a Joint Zonal Commissioner of the Bagmati Zone, and belongs to the Ministry of Home. Yet be beads an organization which is linked with the Ministry of Works and Transport. The linkage between the KDC and the Ministry of Home is not clearly

147 defined. Further, KDC is supposed to look after places of historical and archaeological importance, and many of its past activities have been geared to this direction. But its relationship with the Department of Archaeology, the central agency responsible for such jobs, is mentioned nowhere in the 1976 Plan. Similarly, the DHBPP is responsible for urban planning activities throughout the country, as per HMG's stated policy. A planning team of this Department is attached to the KDC for preparing various levels of development plans of the Valley, but the linkage between the KDC and the DHBPP is still unclear.

5.2.3 Concluding Remarks

From the above discussions, it is clear that the KDC has been largely ineffective because its responsibilities are ill-defined and overlap considerably with those of other sectoral agencies. This is true both in regulatory and development related activities. In addition to an unclear role and lack of internal cohesion, the KDC lacks trained personnel (Schneider, 1987; discussed in Section 9.4) and its poor financial base (Suwal, et al., 1979; Shah, 1983; Rimal et al., 1986) makes it incapable of taking the lead in urban planning and development works. These institutional problems have been significantly highlighted as the main bottle-neck for the ineffectiveness of the KDC by a number of study reports mentioned earlier.

5.3 Land Use and Planning in the Valley

Kathmandu presents a complex pattern of land uses. Expectedly, the institutional and administrative land uses are relatively extensive in Kathmandu which are typically located in the peripheral areas just outside the historical core area. In Lalitpur also, similar pattern can be observed while in Bhaktapur, the local level institutional and administrative land use is contained largely within the core area itself except for the general hospital and military areas. This section presents a brief profile of Greater Kathmandu land use, and gives the salient features of land use planning in the Valley in the context of the 1976 Plan and the 1984 proposals along with their major limitations.

148 5.3.1 Greater Kathmandu Land Use

The central areas of Kathmandu and Lalitpur are the focal points for a variety of urban activities. Retailing is the most important land use with intensive shopping areas like Asan, Indrachowk, New Road, and Makhan Tole in Kathmandu and mainly Mangal Bazar area in Lalitpur, although some outlet in suburban areas, such as Dillibazar, Baneswar, Naxal, Gausala, Maharajgunj, Pulchowk, Jawlakhel, and Lagankhel, have also emerged.

Table 5.2 presents the land use data of Greater Kathmandu area for 1971 and 1981, and Figure 5.4 illustrates the spatial arrangement of different land use patterns in 1981. It can be seen that between 1971 and 1981, Kathmandu and Lalitpur expanded both physically and functionally. While agricultural areas declined from 66 to 40 per cent and 71 to 52 per cent of Kathmandu and Lalitpur town areas, residential land uses more than doubled from 861 to 1,936 hectares. During this period, the population of Greater Kathmandu increased by 107,000 persons, but only about 43,000 (40.2 per cent) of this increase was accommodated in new residential areas whereas the old city and existing residential areas both absorbed increments of 32,000 (29.9 per cent) population each. As a consequence, strains on transport, electricity, water supply, and sanitation occurred as a result of excessive densification in the core and low density urban sprawl in new areas.

During this period, institutional land uses increased by 38 and 74 per cent respectively in Kathmandu and Lalitpur (rising to 6.5 per cent of each town area). Virtually all urban land uses increased in percentage terms with the exception of recreational or open space which declined, due mainly to their conversion to institutional use through public approval, such as those at Lainchour, Jawlakhel, and Lagankhel. Roads and industrial areas increased significantly, by nearly two-and-half and four times respectively. The areas occupied by all public functions increased from 16 and 9 per cent of the town area in 1971 to, respectively, 23 and 17 per cent in 1981 in Kathmandu and Lalitpur. As the Tribhuvan University Campus at Kirtipur lies outside the municipal boundary, it is excluded from these data.

149 Table 5.2: Greater Kathmandu Land Use, 1971 and 1981

------Kathmandu

------1971 1981 Change (1971-81) Use ------Ha % ------Ha % ------Ha % ------Residential 664.85 14.01 1560.17 32.88 + 895.32 +134.66 Institutional 224.78 4.74 309.49 6.52 + 84.71 + 37.68 Residential/ Commercial 5.45 0.11 9.32 0.20 + 3.87 + 71.00 Service; Commercial 22.57 0.48 50.52 1.06 + 27.95 +123.83 Open Space/ Recreational 229.03 4.83 220.67 4.65 8.36 3.65 Industrial 15.07 0.31 45.71 0.96 + 30.64 +203.31 Police/Military 95.71 2.02 129.99 2.74 + 34.28 + 35.81 Road 79.95 1.68 207.90 4.38 + 127.95 +160.03 Airport 74.50 1.57 114.55 2.41 + 40.05 + 53.75 Forest 57.49 1.21 57.49 1.21 o.oo 0.00 Agricultural Land 3147.21 66.33 1910.80 40.27 -1236.41 - 39.28 River 128.70 2.70 128.07 2.70 o.oo o.oo

TOTAL------4744.68 100.00 4744.68 100.00 ------

150 Table 5.2 contd.

------Lalitpur

------1971 1981 Change (1971-81) Use ------Ha % ------Ha % ------Ha % ------Residential 196.44 12.44 375.55 23.78 + 179.11 + 91.18 Institutional 60.00 3.80 103.04 6.53 + 43.04 + 71.73 Residential/ Commercial 1.05 0.07 1.52 0.10 + 0.47 + 44.76 Service; Commercial 3.10 0.20

Open Space/ Recreational 26.22 1.66 24.80 1.57 1.42 5.41 Industrial 10.61 0.67 53.66 3.40 + 43.05 +405.74 Police/Military 13.28 0.84 14.26 0.90 + 0.98 + 7.38 Road 32.39 2.05 67.44 4.27 + 35.05 +108.21 Airport Forest 3.16 0.20 3.16 0.20 0.00 0.00 Agricultural Land 1123.50 71.16 820.12 51.94 - 303.38 - 27.00 • River 112.20 7.11 112.20 7.11 0.00 o.oo

TOTAL 1578.85 100.00 1578.85 100.00 Source: Aerial Photograph 1971 and 1981. Computed by PADCO (1986: 61).

lSOa G FlGORE 5. 4 r\ GREATER KATHMANDU 'I ', URBAN LAND USE \ 1981 I o 04 o.a 12 L6Km i_,. SCALE \ ...... , \ ... l£GENO \ .. rs·, teTITUTIONAL

.. INDUSTRIAL..

CZ:RVICE /COMMERCIAL

- OPEN SPACE /OTHER RECREATIONAL

- RESIDENTIAL /COMMERCIAL 1-!

- RESIDENTIAL

.. VACANT/A~CULTURAL LAND CJ I~J RIVER [§~ ROAD I I FOOT PATH

POLICE I MILITARY r- FOREST

Source: PADCO, 1986:59

>#'r~ .... l ~ P.151

SOURCE· AERit.L PHOTOGRAPHS 1961 PREPARED BY • PAOCO I

5.3.2 Land Use Planning in the Valley

The 1969 'Kathmandu Valley Physical Development Plan' (DHBPP, 1969) was the first scientific attempt at physical planning at the regional level, although most of its recommendations were devoted exclusively to an urban context. But this work highlighted the need for a regional approach to physical planning in the Valley. The unadopted 1973 Plan proposals (DHBPP, 1973) were based on the 1969 Plan with some amendments and adjustments. The officially approved 1976 'Physical Development Plan of Kathmandu Valley' (DHBPP, 1976(a)) builds on the 1969 and 1973 efforts. This '1976 Plan' mainly consists of broad based land use plan of the Valley with major emphasis on land use categorization (zoning) of urban areas, as noted below:

1. Residential Areas (further divided into the following): Residential Areas (Zone A) include old town area (city core), Residential Areas (Zone B) include other residential of the towns, Planned Residential Areas (Zone C) include all areas designated as public housing schemes, and Urban Renewal Areas; 2. Institutional Areas (further classified into government and semi-government, educational, police, military, and health services); 3. Preservation Areas include historical monument zones {Durbar Squares), places of cultural and religious importance, gardens, parks, and forests; 4. Industrial Areas mainly include industrial estates of the Valley; 5. Transport Service Areas include bus and truck parks, and vehicle stands and maintenance areas;

152 6. Airport Areas; 7. Sport Areas; and 8. Rural Settlements and Agricultural Areas mainly outside the Greater Kathmandu.

The areas under various categories of zones and their percentage distribution is shown in Table 5.3. From the above land use classification, it can be seen that land use planning is mainly urban based with a much broader classification of preservation areas, rural settlements and agricultural areas covering the rest of the Valley. The concept behind this broad based land use classification was that in the Valley context, planning of the three urban centers can not be done in isolation and that the Valley should be considered as a single entity for its planned urban development such that regional physical planning of the Valley can be much more advantageous in the long run {Pruscha, 1973:17; Chhetri, 1986(a):51). Besides stressing on the preservation of important monuments and religious areas, open spaces, and forest areas, the Plan's emphasis seems not to disturb the rural settlements dotted along the rich agricultural landscape of the Valley. However, among the three urban centers, the Plan gave greater attention to Greater Kathmandu area as the focus of present and future urban development activities, since the preservation and restoration of Bhaktapur was already underway through the German co-operation. The land use plan of Greater Kathmandu and the areas and percentage distribution of different category of land uses are presented in Figure 5.5 and Table 5.4, respectively.

Apart from the brief information present in the documents identified as 'the 1973 Plan' and 'the 1976 Plan', other supporting documents for plan preparation do not seem to exist. The 1976 Plan drew heavily on the 1973 Plan, which in tum was primarily based on the 1969 planning efforts. A following points clearly stand out concerning these Plans:

The target plan period does not appear in the documents, although it can be guessed that the 'Plans' aimed at catering to the needs of urban growth for the next 20 years.

153 Table 5.3: Land Allocations in Kathmandu Valley Land Use Plan, 1976

------Proposed area Existing area Description ha ha ------Residential Area Zone A: c1ty core (mixed res.+comm.) 334 0.46 334 0.46 Zone B: residen. outside the core 2,400 3.31 1,600 2.20 Zone c: planned residential 65 0.09 0 0 Urban Renewal Areas 80 0.11 0 0 Institutional Zone Government & Semi-Govt. Areas 512 0.71 100 0.14 Health Services Areas 50 0.07 34 0.05 Educational Areas 411 0.57 350 0.48 Police Areas 20 0.03 16 0.02 Army Areas 120 0.16 90 0.12 Preservation Areas Special Preservation (Durbar Squares) (11 ha included in Zone A) Forest Preservation Areas 13,408 18.46 13,408 18.46 Other Areas (Combined) *1) (open spaces, parks and 55,210 76.04 56,678 78.06 religious places, industrial areas, transport service areas, and rural and agricultural areas)

Total 72,610 100.00 72,610 100.00 Note: *1) Detail breakdown not available. Source: DHBPP, 1976.

154 Figure 5.5: Greater Kathmandu Land Use Plan, 1976

__ , / .. . . "':) .....)'/' ...... r . / \...... ·.: /·"'

ZONE- A (CITY CORE)

ZONE- B (RESIDENTIAL AREA) RECREATIONAL/MONUMENT

ZONE - C (PLANNED RESIDENTIAL) INDUSTRIAL ZONE

URBAN RENEWAL AREA -D. . AGRICULTURAL AREA

- INSTITUTIONAL AREA MUNICIPAL BOUNDARY

SOURCE KVTPT SCALE

155 Table 5.4: Land Allocations in Greater Kathmandu Land Use Plan, 1976 (within the Ring Road)

------Proposed area Description ha t ------1. Residential Area Zone A: city core (mixed res.+comm.) 246.80 6.19 Zone B: residen. outside the core 1,443.92 33.75 Zone C: planned residential 595.20 13.91 Urban Renewal Areas 192.00 4.40 2. Institutional Zone 397.70 9.28 3. Preservation Areas 219.60 5.13 (recreational and monument areas) 4. Industrial Areas 16.00 0.38 5. Agricultural Areas 1,150.14 26.88

Total 4,278.56 100.00 Source: DHBPP, 1976.

156 The anticipated urban population growth is not mentioned, and it is not clear how they were supposed to be distributed in different residential areas. The 1973 Plan gives the existing population density of 450 p/ha in Zone A residential area and proposes densities of 150 and 160 p/ha, respectively, for Zones B and C. Although it does not mention either existing or proposed densities in the 'Urban Renewal Area', it can be assumed to have figures comparable to those of Zone A. Based on these densities, the designated residential area is capable of accommodating nearly 517,400 inhabitants, some 306,000 people over the combined population of Kathmandu and Lalitpur in 1971. This figure should be matched with the actual population growth of 107,000 in Greater Kathmandu between 1971 and 1981 (refer, Table 1.1) and the fact that this Land Use Plan shows areas only within the Ring Road which contains about 70.4 per cent of the combined area of Kathmandu and Lalitpur Town Panchayats (1981 areas). Further, actual field verification showed that average density in the core areas was only 285 p/ha in 1971, which did not go beyond 387 p/ha even by 1981 (PADCO, 1986:53). The Plans do not mention the basis of allocating areas for different zones; and the standards adopted to compute the future urban land needs are missing.

In short, both the 1973 and the 1976 Plans do not appear to be based on scientific studies or field investigations and the areas zoned for different purposes seem to simply rubber-stamp the existing pattern, while the amount of land allocated to various uses, especially the residential uses, seems to have been made on an ad hoc basis.

During the course of plan implementation, following its approval in 1976, the planning attempts narrowed down and they began to focus only on town areas leaving aside the numerous rural settlements and agricultural areas. As things stand now, the 1976 Plan and Regulations are implemented only within the town panchayat boundaries with the exception of a few highways and some places of religious importance. On the other hand, the uncontrolled urban sprawl, especially in Kathmandu-Patan area, is gradually pushing towards areas designated as agricultural areas in the land use plan. Similarly, a large number of small scale manufacturing industries have sprung up in these areas.

157 Thus, the general broad land use classification, which seemed a pragmatic approach in the Valley context in mid 1970's, no longer seems so.

The land use planning in the Valley has not been able to guide the urban growth in a planned manner. One of the basic assumptions of the 1976 Plan was that strict enforcement of land use and building regulations would help to shape and direct urban growth- this has proved wrong as shown in Section 5.4 below. Chhetri (1986(a):52) suggests that private ownership of most of the urban and other lands in the Valley, together with soaring land prices, could have been the main reasons for the failure of the regulatory measures under the 1976 Plan to achieve the intended results. The remarkable changes and activities in the urban land market mechanism brought about by the urban growth, together with increasing land prices, have resulted in scarcity of land in city area leading to a low density urban sprawl on the periphery. Individuals' effort to maximize their investment in land seem to have direct impact on the gradually emerging physical form of haphazard urban extension.

5.3.3 Proposed Development Concept, 1984

After some eight years of experience with planning and implementation of the 1976 Valley Plan, the Kathmandu Valley Town Planning Team (KVTPI) prepared a draft development concept plan in 1984 (KVTPT, 1984). This was an attempt to revise the 1976 Plan. This plan, called 'the long-term concept of physical development plan', was conceived as a solution to the increasing problems arising from rapid urbanization trend in the valley. The 'Plan' gives more emphasis on regulatory measures and environmental management to prevent further deterioration of urban environmental quality and to expand basic infrastructural facilities to a large segment of Valley's inhabitants.

This document addresses some of the main issues affecting land use in the Valley, including: open acknowledgement of the current system of ad hoc development by both government and the private sector; the importance of transportation in governing land use; the need to keep in mind a vision of the economic role of the Kathmandu Valley

158 mainly as an administrative, cultural, touristic, and agricultural area and not as a major industrial center; and the reality that financial resources are limited, restricting what can realistically be achieved in the short to medium run.

As the story goes, the preparation of the 'Draft Plan' followed the 'collection of data pertaining to urban activities under Kathmandu Valley Town Development Plan and their analysis' (KVTPT, 1984:20). It is claimed that the Plan incorporated suggestions from various government agencies, academicians, pancbas (political workers), social workers and laymen, and therefore, it was hoped to have responded to the general expectations of the day. The urgency to deal with proper utilization of 'land' as a resource of great importance but in limited supply was recognized and these aspects were hopefully incorporated in the land use plan proposals. The 'Development Concept' projected that the Valley's population would grow annually at the rate of 1.70 and 1.63 per cent, respectively, during the 1981-91 and 1991-2001 decades, thereby making the total population at 0.87 million in 1991 and 1.03 million in 2001 (KVTPT, 1984:7). Table 5.5 presents the 1984 proposals of 'Land Use Plan of Kathmandu Valley' prepared for guiding urban expansion for the next two decades when the Valley's population was expected to increase by 250,000 inhabitants during the plan period (1981-2001).

A careful look at Tables 5.3 and 5.5 would give some grounds to doubt the claim that the '1984 Proposals' were made on the basis of scientific studies and field investigations. The following observations are relevant:

The city core areas were assumed to have a high average density of 520 p/ha (KVTPT, 1984:21) against the actual figure of about 387 p/ha in 1981 (PADCO, 1986:53). The residential areas were supposed to have three density standards; these being: low density area (100-200 p/ha), medium density area (200-400 p!ha), and high density area (400-700 p/ha) (KVTPT, 1984:23). But the document neither mentioned the rationale for the adoption of these density standards nor showed the basis of their distribution in different categories of residential land uses. It

159 Table 5.5: Land Allocations in Proposed Kathmandu Valley Land Use Plan, 1984

Proposed area Existing area Description ha ha

Residential Area Zone A: city core (mixed res.+comm.) 323 0.44 323 0.44 Zone B: residen. outside the core 2,860 3.94 2,400 3.31 Zone C: planned residential 110 0.15 38 0.05 New Settlement Areas 911 1.25 80 0.11 Institutional Zone Government & Semi-Govt. Areas 512 0.71 100 0.14 Health Services Areas 50 0.07 34 0.05 Educational Areas 411 0.57 350 0.48 Police Areas 20 0.03 16 0.02 Army Areas 137 0.19 120 0.16 Preservation Areas Special Preservation (Durbar Squares) 11 0.02 11 0.02 Forest Preservation Areas 13,408 18.46 13,408 18.46 Preserved Open Spaces 168 0.23 158 0.22 (sports areas, play grounds, natural parks, green belts) Parks and Religious Places 88 0.12 72 0.10 Industrial Areas 4,360 6.00 50 0.07 Vehicle Service Area Vehicle parking, garage and repair shops 22 0.03 4 0.01 Airport areas 164 0.23 132 0.18 Rural and Agricultural Areas 49,055 67.56 55,314 76.18

Total 72,610 100.00 72,610 100.00 Source: KVTPT, 1984: 95-97.

160 is silent on the measures needed to realize the expected density patterns in future urban development. The Plan proposed to increase the 'Preserved Open Spaces' to 168 ha from the existing 158 ha (refer, Table 5.5). This is an encouraging sign, but the justification to increase this land use by only 10 hectares over a span of 20 years can hardly be understood. Considering the open acknowledgement of over-crowding, congestion and lack of open spaces in many parts of urban areas (KVTPT, 1984:20), it can be questioned how far an increase of a mere 6.3 per cent of 'open spaces' could eliminate the existing backlog and also cater to the needs of future population which is expected to increase by about 33 per cent during the plan period? Realizing the financial constraints to providing urban infrastructure in urbanizing areas, the document proposed the adoption of the land readjustment technique to develop land in the fringes. But it relied heavily on regulatory measures to realize the plan objectives and failed to formulate measures to show how urban growth could be directed to the desired locations. There is no mention why the 'urban renewal project' conceived by the 1976 Plan was never implemented, and no such area is designated in the 1984 plan proposals. Some of the areas under 'Institutional Zone', especially those in the Government and Semi-Government Areas, Health Services Areas, and Educational Areas, were reported to have the same existing land coverage as they appeared under existing land uses in the 1976 Plan (refer, Table 5.3). The failure of Table 5.5 to incorporate significant expansion of these land use categories after 1976 (as shown earlier in Section 3.5) is indeed surprising.

Additional remarks on the '1984 Proposals' are made later (refer, 5.4.3). The above discussions show that the '1984 Proposals' are simply an extension of the '1976 Plan' and are made on an ad hoc basis. As before, this Plan also focuses on the Greater Kathmandu area alone. Although this Plan has yet to receive government approval, the effectiveness of its proposals to address the problems of urban development in the Valley can be expected to be very limited.

161 5.4 Plan Implementation

As of now, Nepal has no zoning laws, subdivision regulations, or building codes. Although there are legal provisions covering land registration, surveying, transfer and taxation, there is no systematic legal control over land use. Several previous proposals for zoning regulations and building codes were attempted for the Valley, but they were never passed into law. This Section discusses measures taken to implement the Physical Development Plan for the Valley (the 1976 Plan) and assesses its effectiveness along with those of regulatory measures and enforcement of controls.

5.4.1 Implementation of Plan

Some of the important public sector agencies involved in the urban development process have been identified earlier in Section 5 .2, and the existing institutional linkages of urban agencies as shown in Figure 5.2 and the organization structure of the Kathmandu Valley Town Development Committee (KDC) as shown in Figure 5.3 illustrate the relationship among the various participants. The undefined functions and responsibilities of various agencies participating in the urban development process, the overlapping roles of the TPICs and the municipalities, and the emphasis on regulatory measures of control as a means of plan implementation, have created a number of difficulties in urban development as noted in Sections 5.2 and 5.3. The Plan required the KDC to get its development programs implemented through sectoral agencies, but it was unable to co-ordinate their programs, as discussed earlier (refer, 1.5 and 5.2.2). The generally stagnant administrative pattern of Nepal has further hindered the development efforts.

The government's direct participation in the urban development process in the Valley, through the formulation of the KDC and its supporting institutions, have been extremely limited due to paucity of funds and skilled personnel (Suwal et al., 1979; Shah, 1983; Rimal et al., 1986; Schneider, 1987). The lack of internal cohesion within the KDC narrowed down its activities which prevented it from achieving the inter-agency co-operation and co-ordination and from enforcing the regulatory measures. The

162 responsibility for planning, regulatory functions, enforcement, and physical development is fragmented and overlapping among a multitude of central and local agencies. This has given rise to confusion and uncertainty over which institutions have jurisdiction over what aspects of urban planning and development. This factor together with the absence of a tradition of government planning or co-ordination, as illustrated by the decision to build the Ring Road in early 1970's in an ad hoc manner without the necessary background studies (Norton, 1974), have prevented the formation of effective legal and regulatory instruments for land use. Thus, the 1976 Valley Plan has largely remained as a mere paper exercise.

5.4.2 Development Control Measures

There have been several attempts in the past years to formulate land use regulations, especially zoning and building codes in the Valley. The 1976 Land Use Plan of the Valley and the regulations which are in force have been conceived on the basis of the unadopted 1969 Valley Plan. The 'Nepal Building Code' (Ortner, 1965) drafted in 1965, never became operational due to lack of an effective institutional mechanism to implement it and the necessary competent personnel (Pruscha, 1973:1-2; Acharya, 1986:76). In 1973, the Department prepared a land use plan of the Valley (DHBPP, 1973), but it was not supported by detailed sectoral analysis and narrative backup. This Plan never became operational. Following the approval of the 1976 Land Use Plan, the KDC prepared a series of documents including zoning proposals dividing urban areas of the Valley into broad land use categories based on the 1973 and 1969 works (Suwal et al, 1979: 103-108). However, it is significant to note that despite the necessity of a detailed study prior to the establishment of various zones and regulations to regulate their use as recognized by the 1969 Plan itself (DHBPP, 1969:157), no detailed fieldwork or analysis was done before their establishment in 1976. As discussed elsewhere (Acharya, 1985), the silence of the 1973 Act on the specifics of plan preparation may have led to omitting the obvious steps commonly followed in the formulation of plans.

163 The 1976 zoning proposals (KDC, 1976) were accompanied by other policy documents dealing with general urban design, planned residential development, development along major roads, and urban infrastructure. These zoning regulations consist of two parts: (i) demarcation of the urban areas into various zones specifying the types of activities permitted in each of them (e.g. residential, commercial, industrial, etc.), and (ii) restrictions in the form of height control and ground coverage, with the emphasis on the bulk control of buildings. The zoning map showing different zones in the Greater Kathmandu area (refer, Figure 5.4) and instructions for various actions to be taken in different areas covered by the map, constitute the main items of the Plan and zoning regulations. The map is in a smaller scale (1:15,000) which was neither detailed out nor precisely demarcated on the ground by superimposing it into the cadastral survey maps. Similarly, the instructions are also not detailed enough to become clear-cut for both the general public and the implementing authorities. Although these regulations were officially approved by the KDC, their legal status is still doubtful while Kaphle (1987:114) is firm that they are not legally valid. This may explain why, other public agencies do not seem to pay any particular attention to these regulations since these were never published in the Nepal Gazette.

As far as building regulations are concerned, restrictions on ground coverage, height, set-backs, and right-of-way to control the bulk of the buildings are the main features appearing in the instructions. Except for the right-of-way, other provisions of the regulations were not published in the Gazette and are not easily available to the general public. Besides these 'instructions', a number of other regulations established by various agencies for specific areas are also in force. These regulations include those issued by the Kathmandu Town Panchayat regarding building permit, those applicable to the Pashupati Development Zone exercised by the Pashupati Development Committee and preservation areas around Monument Zones exercised by the Department of Archaeology, special development regulations in the vicinity of the Royal Palace, and the right-of-ways for highways and major urban arterials exercised by the Department of Roads. Except for the 1976 Regulations, all other rules and regulations were published in the Nepal Gazette and are, therefore, legally binding. This writer is not aware of any case in which the KDC regulations were brought before a court of law to

164 test their legal validity.

There are no subdivision regulations in the Valley. Except for prescribing right-of-ways for different types of roads, the '1976 Instructions' do not contain provisions for plot sizes or standards for roads and infrastructure. The division of plots is mainly influenced by the need for having a vehicular access to the land. Land brokers often play a catalyst role to subdivide the land into different building plots. Their primary concern is not in having a good standard subdivision layout with access roads, infrastructure, open spaces and community areas, but in simply maximizing profits by keeping the access roads to a minimum width and length (refer, 3.7).

The CEDA report pointed out several important problems with these regulations (Suwal et al., 1979: 118-123). These being:

A clear zoning map with precise boundary demarcation was never prepared; The zoning categories were not specific enough with regard to the types and intensities of uses permitted or prohibited; The zoning categories did not attempt to specify permitted lot sizes or densities; Little attention was given to areas beyond the Ring Road; Except for brief reference to the need for sanitary facilities in buildings, no attempt was made to specify standard for urban infrastructure system, such as street, water supply, sewerage or drainage; and Mixing of building regulations with zoning regulations also caused complexities

Kaphle (1987:55-56) listed some items which were not covered by the building regulations. These being:

The building bulk control measures, for example, the ground coverage and height, were not related to the density standards, resulting into encouragement of fragmentation of plots and encroachment onto agricultural lands; and There were no 'Building or Housing Code' specifying rules regarding fitness of dwellings, occupancy rate, structural safety, fire protection, sanitation and

165 sewerage.

5.4.3 Recent Proposals

The recent attempt to push forward with land use regulations appear in the 'Draft Development Concept Plan for the Valley' prepared by the Planning Team in 1984 {KVTPT, 1984). The 1984 proposed regulations are almost identical with the '1976 Instructions' with only minor changes. While the proposal provides some thoughts about how to deal with land use controls, it still poses some problems that limit its usefulness. The text defining the land use categories and uses permitted in them are not clear-cut, and in most cases, they authorize the Implementation Committee to use its discretion in granting permits without providing the necessary guidelines to the Committee to do so. The few standards which are provided deal with building codes not land use standards. Subdivision regulations are absent, and the zoning map appearing in Volume 2 of the 1984 'Development Concept' has some inconsistencies with the proposed zoning categories. Further, the map covers only the area within the Ring Road.

It is surprising to note that the 1984 'Development Concept' considered the provisions of the 1973 Act adequate to undertake planning and development activities in the Valley. It did not question the limitations and ineffectiveness of the 1973 Act, or the serious organizational and institutional problems of the KDC. However, the report made an open acknowledgement of the KDCs failure in mustering the necessary co-operation and co-ordination of sectoral agencies as envisaged under the 1976 Plan and in its failure in controlling haphazard and substandard development resulting in unregulated and chaotic conditions in the metropolis {KVTPT, 1984:11-20). So far, the 1984 proposals have not received the Government's sanction. However, looking at the past efforts on regulatory issues, the PADCO report (1986:125) noted that, the absence of a single agency responsible for these functions in the Valley, or even a reasonable division of responsibilities among existing institutions, was the main reason why no effective land use law yet existed.

166 5.4.4 Enforcement of Controls

Development control measures are provided in the following ways: (a) the Committee through the 1973 Act; (b) The Cabinet Decision approving the general plan (zoning restrictions); (c) the Cabinet Decision authorizing the Planning Team to prepare the sectorial plans, and provide the Committee with standards or guidelines regarding land uses. Section 5(1) of the 1973 Act empowers the Committee to issue ordeiS through explicit notification, from time to time regulating, restricting or prohibiting specific matters covered by Clauses (b) through (g). The list is quite comprehensive, ranging from building construction, to the use of land in general, the protection of natural beauty and prevention of air pollution. Furthermore, the plan itself incorporates regulations in the form of restrictions on particular types of uses in particular areas or zones.

The committees are empowered to issue orders for the "demolition of structures which have been completed" (Section 5(1) (c)). Penalties for violations have been set at a fine not exceeding Rs. 6000 (about US$ 300), six months imprisonment, or both (Section 6). Other details have yet to be filled in. For instance, what procedure should be follewed in resorting to demolition of illegal structures? Should alleged violators be given an opportunity to be heard before demolition is ordered? Before whom? Who would exercise this authority- Joint Zonal Commissioner, CDO, Town Controller or the municipal mayor? And how would the police power be mobilized? These are some of the questions which have been left unanswered in the 1973 Act and they have created a lot of confusion in exercising this provision of the Act.

Similarly, the Town Panchayat Act, 1962 also empowers the municipal mayor to order demolition of an illegal structure; and the penalty fixed by the Act for the violation of its provisions is a fine of Rs. 100 (about US$ 5) only. Therefore, the effectiveness of this provision becomes questionable. Here again the detailed procedural matters are missing. Enforcement of these provisions is further complicated by the Muluki Ain (the legal code of Nepal) which prohibits the demolition of any building once a roof is put over it.

167 Kaplan identified the problem of retroactivity (Kaplan, 1974: 19). The problem is: if a pre-existing building is saved, and permitted to continue as a "non-conforming" one, what happens when the building is demolished and the owner proposes to replace it? Existing statutory provisions do not address this problem.

Kaphle (1987:66-67) observed the possibility of misuse of authority in using discretionary powers of the authorities in granting development permission, and gave examples of the flaws in the regulations, conflicting land uses, lack of density standards and planning blights. His study clearly establishes the inadequacies and ineffectiveness of the regulatory measures resulting in various cases of violation of regulations (Kaphle, 1987:112-113). These problems of enforcement of development control measures in the Valley are similar to those of the other four regional centers, i.e. Dhankuta, Pokhara, Surkhet and Dipayal (Acharya, 1985).

As discussed earlier (refer, 4.2), although statutory provisions authorize the enforcement of controls, their basic weakness is that, in general, one act does not refer to the provisions present in the other related acts. These provisions also do not define the relationship of the committees with other public agencies like the municipalities and with the Land Registration/Administration Office to regulate the transaction of immovable property. The usefulness of the existing system of enforcement of controls becomes questionable when there is a lack of effective system of checking the progress of work during the construction period and when occupancy certificate is not required to occupy a building after its construction is completed.

5.4.5 Conflicts Over Implementation Powers

Traditionally, the municipalities have been handling the issuance of building permit and control functions. Ever since the KDC and its supporting agencies were established in 1976, there have been frequent conflicts and confrontation between the TPICs and the municipalities over these functions (Acharya, 1985; Rimal et al., 1986). After the KDC came into existence in 1976, building permits begun to be issued by municipalities only on the recommendation of the respective TPIC, which looked after full control

168 functions. In 1978, the Government decided that building permits be exclusively issued by the municipalities while controlling activities were done by the TPIC. Initially in 1978 when the municipalities took over issuance of building permit, the TPICs participated in the process by providing technical help in processing applications. But the municipalities could not endure the continuing interference from the TPICs and soon took complete control over it. Since 1981, both building permit and control functions were entrusted to the municipalities.

Kaphle (1987:109-110) observed that since the municipalities are politically motivated, both the permits granted by them as well as the weak enforcement of controls, have led to violation and evasion of the regulations to a large extent and also encouraged corruptive practices. In 1986, the TPICs again started to undertake control functions, though there had been no formal decision to this effect.

5.4.6 Concluding Remarks

From the above discussions, it is clear that the existing regulatory measures have not been able to check the haphazard urban growth in the Valley and to provide effective guidance for urban development. As an instrument of plan implementation, they have not been successful.

A number of reasons can be identified for their ineffectiveness as policy instruments in regulating urban growth and in implementing land use plan. These include: inadequate drafting of the regulatory measures, difficulty in enforcing them due to their unclear legal status, lack of resources with the KDC for their effective operation, ill-defined linkages of the KDC with municipalities and other agencies, and the lack of a comprehensive plan on which to base land use control measures.

5.5 Chapter Conclusions

The development of Kathmandu Valley as the capital region of the country has always a received high priority with the Government. Since modem planning activities have

169 relatively short history in Nepal, the various components of the planning machinery and policy instruments are, however, still evolving. An assessment of the effectiveness of the planning system operating in the Valley was provided in this and the preceding Chapter.

This Chapter presented an overview of the institutional arrangements for planning in the Valley, introduced major agencies involved, and assessed the operation of the KDC. It also discussed the limitations of land use and planning in the Valley and reviewed the effectiveness of the regulatory and development control measures as instruments of land policy and plan implementation.

The approved and implemented 1976 Valley Plan was the outcome of a series of previous attempts aimed at planned urban development in the Valley. The Plan relied heavily on negative measures of control to achieve the intended objectives with little positive efforts towards a guided development. The above discussions show that the Plan and the regulatory measures are far from achieving the broad objectives of planned urban development. Even after a decade and a half of plan implementation, the regulatory measures have shown little success in checking the haphazard building development in the Valley or in guiding urban development along desired channels. The lack of a comprehensive plan, ineffective institutional and organizational arrangements, unclear roles of various agencies participating in urban development, lack of co-ordination in sectoral development activities, ad hocism in planning, and inadequate regulatory measures, have led to the poor enforcement of land use planning control measures and their widespread violations, resulting in a chaotic and confused urban environment and development patterns.

Thus, the planning institutions, established with the vague provisions of the 1973 Planning Act, have been largely ineffective in influencing the course of urban development in the Valley.

170 6. OPERATION OF NETWORK INFRASTRUCTURE PROVISION BODIES

The provision and extension of the network infrastructure of public roads, water supply, and electricity supply, influences the direction of urban growth by encouraging land and building development in proximity to their locations. The public agencies (government and semi-government) responsible for the provision of these infrastructure and services are the Department of Roads, the Water Supply and Sewerage Corporation, and the Nepal Electricity Authority. This Chapter describes the operation of these bodies and assesses the adequacy of their services and facilities in suburban and urban-fringe areas of the Valley. Discussion of other facilities, such as telephone, education, health, and public transport is beyond the scope of this Thesis.

6.1 Public Roads

The Department of Roads (DOR), under the Ministry of Works and Transport, has the overall responsibility for providing public roadways in the country.

6.1.1 Institutional Set-up

The DOR is headed by a Chief Engineer, who reports to the Government through the Secretary in the Ministry of Works and Transport. It undertakes the construction and maintenance of roads in the Valley through its zonal and district offices, which accommodated some 106 staff (45 technical and 59 administrative) in 1987. The district offices also construct some roads outside urban areas although many of such roads continue to be opened or built by village and district panchayats in accordance with the decentralization policy initiated in 1982.

The DORis funded from general HMG budget. Funds for urban roads improvements and maintenance come largely through HMG budget. In addition, special budgets can be set-up to fund individual road projects, such as the foreign aided road projects.

171 6.1.2 Priority Works

The DOR has classified Nepalese roads into four categories (DOR, 1988:4-5). These being, national and regional highways, feeder roads (connecting district and/or zonal headquarters to highways), district or pauchayat roads (linking village(s) to the market center), and city roads and streets.

The DOR tries to concentrate its efforts on the extension of regional road network giving the East-West Highway top priority, and roads linking regional headquarters to the East-West Highway second priority. However, the DOR must continually respond to political pressures in Kathmandu with the result that close to half of its budget is consumed in ad hoc activities in the capital. These include projects not selected on the basis of plans and programs following relevant studies (see, for example, Grava, 1974; Norton, 1974). Much of this money is spent in providing or improving access roads to the properties of the politically influential people (Hubbard, 1987; PADCO, 1984(b)). When not constrained by external pressures, the DOR tries its urban activities towards developing spine roads. The priority roads within the Valley include: the Kathmandu-Thankot-Sopyang sector of the Tribhuvan Highway (Kathmandu to Raxual in the Indian border), the Kathmandu-Bhaktapur sector of the Amiko Highway (Kathmandu to Kodari in the Chinese border), and the Balaju-Trishuli Road within the Valley.

Discussions with DOR engineers suggests that it has a limited role in opening up new roads in the urban-fringe areas. Such roads are usually opened up by local pauchayats with the co-operation of concerned landowners, as a result of which the alignments generally follow property boundary on necessity and contain numerous bends. Representatives from pancbayats and the community approach DOR field offices for help after a general consensus is reached on the tentative alignment of a new road. Both technical and material help are provided by these offices for constructing such roads. As the urbanization process in the Valley began exerting tremendous pressures on land and housing markets since early 1970's, land brokers have also helped in opening local roads (for providing access to individual home-sites in clusters of small

172 neighborhoods) by negotiating and persuading landowners, often in partnership with ward committee panchayat leaders. There is no established practice to obtain planning permission to open up new urban-fringe roads.

Nevertheless, the DOR also undertakes urban road construction works in the country. For example, by the end of the fourth year of the Sixth Five-Year Plan period (1980-1985), it constructed some 157 km length of main urban and headquarters roads in the country, representing more than 167 per cent of the Plan's target of constructing 94 km of such roads (NPC, 1985:494-495). The Seventh Plan (1985-1990) arranged to classify all roads into national and district levels, and to construct highways, feeder roads and main urban roads of 'national level' from the center (NPC, 1985:502). Under district level roads, all motorable roads and other local trails are included, which after inclusion in district level projects, should be implemented at the local level. As a result, urban road construction in the Kathmandu Valley has been included under the central level project to be implemented through the DOR (NPC, 1985:515).

6.1.3 Roads Network in the Valley

Nepal gave a high priority to constructing roads following the overthrow of the Rana rule in 1951. Between 1951 and 1987, total roads length increased sixteen-fold, from 376 km to 6,306 km (DOR, 1988:1-4). Among the 14 zones in Nepal, the Bagmati Zone (containing Kathmandu Valley) had the maximum length of roads totalling 1,122 km (598 km black-topped, 258 km gravelled and 266 km {air-weather), representing some 17.8 per cent of the national total in 1987. Likewise, the Kathmandu Valley dominates the urban roads length statistics in the country. Of the 531 km of urban roads (different types) in the country in 1982, some 310 km (42.4 per cent) was within the Valley, which comprised of the Ring Road and other roads within the three municipal limits (Shrestha, 1983:13). Comparatively, other urban centers had small share of national urban roads, such as Pokhara (9.6 per cent) and Biratnagar (7.5 per cent). Figure 6.1 shows the major road network in the Valley and Table 6.1 presents the category as well as type of roads in the Valley for 1982 and 1987.

173 Figure 6.1: KATHMANDU VALLEY ROAD NETWORK r·-' ,_.,..,., "-·~ "· " ,

.r. God6v:r, ~ ... I '") LALITPUR / KATHMANDU ~ '-"'·-VALLEY 1.; t ( I i .... "") .) -..l \ ·"' ~ '·--.'I. .... _ 'f ( """\..-~

(length in km) 1982 1987 ------% Road black- grav- fair- total black- grav- fair- total increase category topped elled weath- topped elled weath- in total er er length ------a b c d e f g h i j Highway 60 - - 60 60 - - 60 0.0 .... Feeder 75 33 5 113 90 20 4 114 0.9 -..3 U1 District 8 37 35 80 13 44 27 84 5.0 Urban 143 68 99 310 183 109 112 404 30.3

- Ring Rd (28) (28) ~-) Kat • ~~~~ (176~ (121! 73) (266(28l - Lalit. (19~ (55 (28 !I~! ~59 - Bhakt. (5 ~~~~ !U! (51) (6 (19 H~~ 51 Total 286 138 139 563 346 173 143 662 17.6 % distri. 50.8 24.5 24.7 100.0 52.3 26.1 21.6 100.0

Notes : Figures in parenthesis give further breakdown of urban roads. j = % increase in total length in 1987 over that of 1982. sources: Shrestha, 1983:14; DOR, 1987:13-14 (with modifications). Table 6.1 shows that between 1982 and 1987, some 99 km of roads were added in the Valley, an increase of nearly 18 per cent over the 1982 stock of 563 km. On the road category, except for a leap of 30 per cent in the length of urban roads (compared with 33 per cent increase in urban population ), the lengths of other roads did not change much. The distribution of the additional 94 km length of urban roads was: 40 km black-topped, 41 km gravelled and 13 km fair-weather roads. Almost the whole of this new addition to the road stock was in urban Kathmandu, while there was no increase in the total road length in Bhaktapur and Lalitpur added a mere 4 km to its stock. Major inputs for this increase in and upgrading of the road stock came from the DOR, since during the first four years of the 6th Plan period (1980-1985), the gravelled and fair-weather road construction in the Valley was 36 km and 37 km, respectively (NPC, 1985:515).

On the surface, it appears that for a small metropolis of 519,000 people in 1987 (urban population within three municipal areas extrapolated from Table 1.3), the overall stock of roads does not seem to be too problematic. However, the proportion of roads between urban (within municipal areas) and urban fringe and rural areas within the Valley does not appear to be uniformly distributed as shown below.

Rimal, et al. (1986:1) reported that about 14 per cent of the Valley area was urbanized (area within the three municipal boundaries) in 1981 which accommodated some 49 per cent of the Valley population. By contrast, the distribution of roads in 1982 (excluding highways, as these are difficult to categorize) was 62 per cent in urban (municipal) areas and the rest 38 per cent in non-municipal areas (refer, Table 6.1). Although estimated population of the Valley in 1987 is not available, assuming an equal population distribution between municipal and non-municipal areas, the distribution of roads in 1987 was not proportionate, with municipal areas having nearly 67.1 of total roads length in the Valley (excluding highways).

The heavy concentration of roads in the built-up portions of the cities (with recent additions being confined almost wholly to urban Kathmandu) prevented their fair distribution in the suburban and fringe areas, resulting in significantly large areas being

176 without proper access roads. This pattern did not allow urban expansion to occur at desirable locations, so that any land having an access road was a prime and valuable land. The inadequate supply of developable land at the fringes led to a number of planning problems as highlighted in Chapter One.

6.1.4 Backlog Estimation

The Valley had a total of 332 km length of road network in 1969, 99 km black-topped, 67 km gravelled and 166 km fair-weather roads (DHBPP, 1969:139). The total length of 563 km and 622 km in 1982 and 1987 (Table 6.1), representing 169.6 per cent and 187.3 per cent of the 1969 total, indicate that significant improvements were made in the provision of public roads since 1969. However, considering the requirements of an

expanding urban population (including increases in income levels, traffic vol~mes and the fleet of individually owned vehicles) and for opening up land for urban expansion, the existing roads stock is inadequate as mentioned earlier, although its quantification was not done.

Lack of relevant data, especially the standards for public roads length per capita, presents difficulty in estimating the backlog in the provision of public roads in the Valley. This problem is compounded by the lack of data on the 'desirable' distribution of population per one km length of different road categories.

In India, a Task Force on Financing of Urban Development having examined the existing per capita road length in various states for different city-size found that in 1983, some 0.84 meters of urban road length per capita was available on the all India level, but for a city of 100,000 to 999,999 inhabitants, the figure varied from 0.25 m to 1.13 m averaging to 0.66 m per capita (Planning Commission, 1983(b): 33). This Task Force considered the length of existing paved streets as 'adequate' and the backlog was estimated on the basis of the percentage of population not served by 'proper roads' (Planning Commission, 1983: 21). Based on these figures, a rough estimation of backlog of roads in the Kathmandu Valley is made.

177 From Table 1.3 it can be observed that, between 1981 and 2001, some 25,850 people were expected to be added annually to the Valley urban population, which means that about 17 km of new roads must be provided annually to serve this population growth (on the basis of 0.66 m road length per capita). Based on these data, the total length of 'desirable' urban roads in the Valley in 1982 and 1987 work-out to be about 257 km and 342 km respectively, thereby suggesting that as far as the gross stock of urban road length in the Valley is concerned, backlogs in 1982 and 1987 were, respectively 114 km and 138 km - an increase of 22 per cent over the period (refer, Table 6.1). Based on rates adopted in a recent report (MSTP, 1988) and assuming carriage way widths of 6 to 10 meters for different roads, the cost of providing 17 km of new roads annually in the Valley to serve additional population growth would be in the range of Rs 40.8 million to Rs 84.8 million (averaging to Rs 62.8 million) at 1988 prices, without the land acquisition costs.

It is necessary to consider the above estimation of backlog with a word of caution. First of all, the 'desirable' standard is based on Indian experience, which may not be directly applicable to the situation in Kathmandu Valley. Secondly, Table 6.1 on the existing stock of roads in the Valley provided data on only the length and the type of roaes, while other details, such as their distribution in different parts in the urban and urban-fringe areas, their widths, and the 'level' of the facilities present, were not provided. Confirming Grava's observations regarding the status of roads in the Kathmandu Valley (Grava, 1974), the backlog is also present in the distribution of roads in different areas (since in many places access roads to serve the existing population and to open up land for urban expansion are lacking), in the widths of roads (most of the roads are narrow), and in the level of facility (many roads are not adequately paved, they lack side-drains, and pedestrian foot-paths are either absent or are grossly narrow in width and need repairs). We can thus see that although the achievement during the 1982-1987 period was relatively better, the situation with regards to the public roads stock in the Valley is far from satisfactory.

178 6.1.5 Maintenance

Road maintenance is done by the DOR with practically no works undertaken by the municipalities. The DOR has prioritized urban roads in Kathmandu and Lalitpur into four categories, probably on the basis of their importance as VIP routes. The first category is for parade routes (ceremonial roads, highways, Ring Road, roads to airport, etc), which receive regular maintenance and periodic resurfacing just prior to the visits by VIPs. The second category is for less important VIP routes, such as most of the inner city roads, roads to famous shrines or to the homes of influential Nepalese, and most inner suburban roads inside the Ring Road. These roads are upgraded and maintained on a budget-available basis. The third category of roads are other suburban roads of less importance, while the fourth category is usually found outside the Ring Road connecting rural settlements. Roads in the last two categories are seldom maintained or improved.

Despite the lack of complete data on budgetary allocation and actual expenditure on road works, Table 6.2 provides some indication of the scale of operation in this sub-sector. During 1979/80-1983/84 period, the budgeted amount for roads and bridges was in the range of Rs 4-39 million, while the expenditures ranged between Rs 3.2 and 30.8 million. The budgeted amounts for the zonal offices were in the range of Rs 1.5-45 million during the 1984/85-1987/88 period. Considering the past trend, budgeted amount for this period was likely to be higher, but was probably recorded under separate headings.

Usually the whole amount of zonal budgets were spent on improvements and maintenance of existing roads, but it was not clear on which items of works or on which locations the budgeted amount for the 1979/80-1983/84 period was spent in the Valley. The high figure for the fiscal year 1987/88 was caused by the necessity to prepare Kathmandu for the SAARC (South Asian Association for Regional Co-operation) summit by opening some important link roads and by improving some major roads in the Valley. A recent preliminary transportation report noted that of the total DOR's budget of Rs 60 million, Rs 25 million were usually spent in Kathmandu

179 Table 6.2: Development Budget and Actual Expenditure on Road Sub-sector in the Kathmandu Valley (in •ooo Rs) Whole Valley * Zonal Office - 1 ** Zonal Office - 2 *** Year Budget Expenditure Budget Expenditure Budget Expenditure

1979/80 4,169 4,808 1980/81 4,000 3,236

1-' 1981/82 4,700 4,689 co 0 1982/83 12,633 12,358 1983/84 39,078 30,804 1984/85 11,600 n.a. 3,525 3,146 1985/86 10,300 n.a. 2,300 2,290 1986/87 23,500 n.a. 1,500 1,500 1987/88 45,050 n.a. 6,000 5,950 *1 1988/89 35,000 *2

Notes: *1 - estimated *2 - proposed n.a. - data not available Sources: * : PADCO, 1986: 132 (with modifications), ** : DOR, Bagmati Zonal Office - 1, Kathmandu, June 1988, ***: DOR, Bagmati Zonal Office - 2, Kathmandu, June 1988. (Hubbard, 1987:6). Discussions with DOR engineers revealed that with the current volumes of the budgetary allocations, which could hardly meet maintenance costs, they were primarily involved in maintaining and improving roads which were already opened up rather then opening up new roads for urban expansion. The 1988/89 proposed budget of Rs 35 million was to be entirely spent on the Pashupati Development Project (a religious area development project covering a large area in the north-east suburbs of Kathmandu), for which nearly Rs 50 million was required, so that the regular maintenance budget for the Greater Kathmandu area was practically nil.

6.1.6 Future Plans and Programs

There has been no systematic transport study undertaken in the Valley, so that, in effect, there is no future plan or program for expanding the urban road network system or for constructing new roads for opening up land for urban expansion. Officials in the DOR, DHBPP and KVTPT have recognized the need for such a study, however. Except for the 1.8 krn long Vishnumati Link Road, running along the eastern edge of the Vishnumati River from Teku in the south to Balaju in the north, no other road has been identified by the officials for immediate construction. Identified and preliminary aligmnent done in 1974 by a team of UN experts, this road project remained on paper for nearly 15 years before being reconsidered for construction. By mid 1988, the Government had not made a decision on this project estimated to cost about Rs 13.5 million (1987 prices), for which assistance from the West German Government was likely (Hubbard, 1987:10).

Although the 7th Plan (1985-90) called for preparing a master plan for the development and improvement of urban roads in the Kathmandu Valley and to launch programs to realize it (NPC, 1985:501), as of July 1988, the preparation of such a plan had not been initiated. The 7th Plan's target was to construct a total of 190 krn of urban roads in the Valley (80 krn black-topped, 80 krn gravel and 30 krn fair-weather roads) (NPC, 1985:515-518). With an outlay of Rs 69 million, the Plan expected to obtain active support and participation of local panchayats and communities in meeting its target (NPC, 1985:499-500).

181 6.1. 7 Major Constraints and Problems

There are a number of constraints to adequate provision of public roads to open up land for urban expansion as well as a good road maintenance and improvement program in the Valley. While the lack of adequate funding for road works and insignificant involvement of local panchayats have hampered efforts to meet the needs of a growing urban population, there is also a clear lack of an up-to-date structure plan for the Valley which can provide guidelines and directions for capital investment. There has also been no study to forecast future public roads needs (with details on the hierarchy, type and locational distribution), and so far no agency has made future plans or programs for the improvement and expansion of road network in the Valley.

The DOR does not view urban roads in the Valley as a high priority, and shifts as much funds as possible to the East-West Highway and other regional highways. The existing institutional framework is flawed by the absence of agencies primarily responsible for urban roads. The DORis currently filling these vacuums by spending much of its budget on urban roads {though meager in volume), but considers them a distraction from the development of more important national and regional roads. The Town Panchayats are not yet ready to accept major civil works responsibilities, while the KDC have had little role in the opening, building and maintaining roads in the Valley.

These problems are compounded by lack of adequate finance to fund expansion and improvement of public roads. Public agencies have so far been reluctant to capture land value increments to finance infrastructure works. If only the DOR were to provide all the required new roads, then at present levels of budgetary allocations (assuming that half of the Rs 69 million outlay made in the 7th Plan is spent on constructing new roads), it will take about 127 years to meet the annual needs of road construction in the Valley until the year 2001 without accounting for the cost of purchasing land (refer, Table 6.2). This figure does not include money needed to clear the backlog identified above. This estimation shows the magnitude of challenging tasks awaiting urgent attention. However, if it is desired to meet both of the above targets by the year 2001,

182 the volume of necessary annual investment for road-works in the Valley would be substantially higher. There is hardly any large amount of money with the Government for that purpose; besides, the calculations omit costs related to land acquisition, project management, and any other external costs.

6.2 Water Supply, Drainage and Sewerage

The responsibilities for planning, building and maintaining water supply, drainage and sewerage systems in urban areas rests with the Water Supply and Sewerage Corporation (WSSC), while that for water supply in rural areas rests with the Department of Water Supply and Sewerage, under the Ministry of Housing and Physical Planning (previously with the Ministry of Water Resources). The WSSC implements the internationally aided sewerage project in the Greater Kathmandu area. Each of the three divisional offices of the WSSC in the three districts of the Valley looks after new construction or extension of service lines as well as the distribution, collection of charges and maintenance of water supply in the Valley. Besides the Department of Water Supply and Sewerage, which looks after the provision and distribution of rural water supply in some places in the Valley, local panchayats are also involved in the system, such as those at Katunge village in Bhaktapur District. However, in this Section, only the operation of the WSSC will be dealt with.

6.2.1 Institutional Set-up

Headed by a Chief Engineer, the WSSC is a government corporation. Its corporate powers and functions are vested in and exercised by a Board of WSSC. The Chief Engineer works under the guidance of the Chairman of the Board, who reports to the Government through the Secretary in the Ministry of Housing and Physical Planning. In 1986, the WSSC had a strength of 1,456 personnel (629 technical and 827 administrative), of which some 870 were involved in the production, distribution and maintenance of services in the Valley.

183 The WSSC is authorized to incur foreign as well as domestic indebtedness to carry out its functions. For foreign aid programs, the WSSC acts as the executing agency, but the financial arrangements for the projects are provided by the Ministry of Finance and the Ministry of Foreign Affairs.

6.2.2 Water Supply Systems

Kathmandu's public water supply system was first constructed before the tum of the century. The distribution network was first provided in 1896 and extended in 1920, 1930 and 1966. The Lalitpur and Bhaktapur networks were also laid in 1896, and although minor additions have been made the network remained unchanged until 1972 when some of the trunk mains were reinforced in Lalitpur and replaced in Bhaktapur. There have been subsequent additions to the network including the recently (1987) completed 'Third Project' financed with the International Development Agency's assistance.

Water supplies in the Valley rely on either ground or sudace water. Presently, four water treatment plants treat sudace water at Balaju, Maharajgunj, Sundarijal and Sunderghat by means of rapid and slow sand filtration processes followed by chlorination. Groundwater, containing high levels of iron and other substances, is delivered directly to distribution system without receiving any treatment. Figure 6.2 shows existing public water supply sources in the Valley (Tri Bhim Ohara, Bir Ohara, Sundarijal, Pharping, Sunderghat, Bode (Bhaktapur), and minor sources) supplying some 83,000 cubic meters per day during dry season in 1986 (refer, Tabe 6.4).

6.2.3 Water Charges and Financial Position

The number of private water connections in Kathmandu increased from 14,167 in 1975 to 33,978 in 1987, a growth rate of 7.6 per cent a year over the 12 years (WSSC, 1986(a):16). During this period, population growth was about 4.6 per cent per annum (refer, Table 1.3). The number of private connections was estimated to be about 52,000 in the Valley in October 1986 (WSSC, 1986(a):ii). However, a recent study (Binnie

184 KATHMANDU VALLEY PRESENT WATER SOURCES

Vl•hnu•tf

Sundartj~l Sour<• 6 Tnat-nt WnrloA

OH081 KHOLA WELl FIElD 4 Re•ervolr • ~ GOKARNA 2 WELLFIELD

!-"co VI SHAKlAPUR l WE&.LFIELD faALKHU------, KHOLA~--o---- 1'------' DAM I

.... "'-.. '~ ' ' ' ' I r.-~-----11 KODKHU KHOlA 1 SURFACE WAtER SOURCE I I DAM I 0 ~ b ~------~ • WElL. SOURCE Cb•P•a•on SprlnJ ,..._i I _[LELEKHoLAl ...... --o-., -'t._.,., SUGGESTED FUTURE SOURCE Pbarpt na P.-p It------•.______!)AM ..I Statton and Well•

Figure 6.2: Existing Water Supply Sources in Kathmandu Valley Source: Water Supply and Sewerage Corporation, 1988. and Partners, 1988: Tables 4.1 and 4.2), estimated the number of connections at 45,132 units in Greater Kathmandu area, consisting of 33,306 (73.8 per cent) metered, 10,832 (24.0 per cent) non-metered and 994 (2.2 per cent) stand pipes serving respectively 58, 19 and 23 per cent of the total estimated population of 389,000 in mid-1986. Metered connections are charged according to pipe size and the amount of water consumed, but for unmetered connections, flat rates per month are charged according to the size of the connecting pipe. Water from public stand pipes is provided free to the consumers, although the government pays Rs 240/month per stand pipe to the WSSC.

On financial terms, the WSSC was incurring regular losses. Data available since mid-seventies show that while incomes increased from Rs 2.23 toRs 23.75 million during the 1974n5 to 1984/85 period, the corresponding expenditures rose from Rs 2.62 toRs 50.15 million (WSSC, 1986(a):17). Sharper increases in expenditures were noticed since the fiscal year 1982/83, probably as a result of greater payments on earlier loans. The estimated income statement for Kathmandu and Lalitpur shows an operating surplus of Rs 3.12 million and a net loss of Rs 16.54 million in 1985/86 (Table 6.3). However, the WSSC expected the deficit to be balanced by 1991 following the completion of the Third Project and strengthening of the services delivery (WSSC, 1986(a):15).

6.2.4 Population Served and Water Used

Table 6.4 presents estimates of water demands, supplies and population served in the Valley towns from 1981 through 2011. In 1986, some 442,000 people were served by the existing systems delivering a daily average of 83,000 cum (188 liters per capita per day). By the year 2001, these were expected to increase to 802,000 persons and 272,000 cum per day, respectively. Almost 99 per cent of the urban population in the Valley obtained their water either through house connections or through public stand pipes in 1986. The rest obtained water from private wells or surface water. Following the strengthening of the system by the Third Project, the existing sources in the Valley were capable of fulfilling the water requirements until the year 1991.

186 Table 6.3: Estimated Income Statement of Water Supply and sewerage Corporation for Kathmandu and Lalitpur (fiscal year 1985/86) (in Rs 1 000)

Revenue A. Revenue from - Private - metered supplies 7,097 Private - unmetered supplies 2,297 Government - metered supplies 0 Government - unmetered supplies 38 Stand pipes 2,215 Billed revenue from water charges 11,647 Rebate for prompt payment (97) Total revenue from water charges 11,550 B. Sewerage revenue 202 c. Other revenues 2,968 D. Total revenue (A+B+C) 14,720

Expenditures E. Operating expenses - Board expenditure 560 - Administrative expenditures 1,787 - Revenue collection expenditure 983 - Production expenditure 1,382 - Production tubewell expenditure 4,901 - Distribution expenditure 1,961 - Sewerage expenditure 29 - Total operating expenses 11,603 F. Operating surplus (D-E) 3,117 G. Other expenses - Depreciation 8,940 - Interest on loans 10,449 - Provision for doubtful debts 268 - Total other expenses 19,657 H. Net incomej(loss) (F-G) (16,540) I. Transfer to revenue reserve (16,540)

Note : Figures do not tally with the results of original table because of rounding. Source: Binnie and Partners, 1988: Table 4.6(A).

187 Table 6.4: Estimates of Water Demands and Supplies in the Kathmandu Valley Urban Areas

Water demand Water supply Deficit Population Year (cu m/day) (cu mjday) (cu mjday) (persons)

1981 90,000 46,000 44,000 364,000 *1 1986 106,000 83,000 23,000 442,000 *2 1991 126,'000 126,000 537,000 1996 186,000 154,000 32,000 656,000 2001 272,000 154,000 118,000 802,000 *3 2006 396,000 154,000 242,000 983,000 2011 577,000 154,000 423,000 1,205,000 ------Notes : *1 - actual *2 - population figures beyond 1986 are projections *3 - population figures in this table differ from those shown in Table 1.3 because of different assumptions made in the original sources Source: wssc, 1986(a):Table 5, p.18.

188 6.2.5 Major Constraints and Problems in Water Supply

There are four main problem areas within the water supply system in the Valley: shortage of water at the sources, poor water quality, limited distribution system, and a high level of loss.

6.2.5.1 Source Shortage: Water shortage have been noticed since 1975. The system's reliable capacity totaled 83,000 cu m a day, which could not meet the area's total demand of 106,000 cu m per day in 1986. Major constraints are limitations in the production from various sources, equipment deficiencies, and weaknesses in the transmission and distribution network. The recently completed Third Project added some 71,000 cum per day to the existing system, thus the total supplying capacity of 154,000 cu m per day was expected to meet the demand until1991 (refer, Table 6.4). Thereafter, the water shortage would appear again.

6.2.5.2 Water Quality: Compounding the overall shortage is the deteriorating quality of water sources. Almost all surface water sources are liable to occasional contamination by human activities, particularly in Bir Dhara and Sundarijal systems. Turbidity increases during rainy seasons giving bad color and foul odour. Presence of suspended matters, dissolved gases, and high quantity of iron have been found in deep-well waters. The iron contents of the well waters range from 0.69 to 5.4 mglliter (WSSC, 1986(a):20), which are higher than the international standards of 0.1 to 0.3 mglliter (Lohani, 1984:168-169).

6.2.5.3 Limited Distribution System: Many households in urban fringe areas do not get house connections because of the lack of distribution lines or their limited capacity. The Third Project was expected to add some 160 km of pipelines to the existing network, thereby strengthening the system and serving an additional population of 163,000. However, in May 1988, it was reported that although the system was then supplying about 90,000 cum of water per day to some 550,000 people in the Valley, it was not enough to meet people's requirements. [1]

189 6.2.5.4 High l&vel of Losses: Although extension and improvements in the distribution network had taken place frequently, the century old network gives high level of losses through leakage, estimated at about 65 per cent in 1986 (Binnie and Partners, 1988: Table 4.2), which means that the per capita availability of water was only 66 liters/day against 188 Vday supplied by the system. Despite improvements made in the system during the Third Project, the Chairman of the Board of WSSC reported in May 1988 that there was still a leakage of about 50 per cent in the system, thereby giving only about 82 liters/capita/day in early 1988.

These problems of the system's existing network and their operations and maintenance are aggravated by the lack of experienced staff, and the shortage of equipments and materials.

6.2.6 Future Water Supply Plans and Programs

From the above discussion, it is clear that the problems facing the WSSC for making future plans and programs focus around two main issues: to solve the water quality problems so that the supply through existing sources meets the demand until1991, and to look for new water sources to meet the demand beyond 1991. The WSSC had made some proposals to handle these problems.

A WSSC study (WSSC, 1986(a):24-28) noted that the water quality problems of existing sources could be mostly solved if the facilities were properly rehabilitated, necessary facilities added to treat water, and the system properly operated and maintained. The report estimated the construction cost of three water treatment plants and upgrading of four reservoirs at Rs 7.5 million (mid-1987 price) with a recurrent cost of some Rs 20 million per year for operating and maintaining the three additional water treatment plants. Japanese assistance was expected for undertaking these proposals.

For increasing the system's capacity beyond 1991, another study (Binnie and Partners, 1988) analyzed the possibility of new sources within and outside the Valley and their

190 probable fmancial implications on the WSSC. According to the study, no new groundwater sources are feasible in the Valley while some minor surface water sources could be tapped to provide an average dry supply of 76,900 cu m/day at a cost of about Rs 350 million (1987 prices) to be completed in 1997. For meeting long-term demand (refer, Table 6.4), two principal sources outside the Valley were identified, Melamchi Khola (rivulet) and Rosi Khola. A combined estimated average dry supply of 423,360 cu m/day is available from these sources, which meets the water demand situation until the year 2011. Carrying water from the Trisuli River through a 50 km long tunnel was considered not feasible.

The official thinking at the WSSC in mid 1988 was in favor of the Melamchi scheme, which comprises of carrying water from Melamchi and its four tributaries through a 27 km long tunnel to the Valley. The phased development of this scheme was estimated to cost a total of some US $ 156.63 million, with the first phase yielding an average of 198,720 cum/day to be completed by 1997 at an estimated cost of US$ 112.70 million. The study suggested the desirability of obtaining foreign loan by the government to cover most of the costs associated with the new schemes, and also of HMG's involvement in the program through equity funding. It also suggested that for increasing the revenue of the WSSC: (i) tariff should be increased in real terms; (ii) the surcharge for sewerage connections should be increased from 25 to 50 per cent of the water charge; and (iii) the efficiency in the operation and maintenance of the WSSC works should be achieved through a number of means, such as by reducing leakage in the water supply system to 30 per cent by 2001, and by reducing the number of WSSC staff from the present 16 to 12 staff members per 1000 water connections.

6:1..7 Situation of Drainage and Sewerage

Although extensive drainage systems were constructed in city core areas during the Malia period (1257-1768 AD), the networks deteriorated later due to lack of proper maintenance (DHBPP, 1969:115). A 1986 WSSC leaflet (WSSC, 1986(b)) stated that the construction of dhal (which in Nepali denotes both drainage and sewerage) was started in Kathmandu and Lalitpur before the tum of the century, in 1899. Although

191 expansion of the drainage network was made at later stages, the sewer lines remained unexpanded. There were about 5,000 sewerage connections in Kathmandu and Lalitpur in 1988 (Binnie and Partners, 1988). The present charge for consumers with a sewerage connection is a 25 per cent surcharge on their water consumption charges.

Between 1961 and 1985, some 100 km of drainage length was added to the network in the three urban centers of the Valley, with the total length reaching some 155 km serving an estimated population of 208,000 (WSSC, 1986(b)). Although three waste water treatment plants have been constructed in recent times, currently they process only about 30 per cent of the waste water carried through the networks, while the remaining 70 per cent is directly discharged into streams and rivers. With the lack of organized sewer system in the Valley, the bulk of the urban population makes its own arrangements for disposing of human waste with water seal toilets including septic tanks and pit latrines, while the majority of the population in urban-fringe and in rural areas still use streets, courtyards and open fields in and around the settlements for the purpose. The WSSC is currently undertaking an internationally aided sewerage program in Greater Kathmandu area (its details were not available).

With inadequate paved roads and drainage network in the Valley and blockage of the drainage lines by debris, storm water during the rainy season usually flows through the streets, forcing the people to travel through 'muddy streets'. Drainage problems have assumed serious dimensions lately with studies identifying drainage as the second most priority issue after water supply (MSTP, 1988:11). This, in part, is due to difficulty in identifying the main responsible agency to carry out the construction and maintenance works among the DOR, WSSC and the municipalities (Hubbard, 1987:5). The Ministry of Housing and Physical Planning (parent line ministry of the WSSC) took a lead in this direction on public request.

In April 1988, the WSSC divided the drainage works in the Greater Kathmandu area in three parts (WSSC, 1988): (i) maintenance (cleaning and repairing) of the old drainage lines to check the contamination of piped drinking water supply with an estimated cost of Rs 1.2 million for 2.75 km length of drains; (ii) priority new

192 construction works to be undertaken during the fiscal year 1988/89 costing about Rs 4.72 million for 5.23 km of drain lines; and (iii) construction of drains on the basis of public participation. In response to a public appeal made to construct drains with 50 per cent cost contribution from the beneficiaries, some 100 applications from individuals, communities and pauchayat ward committees were received by the Ministry and the WSSC, with the total cost estimated at Rs 37.18 million, meaning thereby that the public sector contribution was in the order of Rs 18.59 million. In mid 1988, the WSSC was thinking of constructing these requested drains gradually on an annual basis, while works on some of them bad already begun, as noticed by this writer during his May-August 1988 field visit.

6.3 Electricity Supply

The Nepal Electricity Authority (NEA), constituted in June 1985 by merging together former Department of Electricity and Nepal Electricity Corporation, is responsible for the overall system planning, generation and distribution of electricity throughout the country. Two divisional offices with five branch offices, under the Directorate of Distribution and Consumers Services, look after the distribution, collection of charges and maintenance of electricity supply in the Valley.

6.3.1 Institutional Arrangements

This corporate and autonomous body is headed by a Managing Director, who works through five main functional directorates (planning, engineering, construction, distribution and consumers services, and operation and maintenance). Its corporate powers and functions are vested in and exercised by the NEA Board, which reports to the Government through the Secretary in the Ministry of Water Resources. The NEA is authorized to incur foreign as well as domestic indebtedness to carry out its functions. In 1987, the NEA had a total manpower strength of 7,336, some 271 more than the approved strength of 7,065 staff (EFI, 1988:11).

193 6.3.2 Electricity Supply in the Valley

Power to the Kathmandu Valley is supplied by a number of 66/11 kilovolt (kV) substations and 11 kV distribution system including 11 kV double circuit ring. Kathmandu is connected to the national power grid through the Central Nepal Power System (CNPS). Figure 6.3 shows the major hydro-power stations that supply power to the Valley and its main power transmission lines. The major power stations include, Kulekhani No. 1 (60 megawatt (MW)), Kulekhani No. 2 (32 MW), Trishuli (21 MW), Devighat (14.4 MW), and Sunkosi (10.05 MW). Small hydro-power stations at Sundarijal, Pharping and Panauti also supply power to the Valley, which has two diesel plants, at Tundikhel (1.73 MW) and Patan (1.49 MW). The Marsyangdi (66 MW) hydro-power station under construction was scheduled for completion during fiscal year 1988/89, and its power was to be transmitted to the Balaju substation in the Valley through 132 kV lines.

About 75 per cent of the national power consumption is estimated to be consumed in CNPS which supplies nearly 85 per cent of its power to the Valley (IICA, 1984:2), which means that some 63.75 per cent of the total national power is supplied to the Valley. All major power stations are concentrated in this area.

6.3.3 Power Generation, Consumers and Tariffs

As of 1986, the total installed capacity of hydro-power in the country was 171.32 MW (CBS, 1986(a):2), which is 0.20 per cent of the total potential power of 83,000 MW (NPC, 1985:185). The Central Region generated some 80.4 per cent of the total national power out-put (137.83 MW in 1986), with hydro, diesel and small hydro-power units generating respectively 84.1, 71.0 and 52.7 per cent of the national total (CBS, 1986(a):42).

The number of electricity consumers in Nepal grew at an annual rate of 8.7 per cent between 1970n1 and 1984/85 (CBS, 1986(a):45). Some 72.6 per cent of all electricity consumers were in the Central Development Region in 1984/85, comprising of 97.2 per

194 Figure 6.3: Major Power Sources and Transmission Lines Kathmandu Valley, 1988

KATHMANDU VALLEY

LALI TPUR \.. '- "" J I' I \ } / ( LEGEND I I 11 kV 66KV 132 KV ~~ EXISTING LINE UNDER CONSTRLK:TION -- c:::::l c:::::l .... PLANNED -·- c::::J • c::::J ··- Source: Nepal Electricity Authority, 1988

195 cent domestic, 2.1 per cent industrial, 0.2 per cent commercial and 0.5 per cent others, which consumed some 73.8 per cent of the total energy sold in the country in that fiscal year.

Power consumption for domestic use is charged at a flat monthly rate depending on the capacity of connected meters which allows some units of electricity to be consumed free. Additional energy consumption, beyond the free minimum, is charged on a graded basis, increasing with increased energy consumption.

6.3.4 Assessment of Power Situation in the Valley

Following the completion of the Kulekhani No. 2 project, and strengthening of the transmission line network in the Valley through the Japanese assistance, the electricity position has much improved. Almost the whole of the Valley is electrified, and there are no load sheddings and no voltage drops, as in the past. In fact, the Planning Commission reported that there was no effective demand to utilize all the available power in the country, since only about 60 per cent of the total generating capacity of 126 MW of the central unified system was utilized in the fiscal year 1983/84 (NPC, 1985:705-706). After the completion of the Marsyangdi project, more reliable services can be expected from the NEA in the Valley.

The NPC (1985: 705-706) identified the following main factors responsible for a low power demand situation: (i) inadequate expansion of the transmission and distribution lines; (ii) lack of expected increase in demand for power in the productive sectors, such as industry, agriculture, tourism and transport; and (iii) increase in electricity tariff-rate which discourages higher power consumption. The last point is significant, especially in reducing the effective demand in domestic consumption which contains 97 per cent of all NEA customers. With the current tariff structure, many households will be encouraged to install lower capacity meters and to use less amount of energy, since the electricity bill can be quite high if consumed in excess of 100 units. Despite the NPC's strong recommendations to reduce the tariff to increase effective demand for electricity (NPC, 1985:507-508), the NEA increased electricity charges in June

196 1988 which discourages higher consumption by charging progressive higher charges.

The NEA's operations in increasing the transmission lines and system reinforcement works in the Valley are reflected in the amount of financial allocations made for these purposes, as shown in Table 6.5. Although the absolute volume of investment of some Rs 11.8 million in 1987/88 can be regarded as 'low', it represents more than double the amount allocated in the previous year. As shown in Table 6.5, rural electrification was emphasized in 1987/88 by allocating half of the total budget in this field, while the Kathmandu District continued to take the lion's share in the budgetary allocations (two-thirds in total).

Since Kathmandu is connected to the national power grid and as most of the power generated in the country is consumed in the Valley, a look at the national power situation in the future is desirable. Nepal has a tremendous hydro-power potential, estimated at about 83,000 MW units, as mentioned earlier. The demand for electric energy was expected to increase at 13.9 and 11.2 per cent annually, during the 7th Plan (1985-90) and the 8th Plan (1990-95) periods, respectively (NPC, 1985:717-719).

The Marsyangdi project is assumed to fulfil most of the additional power needs of the Valley until the year 1994, so that other major projects need to be undertaken to reinforce the system's capacity in future. The Arun III project has been recently identified as a feasible project in the Sapta Kosi River Basin in Eastern Nepal, and its construction was understood to be taken on a priority basis for completion by 1995.

The NEA (1987) identified some priority projects needed for reinforcing existing transmission lines, and these were to be undertaken immediately for completion by 1991/92. With regard to the Kathmandu Valley, the priority projects included, Balaju-Siuchatar 132 kV transmission line (US $780,000 at 1986 price), a 66 kV transmission ring in the Valley (US $5 million), and Teku substation and transmission line (US $1.5 million).

197 Table 6.5: Financial Allocations for Line Extension, Rural Electrification and System Reinforcement in the Valley (in Rs 'OOO) ------Fiscal Fiscal year 1987/88 year 1986/87 Line extension Rural elec- system trification Reinforce. Total Amount % Amount % Amount % Amount %

1-' ------\I) Kathmandu = Division - Kath. central - 439 33.3 800 20.0 945 39.1 2,184 28.2 - Kath. western - 439 33.3 2,600 65.0 806 33.3 3,845 49.7 - Kath. eastern - 439 33.3 600 15.0 668 27.6 1,707 22.1

Sub-total 2,614 1,317 65.3 4,000 67.8 2,419 62.1 65.5 ------7,736 Lalitpur 1,352 390 19.3 900 15.3 806 20.7 2,096 17.7 Bhaktapur 1,625 310 15.4 1,000 16.9 668 17.2 1,978 16.8

Total 5,591 2,017 17.0 5,900 50.0 3,893 33.0 11,810 100.0

Sourtce: Nepal Electricity Authority, Kathmandu, June 1988. Despite various measures taken in the past to check loss reduction of power (leakages and system-loss), which was seriously affecting the financial position of the former Nepal Electricity Corporation (NEC, 1984:1), its percentage increased from 28.6 per cent in 1975n6 of the total consumption to 32.5 per cent in 1983/84 (NPC, 1985:190). The 7th Plan's target was to bring the total loss to some 20 per cent (NPC, 1985:711), for which greater efforts were necessary for system reinforcement and strict enforcement of the regulations. Another area where the NEA needs improvements is in its efficiency of operations. A study by a French team (EFI, 1988) found that the NEA was over-staffed in relation to power production. The study suggested a reduction in staff strength to the 5,109-5,334 range by 1997/98, by increasing the number of officers and technicians and by reducing the number of lower level staff. It can be noticed that the desirable figures for total NEA staff in the target year are lower by about 30 per cent than the 1987 staff strength.

6.4 Chapter Conclusions

The foregoing sections documented the operations of the three key network provision bodies, the Department of Roads, the Water Supply and Sewerage Corporation and the Nepal Electricity Authority, as the main physical infrastructure agencies guiding the land development process in the Valley. The major items covered in the review included institutional and organizational arrangements, existing network of these infrastructure in the Valley, and an assessment of the adequacy of the facilities together with any future plans and programs to extend them for providing better services and facilities in the Valley.

From discussions in this Chapter, it is found that the provision of electricity supply was adequate but the provisions of public roads and water supply and drainage were not. Indications were that expanding infrastructure facilities for future population growth would be problematic except perhaps for electricity supply. Further, although the electricity and water supply agencies had future plans and programs to extend their services in the Valley, the DOR had no such plan prepared to date.

199 The main problems in the inadequate provision of infrastructure can be identified as the lack of finance, lack of clear responsibility, lack of future plans and programs, lack of co-ordination, and lack of public participation.

Providing adequate funding for infrastructure and services had been a major problem area for the three agencies. Besides financing their operations from internal sources, all of them were receiving external help to expand their facilities. As far as internal funding pattern is concerned, the DOR is unable to generate its own revenue base from users charges, development charges or share in the centrally collected vehicle tax, so that it depends wholly on HMG budget to meet its expenditures. The vehicle taxes are paid into general revenue; but at present the two are not related. Thus, there is no financial mechanism for linking the supply of roads to the demand for roads (through increases in the vehicle fleet and people's incomes). The WSSC and the NEA are in a much better position because they have their own revenue base through the users charges. Besides, they can raise their tariff rates to increase the revenue, and can also reduce their expenditures by efficiency of operations and by minimizing the losses and leakages in the system.

Taking the whole Valley as a planning unit, it is also found that there are some serious jurisdictional problems to provide the infrastructure. The responsibility problem has been adequately taken care of in the case of the NEA, which views the whole country as an integrated system to provide electricity through the national power grid. Its Bagmati Department and the concerned divisional offices provide adequate institutional framework to maintain and expand electricity supply in the Valley. In the case of public roads and water supply, a number of agencies are currently providing these facilities. Besides, the DOR does not view urban roads as a priority and its role in opening a new road for opening an area for land development is almost insignificant. The WSSC is concerned mainly in urban areas for the provision of water supply although some rural areas continue to receive water supply through its network. With regard to public roads and water supply, the roles of the local governments in the Valley (village and town panchayats) have been unclear both in construction and maintenance, while the KDC has so far acted as a passive observer.

200 The three main network provision agencies are created under different statutes, so that their decision making hierarchy, their priority works, their plans and programs, and their funding pattern are all different and not related to one another. This has brought about a number of co-ordination problems in the timing, pace and direction/location in the delivery of their services (refer, Chapter 1). The co-ordination problem is further aggravated since the DOR has neither any plan and program for the extension of road network in the Valley, nor any effective role in providing new access roads for urban land development. Desirably the provision of electricity and water supply should take place in areas that are opened up for development through the provision of access roads, and these services should follow the road alignment to extend their lines for servicing new areas. But this direction of development and the synchronization in the provision of services can not take place under the current pattern of institutional arrangements and the insignificant role played by the DOR in opening new access roads. Due to lack of any effective control over budgetary allocations, the National Planning Commission as an apex body to sanction all programs and projects of line agencies and the KDC as a planning and executing agency for urban development in the Valley, have been largely ineffective in securing the required co-operation and co-ordination from these three main network provision bodies to provide guidance to both public as well as private sectors for urban expansion and land development activities. These co-ordination aspects are dealt with in detail in Chapters 8 and 9.

With the exception of the recent initiatives taken by the Ministry of Housing and Physical Planning to seek co-operation at the community level for identifying priority drainage projects and for involving beneficiaries to share half of the cost of providing them, the three agencies have so far done nothing to seek citizens' participation either in identifying the projects or in their plan making and implementation works. In this respect, even local government bodies are not involved. The obvious results are: urban and land development activities take place randomly in a scattered manner, the citizens do not get the services where and when they want, the public agencies seldom get the local support in implementing the projects in the field, and neither the beneficiaries have any incentive to pay for the provision of services which they receive nor the public agencies can ask them to contribute towards meeting the project costs.

201 1. Figures quoted by Dr. B.P. Shah, Chairman of the Board of WSSC, during his speech delivered at the seminar on 'Urban Development Strategies for Kathmandu Valley' on May 18, 1988.

202 7. SUMMARY AND SYNOPSIS: ADOPTION OF A LAND MANAGEMENT SYSTEM IN mE VALLEY

This Chapter presents a brief country profile and summarizes the main points dealt with in earlier chapters. It is argued that opportunities for implementing urban development plans in the Valley through conventional mechanisms are limited and that a new approach to urban development should be adopted. An improved land management system (LMS) aimed at orderly urban expansion, planned urban land use and adequate land supply is suggested. The proposed IMS is briefly described showing how the system works, how the various techniques and measures are fitted in the system and how they operate. This is followed by a brief presentation on how plan implementation in the Valley can be achieved by modifying the techniques for application and how the proposed IMS can be adopted in the Valley. Further discussions on the various techniques and measures of the IMS and their implementation aspects are covered in subsequent chapters.

7.1 Country Profile

Nepal, a small land-locked mountainous country, is sandwiched between two big Asian neighbors, China and India. With an area of 147,000 sq km, the Kingdom of Nepal had a population of 15.02 million in 1981 (estimated 17.13 million in 1986) (CBS, 1986(a): 11-20). The major part of the country comprises high mountains and rolling hills.

7.1.1 Political Set-up

The revolution led by the then popular Nepali Congress Party ended the century old Rana regime (one family rule) in 1951 and reinstated power to the throne. This change also opened up the country for outside world. Between 1951 and 1960, a number of short-termed governments led by various parties came to power. The government of Nepali Congress Party, which came to power in 1959 after winning an absolute majority in the first general election, was dissolved in 1960 by the then ruling monarch

203 King Mahendra and its members were imprisoned. Thereafter, political parties were banned in Nepal and a new constitution establishing partyless panchayat system was promulgated in 1962.

The country is subdivided into more than 4,000 communities that are governed by a pauchayat. The structure of the Panchayat System is made up of three tiers - Village or Town Pancbayats at the lowest level, District Panchayats in the middle and the Rastriya (National) Panchayat at the top. The King nominates 25 per cent of the 140 National Panchayat (a unicameral legislature) members.

7 .1.2 Administrative Set-up

Politically and from an administrative point of view, the country is divided into 14 zones and 75 districts. Zones and districts are grouped into five development regions. Branches of Central Government departments go down to the district level. The district administration is headed by a Chief District Officer.

All powers (executive, judiciary and legislative) emanate from the King. The King governs the country through a council of ministers headed by a prime minister. A small core of Palace Officials advises the King on all matters of the State.

7.1.3 Socio-economic Profile

Nepal has a composite population stemming from various racial strands, mainly the Mongoloid groups from Tibet and Indo-Aryan people from northern India. These two groups of people have traditionally settled in the mountain/hills and the hills/ferai regions of the country, respectively. However, as a result of an increased mobility made possible by recent developments in the transportation sector, these days one finds a mix of people settled in various parts of the country. The predominant castes in Nepal include Brahmins, Chhetriyas, Newars, Tarnangs, Magars Gurungs and Thurus. Nepal is the only Hindu country in the world and about 90 per cent of its people follow the Hindu religion followed by Buddhism and other religions (CBS, 1986(a):21).

204 The most important economic resources of Nepal are forests which cover about 38 per cent of the total land area (CBS, 1986(a):32). Nepal is predominantly an agriculture country. About 91 per cent of the total workforce is dependent on agriculture which also accounts for about 60 per cent of the Gross Domestic Product (CBS, 1986(a):30, 240).

Literacy is very low in Nepal- some 29 per cent in 1986 (CBS, 1986(b)). About 40 per cent of the population is below poverty level. The GNP per capita was US$ 160 in 1984 (World Bank,1986:174).

7.2 Planning and Land Development in Kathmandu Valley

The Kathmandu Valley lies in the mid-hill region of Nepal (refer, Figure 1.1). The Valley is the seat of government and the headquarters of the Central Development Region. The Valley accommodates three of the eight administrative districts of the Bagmati Zone, namely, Kathmandu, Lalitpur and Bhaktapur. At the local government level, the Valley contains the three municipalities (town pancbayats) of Kathmandu, Lalitpur and Bhaktapur and over 100 other village panchayats.

The Valley population is estimated at about 739,000 in 1981, about half of which were residing in the three urban centers (Rimal et al., 1986:1). Between 1971 and 1981, the Valley urban population grew at 3.8 per cent per year (refer, Table 1.3).

7.2.1 Urban Land Development Process

Most land in the Valley is privately owned and privately developed but the government participates in the development process through the provision of the network infrastructure (public roads, water supply and electricity supply) and through a statutory planning control system designed to regulate urban development in the Valley. The provision and extension of these network infrastructure influences the direction of urban growth by encouraging land and building development in proximity to their location. The government agencies responsible for the provision of these infrastructure

205 works and services are the Department of Roads, Department of Water Supply and Sewerage, and Nepal Electricity Authority, respectively.

Government land development in the Valley has always been limited and the bulk of the urban land and housing development has been undertaken in the private sector through numerous individual projects (refer, 3.7). Commercial (organized) land and housing development agencies have yet to emerge in Nepal, so that most housing is built as individual units on small scattered land subdivision projects, and are carried-out for personal use and/or for rental purposes. Land development is not regulated by subdivision regulations. Usually the residential development takes place on elevated tableland called 'tar' land which gets access through a public road or a trail. The individual owner-developer applies for the building permit to the municipality. The availability of services, such as water supply and electricity, is not a pre-requisite for the issuance of building permits as they can be provided later by the concerned agencies.

The problems related to this land development process stem from both the public agencies responsible for the key network infrastructure as well as from the private owner-developers. The extension and construction of the public roads, water supply and electricity supply is not planned, and they are provided on an ad hoc basis mostly in response to political pressures. The provision of services can hardly meet the needs of the growing urban population whereas the lack of funds and lack of inter-agency co-ordination on the timing and pace of their delivery have adversely affected the land development process. Since the land development activities undertaken by individual owner-developer is neither controlled nor regulated, the development usually takes place on poorly serviced land. The sites are scattered, isolated and may be of inappropriate shape and size for their full utilization. Of late, due to development pressures, increasing demand, and high land prices, land development is taking place on low-lands and flood-plains. Incompatible land uses, encroachment onto agricultural lands, and haphazard urban growth have been the results of this land development process.

206 7 .2.2 Brief Planning History of the Valley

Though urban planning in the modem sense is a recent phenomenon in Nepal, pre-industrial societies have always been concerned with sensible use and management of land. In the Valley, settlements were planned on the flat table land called 'tar' and extensive agriculture was practiced on the fertile soils of the river valleys below. All settlements were built compactly with a strong trend for vertical expansion, partly for defensive reasons but most importantly to spare fertile land. Settlements were located close to arable land, running water and markets, while forests were considered as sacred communal property and were protected against boundary encroachment.

Until about 1950, the urban population in the Valley was fairly stable and of small size, increasing mainly through natural growth. After the overthrow of the Rana rule in 1951, people from all over the country started to migrate to the Valley in large numbers. During the 1960's and the 1970's, as population pressure began to grow, the urban areas expanded laterally engulfing low-lands and agricultural belts.

Following the collapse of the Rana regime (1846-1951) and with a view to prepare Kathmandu for its international exposure, the government attempted a number of efforts towards providing/improving infrastructure and services. However, the government's planning response to tackle urban and land development problems in the Valley did not begin until early 1960's, but it was only in 1976 that the Government formally approved the Valley Land Use Plan and established an agency, the Kathmandu Valley Development Committee {KDC), to undertake regulatory functions. An overview of the planning history of the Kathmandu Valley since 1951 is presented in Table 1.2 and the salient features of the government's planning response as outlined in the 1976 Plan is briefly sketched.

This Kathmandu Valley Town Development Plan, 1976 {the 1976 Plan) consisted of a land use and transportation map, and land use regulations along with an organizational structure of a committee for the implementation of the Plan. This Plan "aimed at putting restriction on haphazard growth and urban sprawl so as to develop

207 urban areas in a planned way" through the application of land-use control measures (KVTPT, 1984:3).

7.2.3 Present Urban Land and Development Problems

More than a decade has passed since the government adoption of the Valley Development Plan aimed at planned and orderly urban development, but as discussed earlier (refer, Chapters 1,4 and 5), the present situation in the Valley appears to be contrary to what was intended. Incompatible land uses and violations of regulations are frequently observed. Unplanned urban sprawl is threatening to engulf the productive agricultural land in the Valley because the authorities are unable to control the haphazard growth and scattered development due to a number of factors. There is inadequate provision of urban infrastructure and services in the new housing areas. Land values are rising rapidly, so that the affordability of land for housing is declining. The authorities frequently undertake their urban development works in a piecemeal and ad hoc manner.

These urban land and development problems in the Valley are serious and most of them have been officially recognized and acknowledged (KVTPT, 1984; MHPP, 1988 (a)).

Drawing on the material presented in previous chapters (refer, Chapters 1,3,4,5 and 6) and other sources (KVTPT, 1984; Acharya, 1984-86; Rimal et al., 1986; Schneider, 1987; MHPP, 1988 (a)), major reasons for the failure of planning activities in the Valley can be attributed to:

208 the reliance on negative control mechanism as a means to implement the official land use plan rather than the adoption of a more positive government action to provide guidance and direction to urban growth; the limited administrative capability of the KDC and its week legal base to effectively control haphazard urban growth; the shortage of funds for the provision of infrastructure and facilities; the lack of inter-agency co-ordination in the timing, pace and delivery of physical and social infrastructure; the negligible efforts to bring more developable land in the market. The shortage of development land in accessible locations encouraged excessive encroachment onto low-lands and flood-plains close to built-up areas; the inability to tap the tremendous potential available through citizens' participation in urban development works; and the corrupt practices among officials in the use of discretionary powers in carrying out planning duties.

7.3 Need for a New Approach

The Kathmandu Valley consists of an area of about 597 square kilometers, which is unusual for its size and fertility in the mountains and hills of Nepal. The Valley is the seat of national government as well as the three districts and town panchayats (municipalities) of Kathmandu, Lalitpur and Bhaktapur. Because the Valley area is finite, agriculturally productive, and the size of a large and growing urban population, land issues are becoming more acute. The combined urban population of 364,000 inhabitants in the Valley in 1981 (some 38 per cent of the national urban population) is expected to reach 0.88 million by 2001 and 1.6 million in the year 2020 (refer, Table 1.3). At current rates of unplanned urban sprawl, all prime (agricultural) land in the Valley will be urbanized by the year 2020 (PADCO, 1986:32). Clearly, the challenge before authorities in Nepal is to determine the future layout of the Valley, and establish appropriate policies, plans and implementing arrangements to fully utilize the Valley's valuable land resources.

209 The Nepalese Government established the KDC to guide the growth and development of the Valley and the use of urban land through land use planning control system in order to achieve the broad objectives of efficiency and amenity in the pattern of urban land use. But this has not proved to be successful and more effective measures are needed.

Experience elsewhere in Asia also depicts a similar picture (refer, Chapter 2). The various regulatory measures to control the use of land and taxation instruments have not been very successful as land policy instruments (UN ESCAP, 1985). The Indian experience with the policy of direct government intervention in the land market by bulk acquisition and development of land (for example, in Delhi) has met with numerous implementation problems (Acharya, 1987(a)).

In view of these experiences, an alternative approach is needed for application in the Kathmandu Valley to achieve planned urban development and adequate land supply. The opportunities and limitations of three broad categories of urban land development systems (viz. private land development under the statutory planning system, government land ownership and development, and private land ownership and government land development), currently operating in the formal sector of most mixed-economy countries of Asia were discussed in Chapter 2. In addition, the existence of a considerable amount of informal land development activity was noted, including Kathmandu's semi-formal land development practice carried out mostly through land brokers' participation.

The literature review highlighted a number of limitations with current land development systems and suggested the development and adoption of a mixed private and government land development system in the Valley.

7.4 A Land Management System for the Valley

Most urban land in the Valley is privately owned and privately developed, and any system which tends to heavily interfere with this established practice has little chance

210 of succeeding. The private land development under statutory planning regulations has a number of limitations, but it is going to be the dominant form of urban land development system, although the system needs significant modifications to minimize its negative effects through the adoption of more positive plan implementation tools and realistic regulations and approaches.

Similarly, it can be argued that it is not realistic (and probably not desirable) to propose government land acquisition and development on a large scale as is practiced in Delhi and Singapore. Nor it is realistic to propose the general use of government land pooling/readjustment (LP/R) projects as is practiced in Nagoya, Seoul and Kaohsiung, as this would take many years to implement. However, it should be possible to achieve real improvements in urban land development by shifting from the almost wholly private land ownership and development system to a more mixed private and government development system.

Under this mixed private and government land development system, the government would participate positively for implementing official land use plan and augmenting land supply by way of installing key network infrastructure mains in urbanization promotion areas and by undertaking selective land development projects. In this system, the government acts as a regulator and facilitator, and encourages the private sector in land development while it also undertakes some land development activities, especially to fill in the gaps left by the private sector.

In this proposed system most land would still be developed by way of private land development projects (including land and housing projects), but there would also be substantial number of government land development projects and government LP/R projects. This would provide a more competitive land supply system in which separate projects would provide a wide range of building plots and houses (by location, type, size and price) that give households alternative ways of obtaining their housing. A metropolitan planning and development authority can usually achieve effective influence over the land supply and the land market with only a small share of the total land development activity by way of government controlled projects. The development

211 Figure 7.1: Land Policy and Management for Asian Qties

JJRBAN lAND POI.ICY i ) INSTI]J!TIONS PROGRAMS ------~ PROJECTS Formulation and statement of government objectives, priorities and Responsible Minister and Long Term Plan/Program for Staged Private Land Subdivision Projects measures on the ownership and use of Department Metropolitan Expansion urban land Private Land and Housing Responsible Organization for each city 5-10 Year Network Extension and Land Development Projects (metro planning and Rezoning Program development) Land Pooling/Readjustment Projects Five Year Housing Land Supply Pro Land Banking or Development gram Government Sites-and-Services Projects Organization (including core/shell housing projects) Five Year Low-Income Housing Land Supply Program Cooperative Land and Housing N Development Projects .... Philosophy of Promotion, 5-10 Year Urban Renewal Program N Cooperation and Information Employer Land and Housing Five Year Squatter Housing Development Projects (Desirable Objectives: Appropriate Land Use Planning Upgrading and Resettlement Program Squatter Housing Upgrading Projects Efficiency, amenity and equity in the use Coordination of Government Urban of urban land resources by way of: Development Activities Squatter Housing Resettlement . Planned land use, Projects • Orderly development, Land Market Prices, Supply and Demand . Adequate land supply, and Information System Private Redevelopment Housing Projects . Increased land supply for low-cost housing) 1\DDf[IONAI. RF.SOJJRCES Government Redevelopment Housing Projects Professional Land Managers

Additional Funding for Development Works (from land value increases)

Source: Archer, 1987: 6D. authority would adopt a land management approach rather than a regulatory approach towards guiding, stimulating and co-ordinating urban land development.

7 .4.1 Land Management Tools

Land management is concerned with the restructuring of physical development patterns and the provision of land to accommodate urban development. Effective land management is essential for making an optimal use of scarce land resources and for securing an adequate level of urban infrastructure and urban services at reasonable cost. Its general objective in metropolitan expansion is to ensure the timely availability of land for urban development at affordable cost with a view to achieving an orderly urban expansion, an adequate land supply, and a planned pattern of land uses. Archer (1987) suggests a possible framework of land policy and management for Asian cities (refer, Figure 7.1).

Any complete urban land management package contains a large number of measures and techniques, as follows:

Land management (responsible) organization; Planning strategies for urban expansion; Government land acquisition for public, community and government purposes and the allocation/development for private purposes; Land use controls; Co-ordination of government development activities; Guided land development (GLD); Land pooling/readjustment (LPIR) projects; Funding adequate provision of infrastructure; Land market and supply information system; Land supply programs; and Trained and skilled land managers.

213 Figure 7. 2

LAM» PIANAGD!DfT SYST~

firUws anSI Oil I - Pull tic 1- r1 ~ Sector . J Major Land Land Responsrble KanageMnt ..,., + Age neg ... DevelOIWIIt Tools ~ J Private - - - r't..t ~ I Sector ...... Land Supply I Legal I ~ ..,. ~ Pro !Jl'Wif s - - fra,.ewrk l-t I Adequate .... - c lfil Jon Funding RoHl~~iogt -oo·lffdD ~e v,,,mr -_ 'II p otwnl.anf l!m•in} - Owlersllip l](nmitnr::inJ) Trained >--1 Pattun Pla.'lpowr - Additionll - tDd Kartet Land Dealings Projtcts ~ rc ¥~tlln ~ ( Proi.ct:im - gs "' • sur::ph.s/

214 Although the overall land management system (LMS) proposed in this Thesis (refer, Figure 7 .2) accommodates all the above measures and techniques, focus is placed on some of the key elements of the system (e.g. co-ordinating mechanisms, institutional arrangements, adequate funding arrangement for the provision of infrastructure, and the use of the GLD and the LP!R techniques). However, it must be noted that the adoption of the LMS in the Valley would require action across all sections of the system. These are covered in the following sections and chapters.

7 .4.2 The System

The objectives of planned urban expansion and adequate land supply can be achieved by setting up a metropolitan land management system designed to monitor and co-ordinate the various land development projects being undertaken and to initiate such additional projects that are needed to fill the gaps. A brief outline of such a system, presented schematically in Figure 7 .2, follows.

A responsible authority, equipped with necessary powers and resources, operates as a metropolitan planning and development authority with responsibility to ensure planned urban development and an adequate supply of urban land. Various land supply programs are initiated both for opening up land for planned urban expansion as per metropolitan strategy and for bringing adequate quantity of serviced land in the market. The extension of main roads and trunk utility mains are geared towards developing land in urbanization promotion areas. The provision of physical infrastructure (e.g. public roads, water supply, drainage, and electricity supply) and social services and facilities by various government agencies is co-ordinated. Additional funding for servicing new areas is obtained by capturing some of the land value gains generated by the provision of such services.

A number of government, private and joint-venture (government and private sector partnership) land development projects are formulated and implemented where the concerned landowners, tenants and local citizens are encouraged to participate in the process and project management. Serviced sites are eventually built-upon by building

215 development projects.

A land market and supply information system, designed to monitor the demand/supply situation of serviced residential land, is set-up to estimate the production surplus/deficit. This market information helps the development authority to reschedule/redirect land supply programs by adjusting the tum-over of existing land development projects and/or initiating additional projects. The establishment of a policy review and co-ordinating mechanism covering major aspects of the land management system, such as agency framework, legal powers, planning instruments, urban expansion strategies, land management tools, land supply programs, funding arrangements, co-ordinating activities, and citizens' and the private sector's participation in the land development process, completes the feedback loop of the system (not shown in Figure 7.2).

The system offers significant benefits to all those concerned with urban and land development and to project landowners and tenants having interest in land. Table 7.1 summarizes the major roles/interests of principal participants of the system and the benefits available to them.

7 .4.3 Land Development Techniques

This Thesis attempts to build a LMS for the Valley based on the combined use of the two principal land development techniques of land pooling/readjustment (LP/R) and guided land development (GLD). Chapter 2 contains elaborate discussions on these techniques.

LP/R involves the consolidation of separate private land holdings in urban fringe areas for their unified planning, servicing and subdivision as a single estate with the sale of some of the new building plots to recover the project costs and the redistribution of the other plots back to the landowners (refer, Figure 7.3). Although there are some variations in the type and form of the schemes, and the respective implementing agencies, all LP/R projects are prepared with the co-operation and active participation of the landowners concerned and formulated for complete cost recovery within the

216 Table 7.1: Benefits of Proposed System to Participants

Participants Interests/Roles Major Benefits

Government . Regulator . Planning gains . Facilitator - planned pattern of land uses . Positive participation in - orderly mban development land development - adequate mban land supply . Social equity . Optimal utilization of scarce resources (land, capital, manpower) . Equitable distribution of services and facilities • Greater co-ordination of government programs . Self financing mban development mechanism . Otecking misuse of authority through greater public scrutiny . . Political gains (popular public support) Private developers . Entreprenemsbip . Innovative land and mban development . Profit oriented . Efficient management . Increased productivity . Minimization of cash flow problems . Project viability and assurance of profit

Landowners . Land value gains . Land value gains assured . Availability of services . Provision of services assured . Participation . Greater participation in project management . Mutual trust between government and people . Reduction in potential disputes with tenants since government acts as a mediator

Tenants .Land rights . Interest in land right recognized . Share in land value gains assured

Land Brokers . Profit oriented . Land opened up for development . Mediator . Affordable plots available as per purchasers' ability to pay . Resolution of conflicts between landowners and tenants . Profit from relative land value gains

General public . Participation . Greater citizens' participation . Availability of services and . Services and facilities planned and provided at facilities various locations . Desirable development . Planned development . Environmentally sound development • Greater social harmony

217 • Figure 7.3

An Urban Land Pooling/ Readjustment Project

Porl

Plots Sold + J for Cost Str~ Recovery Unified \f/'.. 1 + I I + Planning N d ' :;; Rural lnfrostr~cture ""-I Servi~e V _!Landowners LandParcels Subdivlston / ButldtngPlots II Plots

Source: R W Archer. 1988. Bangkok. project period through the sale of 'cost equivalent land' reserved in the scheme for that purpose.

However, the LP/R technique can be utilized most effectively in areas which are already opened-up for development with the necessary access roads and trunk utility mains nearby. Construction of public roadways is the most appropriate mechanism to open-up urban fringe land for development and thereby augmenting its supply (Echenique, 1982). Therefore, LP/R must be incorporated with another approach which guides land developers to desired locations by the forward installation of the key network infrastructure. The technique of guided land development (GLD) is one of such approach, which comprises of a mechanism for the forward provision of the key network infrastructure in designated urbanization promotion areas in the fringes (refer, Figure 7.4). In this approach, the government provides the necessary trunk infrastructure extensions, recoups the costs through some form of betterment charges, and the land subdivision and development is largely left to the private sector.

Although these techniques have a lot of potential to be used as powerful tools to implement officially adopted urban development plan in a positive way, they need to be improved/refined for application in the Valley. Tables 7.2 and 7.3 outline the pre requisites for the use of the techniques, their potential constraints and opportunities for improvements. It may be noted that the manpower constraint for the use of the LP/R technique can be overcome by training program as suggested for the GLD.

Besides the improvement possibilities noted above, lessons from the Pokhara experience with the use of LP/R projects (refer, Appendix A) should be considered in formulating projects in the Valley. These include the following:

preparation of unambitious small scale projects, project to be selected for its financial viability, functional funding arrangement for each project, each project to be managed by separate project manager, detailed initial preparation for each project,

219 Figure 7.4 THt GLJ 'PROCfSS

vt •. anntn Finance If- ftgency g

Public llattr Roads Supply

I I

lxttnsit,t tl LMt o,tatd lrJ»M hvtlOPMDt L-...... A lrUI Plu r-""'1' lxpansioa ~ tMk ltilitJ ~ Q for lrbu bta IIIia flftwrb lxpansi•

Electri Drainage city

Land JevflOJ'RfRt

PVt. Sector + Public Sector

220 Table 7.2: Constraints in the LP/R Technique and Ways to Overcome Them

Prerequisites Major Constraints Opportunities/Refinements

Project site to be physically • Planning and servicing . Careful selection of project site and economically ripe for . Marketing development

Access roads and trunk . Land not opened up for . Use of GLD mechanism to open up land for utility mains available near development development with roads and services the site available at the periphery of larger blocks

Fragmented land- . Land assembly problems . Selection of small and manageable project ownership due to heavy fragmentation area for LP/R projects • Persuasion and promotion initiatives

Legal and institutional set- . Inadequate legal provision . Current Planning Law (1988) allows the use up to undertake LP/R . No experience with the use of the LP/R technique although procedural projects of the technique matters are not detailed out . Inadequate property records . Lessons from the Pokhara experience with and maps LP/R projects . Recent initiatives by the Government to initiate few LP/R projects in the Valley . Property records and cadastral maps are reasonably good but need improvement

Project landowners . Inadequate support from . Opportunities provided by the understand and support the project landowners Decentralization Act use of LP/R . Conflicts between . Persuasion and promotion initiatives landowners and tenants . Government acts as a mediator to resolve conflicts between landowners and tenants . Tenants' rights are recognized and protected . Land value gains are assured

Use of compulsory acqui- . Reluctance to use power . Giving a threat to use this power sitiQn powers against due to political reasons • Using power in extreme cases minority holdout landowners

LP/R agency interested in . No genuine interest . Political commitment to carry out the orderly urban expansion for projects a planned pattern of land • Ministry of Housing and Physical Planning uses is interested in undertaking LP/R projects

221 Table 7.3: Constraints in the OLD Process and Ways to Overcome Them

OLD Prerequisites Major Constraints Recommended Measures Major Tasks I.Dng-range struc- . Plans not available . Set up a planning and . Plan preparation ture plan with . Plans not phased on intervals implementing agency with . Phasing of plan phasing of devel- . Plans not accepted by key wide powers opment works public agencies . Co-operative planning . Pressures from political . Persuasion & convincing and/or influential groups . Strong commitment and to divert the plan determination of central government

Inter-agency co- . Pronounced lack of . Greater initiatives from . Directives ordination in the inter-agency co-ordination central government timing, direction . Initiatives from NPC, . Co-ordination and pace of MOF, and planning agency . Co-ordination services delivery . Urban development unit . Prioritization and in Ministry of F'mance selection of . Capital Improvement sectoral projects Folio mechanism . Establishment of . Other co-ordinating Urban mechanisms Development Committee

Funds available . Initial funding not available . Credit finance from . Establish finan- with government financing institutions cing institution and/or agency . Grants from central govt. . Incremental approach to upgrading the standards of infrastructure improvement

Financing infra- . Determination of % of • Levy development charge . Formulate policy structure through recovery required . Deferred payment option . Select option(s) betterment tax . Extent of betterment & . Repayment in land rather their distribution in space cash payment . Collection problems . Combine with other land . Burden to benefiting management tools (e.g. landowners and residents excess condemnation, LP/R, etc.)

Adequate . limited administrative . Formulate unambitious . Prepare programs manpower available capability programs . Shortage of land valuers . Manpower training and land managers programs . External advisor for a short period with training component attached

222 landowners'/tenants' participation in project management, and integration of land development policy with employment policy.

In addition, both of these techniques need to be used in combination with a view to augment the supply of serviced land and to implement official urban development plan for the Valley.

7 .S Plan Implementation through the TecbniqJJes

LP/R and GLD techniques are innovative forms of a joint government and private sector involvement in urban land development and management. Major potential of the techniques include:

implementing urban development plans, ensuring orderly urban expansion, increasing urban land supply in the market, self-financing mechanism (i.e. meeting most of the costs of new urban growth}, and involving concerned landowners in project formulation and management.

These techniques also provide an alternative to private piecemeal land development on one hand and large scale government land acquisition and development on the other hand. Since LP/R and GLD projects offer significant benefits to all participants, which encourage a majority of landowners to accept them and are implemented at no additional cost to the government, they are financially feasible techniques with the added political appeal (refer, Chapter 10).

7 .5.1 The Local Fit

These techniques have greater chances of acceptance in Nepal because they can be built to fit in with traditional practice of providing basic services and facilities through community efforts and because of their potential political appeal.

223 Traditionally, through public participation and community efforts, a large number of services and facilities, such as main water channels, public water taps, schools, public and community open spaces, sports and recreational facilities, places of worship, health care facilities, opening up of access and inter community roads, and various other social facilities, were provided by individuals, groups of people and charitable organizations. Many new roads have been opened up to serve new areas by this process in which adjoining landowners were persuaded to contribute their land for the roadway free of cost and voluntary labor and money were contributed by local people to built the road.

The traditional practice of project identification and management is based on consultation among people within a community to identify a project to satisfy a felt need. A committee comprising of key social figures, interested and dedicated individuals, political leaders and public servants (where applicable) is formed to manage the project. This committee consults the local people, finalizes the projects, works out the project details, raises contributions (in cash or kind) to implement the project, liaises with various agencies (where necessary) and also approaches the government to provide financial and administrative support to the project. Being a project conceived and implemented through local efforts, the community would largely take responsibility to manage and run the facility and maintain it to keep it in good condition.

During the last few decades, public participation and active community involvement have been generally lacking in many of the projects initiated by government in almost all areas of social and community services and facilities identified above. Political events of the recent past (by virtue of the partyless panchayat system) have not encouraged people to come forward and express their opinions and concerns to the public authorities (Acharya, 1989(a)). In such a setting, the community involvement process built into the techniques would provide a political ventilating mechanism to encourage the people to express their views and to participate in project management. This will also be in conformity with the recently initiated decentralization policy aimed at mobilizing local resources for undertaking local level projects (K.C., 1984). The re-establishment of multi-party democracy in Nepal in April 1990 provides opportunities for active community participation.

224 7 .5.2 Applying the Techniques in Combination

Land management tools, when applied in combination, often produce synergetic effect (Acharya, 1989(b)). Since these techniques complement each other, they should be applied in combination to achieve the intended results. A large portion of the Valley urban fringe land is heavily fragmented (refer, 10.7.2) and is often difficult to put to urban uses because it is locked-up and services are not available. In such a situation, the GLD mechanism opens-up land by the forward provision of infrastructure, especially by providing the main roadways. Land parcels within the road framework provided by the GLD process can then be assembled, subdivided and serviced through various private and government land development projects, including government LP/R projects.

The proposed LMS incorporates an active participation of landowners. Land for road network to be created through the GLD mechanism would be mainly contributed by landowners who receive direct access through the road system. The road alignment must, therefore, follow the path of least resistance, i.e. through the boundary of adjoining land parcels. However, because of fragmented nature of land ownership, a strict adherence to this principle is likely to result in an unsatisfactory zigzag pattern of road alignment. Therefore, 'cut and fill' process would need to be adopted to arrive at a satisfactory road alignment pattern. The LPIR process provides such a mechanism whereby land parcels, in whole or in part, can be exchanged from one location to another to strengthen the road alignment.

7 .5.3 Plan Implementation Mechanism

The land management approach to urban development is a positive approach to gradually implement an official urban land use plan. As indicated earlier, the government-private partnership in land development and management is geared to developing land in locations the government thinks appropriate and desirable. At the same time, government formulates devices to recoup some of the land value gains to finance infrastructure. An outline of how the techniques of LP/R and GLD can be used

225 in combination to achieve plan implementation in the Valley follows.

It would appear that the GLD technique can be used to induce urban development into selected areas that have been identified as preferable within the long range urban plan. It can also be used to physically structure urban growth by the construction in advance of private urban development of the principal elements, particularly the arterial and distributor roads. This method gives planning and development authorities a means of guiding the timing and direction of urban growth, so that a progressive and phased urban development pattern can be followed to implement the major proposals of an urban development plan. A phased program can be formulated for the provision of infrastructure and urban services in the identified and selected development corridors, which would allow an optimum utilization of manpower, finance and capital resources. By formulating mechanisms to encourage private development in such corridors according to target time periods and discouraging development out of sequence as well as outside such corridors, effective control can be exercised for achieving progressive and orderly urban expansion.

Public roadways have been recognized as a key element in opening- up peripheral land for development (Echenique, 1982). Large tracts of land can be made ready for subdivision and development by the installation of key network infrastructure. By increasing the urban land supply, by requiring private developers to include a portion of low-cost sites for housing lower income groups (as in Malaysia), and by initiating government housing projects especially to benefit such groups, there is the possibility to achieve the goal of more equitable urban development.

Since the GLD technique is accompanied with a mechanism of recouping costs of infrastructure through some form of betterment charge, funds can be recirculated to progressively service large tracts of land. This method, therefore, allows the authorities to finance infrastructure by tapping unearned increment in land value from beneficiary landowners.

226 As the LP/R projects subdivide land for planned pattern of land use and are self-financing and can be used for timely land subdivision, then LP/R can also be seen as a powerful technique for the positive implementation of the official land use plan for new urban areas.

This controlling of the timing of land subdivision provides an opportunity for the LP /R agency to formulate a program of LP/R projects (alongside the private and other land subdivision projects) towards the objectives of ensuring orderly urban expansion, countering excessive land speculation, and ensuring an adequate supply of land for housing development.

7 .5.4 Opportunities in the Valley

The proposed LMS would operate best in situations where it is intended to open-up large tracts of land in stages through the GLD mechanism in designated urban expansion areas (preferably in development corridors). The framework provided by road network created through the GLD process would generate relatively large blocks of land parcels roughly in a grid pattern where services would be available along the periphery. A number of LP/R and other land development projects can then be initiated in each of the large block to progressively plan, service and subdivide land for a planned pattern of land use by creating neighborhood road systems, public and community spaces, and plots for building development. Fortunately, the topography of the Valley allows urban development to progress along development corridors or 'fingers' in the 'tar' areas, with the low-lying green spaces of river valleys wedged against the 'fingers' as buffer areas, which can also serve as recreation areas.

The potential of the LP/R technique for consolidating, planning and servicing fragmented land parcels has long been recognized in the Valley. In the mid 1970's, attempts were made to initiate an LP/R project in Bhaktapur by the German Planning Group which was undertaking the restoration of the town. Debates over locational matters and other factors did not allow the scheme to be implemented although its background work had largely been completed. The Proposed Development Concept

227 Plan, 1984 (proposal to revise the 1976 Valley Plan) recommended the use of LPIR projects as a mechanism to provide services with community support and at little or no cost to the Government (KVTPT, 1984).

Recognizing the potentials of the techniques, recently there have been some attempts to initiate a few GLD and LPIR projects in the Valley with a view to providing some basic services at the neighborhood level. Although this positive step has its own merit, there are problems with the present approach to introduce the techniques in the Valley. These include:

the LPIR and the GLD projects have not been prepared for application in combination; the projects appear to have been conceived in isolation as they are not linked to a definite program; the current projects do not seem to have been conceived as a mechanism for positive plan implementation; and the current approach to utilizing these techniques does not seem to have given adequate attention to refining/modifying the techniques for application in the Valley. Even attempts to learn lessons from the Pokhara experience with the use of LPIR projects seem to be lacking.

However, as indicated earlier, the techniques can and should be significantly modified for application. Given the present recognition of these techniques and the Government's attempts to introduce them, opportunities now exist to successfully experiment with them in the Valley.

7.6 Adoption of a Land Management System in the Valley

The adoption of the proposed LMS in the Kathmandu Valley will require initiatives for setting up of such a system and its operation. This will require action by the Central Government and then at metropolitan level and local level.

228 Central Government action should focus on:

urban land policy statements, i.e. the formulation and statement of government objectives, priorities and measures on the ownership of urban land. (It is necessary that the objectives of planned urban development and adequate land supply be expressly stated). institutional arrangements (designating/establishing responsible metropolitan planning and development agency, mechanism(s) for co-ordinating government urban development activities, capturing some of the land value increases to fund development works, introducing land management tools (e.g. GLD and LP!R), formulating the necessary legal framework).

Metropolitan level action should focus on:

long-term plan/program for staged metropolitan expansion, 5-10 year network extension program (including co-ordination of key network infrastructure items), five year housing and land supply program.

Local level action should focus on various land development projects:

planning for each development area, managing the project for developing each development area, adopting a functional funding arrangement, involving landowners and citizens in project management, undertaking various housing and land development projects including government LP/R projects.

There are a number of obstacles to the successful adoption of such a LMS in the Valley which mainly arise from the existing inadequate institutional arrangements and haphazard land development practices. However, there are opportunities available which can be exploited/modified to advantage. Table 7.4 outlines major obstacles and

229 Table 7.4: Obstacles and Opportunities in the Adoption of the Proposed Land Management System in Kathmandu Valley

Obstacles Opportunities

Weak organizational . The establishment of a powerful Kathmandu Valley Development Authority has structure of the KDC been under government's consideration for some time (weak status, limited functions, etc.)

Inadequate legal powers . Legislation was passed in November 1988 which replaced the earlier two (procedural matters not planning laws (i.e. the 1963 and the 1973 Acts) by enacting a new Planning detailed out) Law. This Act provides for initiating LP/R and GID projects. . Opportunities exist to further improve the situation by consolidating legal arrangements, especially in relation to fiscal administration, development control and land development activities Shortage of funds for . Proposed system is based on a self-financing mechanism with limited development works government money for infrastructure development . Opportunities exist to generate initial capital for development works through various means including: - initial seed capital by government as grant and/or loan - floating government backed development bonds - credit finance through financing institutions, e.g. commercial banks, Provident Fund, new financing institution -support from international agencies (e.g. UNDP, ADB, the World Bank) . Incremental approach to providing/upgrading services . Mobilizing local resources for local level projects Political interference . Government's political commitments (ad-hocism in planning . Systematic planning and staged urban development and services delivery) . Greater landowners' and citizens' participation

Bureaucratic corruption . Oearly laid down procedural matters . Greater citizens' participation . Making the system open enough for public scrutiny

Manpower shortage . A short-term training program was recently run in the Valley . Additional manpower promotion through: - carrying out training program as above in the future - training program in educational institutions -on-the-job training -short-term external technical help with training component attached (help may be available through US AID, GTZ, UNDP, MSTP projects, etc.)

Lack of inter-agency . Recent politicalfmstitutional reforms co-ordination - formation of the Ministry of Housing and Physical Planning (the Departments of Housing, Building and Physical Planning, and Water Supply and Sewerage have been brought under one umbrella) -establishment of multi-party democracy, thereby encouraging prospects for mutual consultations and negotiations . Initiatives by Town Planning Central Co-ordination Committee . Possibility of developing Valley Development Authority in the future . Philosophy of co-operation, persuasion and consultation . Greater co-ordinating roles by the NPC and the MOF . Lessons from overseas experience on co-ordinating mechanisms, e.g. -Urban Development Authority (Indian models) - Capital Improvement Folio of Metro Manila - Urban Development Committee of Sydney

230 Table 7.4 (continued)

Obstacles Opportunities

Inadequate land . Continuous property ownership records and reasonably good cadastral survey information system maps (in 1:1250 scale) are available . Land information system can be gradually built upon existing information base by: - undertaking simple and unambitious projects - initiating land/housing monitoring exercise on a modest scale - gradually improving land registration records and cadastral maps through greater information flows and simplified procedures

Conflicts between . Government acts as a mediator between landowners and tenants landowners and tenants . Tenants' rights are recognized and protected in the System (tenancy rights are . Persuasion and promotion initiatives through: hereditary; tenants have a - existing social and cultural institutions right to 25% of land area - respected social workers and community leaders or land value when the - local political workers property is sold; they can retain additional land for residential purposes)

Landowners', tenants' and . The System builds on the active participation of all concerned groups citizens' participation . Opportunities provided by Decentralization Act to mobilize local resources for local projects . Opportunities provided for wider participation by the re-establishment of multi-party democracy . Persuasion and promotion initiatives through: - existing social and cultural institutions - respected social workers and community leaders - local political workers

Use of untested . Government's positive recognition of the potentials of the techniques techniques . Recent initiatives to introduce the techniques in the Valley . Techniques can/should be improved for adoption . Lessons from the Pokhara experience with the LP/R projects . Use of the techniques in combination as part of a land management system . Experimenting with the use of the techniques through a few pilot projects

Ad::b.al: land . Regulating land development process through planning mechanisms development practices . Recognizing, encouraging, assisting and bringing the existing land brokers in the regular land development process . Assisting organized land/housing development initiatives, such as the Kisipiri Housing Scheme of the Kathmandu Management and Construction Company

231 opportunities available for adopting the proposed LMS in the Valley.

In conclusion, it should be emphasized that a LMS, as sketched briefly in previous sections, needs to be adopted in the Valley, and that it is possible to develop such a viable system capable of implementation in Nepal. This is presented in the following sections and chapters.

7.7 Components of the Proposed Land Management System

The proposed land management system (LMS) comprises a number of components in the form of techniques and measures for effective functioning of the system. Of the 11 techniques and measures listed, the following are dealt with in Chapter 8:

Planning strategies for urban expansion; Co-ordination of government development activities (part of this item is covered in Chapter 9 also); Land market and supply information system; and Land supply programs . • Chapter 9 covers the following components of the LMS:

Land management responsible organization (also covered in Chapter 8); Co-ordination of government development activities {this item is mainly covered in Chapter 8); Funding adequate provision of infrastructure; and Trained and skilled land managers.

Two of the main techniques of the LMS, i.e. guided land development and land pooling/readjustment, have been mentioned throughout this Thesis and their implementation aspects are covered in Chapter 10. The remaining two components of the proposed system, i.e. government land acquisition and land use controls, are briefly discussed below.

232 7.7.1 Government Land Acquisition

The government land acquisition for public, community and government purposes and for allocation/development for private purposes is an important component of the land management package. Compulsory land acquisition powers under the Land Acquisition Act of 1977, the acquisition process, determination of compensation, and extent of land acquired for public and government purposes in the Valley were covered in Chapter 4.

Although this Act seems to have facilitated the compulsory acquisition of privately held land for urban planning purposes, there are problems related to determining compensation amount and its timely distribution, and the use to which land so acquired can be put to. Improvement is required in the legislation to ensure that such problems are minimized, that affected persons are given a fair opportunity to present their cases, and that compulsory acquisition powers are not used arbitrarily.

In recent years, increasing tendency has been to purchase private land through negotiations (PADCO, 1986:119). Besides, the use of GLD and LP/R techniques facilitate the dedication of land needed for public purposes and for roadways, so that use of compulsory purchase power may be needed only in extreme cases, such as for acquiring strategic land parcels and corridor spaces for providing infrastructure, and for acquiring land from minority holdout landowners for implementing GLD and LP/R projects.

7.7.2 Land Use Controls

This component of LMS bears close relationship with a number of planning exercises related to controlling, regulating, and directing land use and development activities. These aspects and their effectiveness were discussed in Chapters 4 and 5. Currently, a broad zoning map and some explanatory text material and guidelines for building development are in place in the Valley. There are no subdivision regulations and often zoning boundaries and uses permitted in various zones are not clearly defined. There

233 is a body of evidence, both from the responsible planning and controlling agencies and other institutions and researchers, to suggest that land use controls have been ineffective in the Valley {KVTPT, 1984; UN ESCAP, 1985; Kaphle, 1987; Chhetri, 1988(a); MHPP, 1988(a); Pradhan, 1988). The resulting problems include incompatible land uses, haphazard urban expansion and encroachment onto agricultural and low-land areas.

The main reasons for this ineffectiveness of land use controls, as identified earlier in this Chapter, include:

the reliance on negative control mechanism rather than on positive government action as a principal means of implementing the official land use plan; the limited institutional arrangements, legal powers and resources available with the KDC to control haphazard growth; and the shortage of development land and high land prices arising from a number of factors including the lack of services, and the lack of co-ordination in the provision of physical infrastructure to service land.

The corrective measures required to address these problems require actions across all fronts of the proposed LMS, such as making institutional reforms, planning of urban development in the Valley, initiating phased urban expansion programs, co-ordinating the provision of infrastructure, regulating and directing urban growth, and ensuring adequate urban land supply. These aspects are dealt with in Chapters 8 and 9. Providing incentives to the private sector and regulating its land development activities (such as, through bringing land brokers into the main stream land development process, instituting unified land subdivision and building permit issuance system, and encouraging wider participation) are dealt with in Chapter 10. That Chapter also discusses implementation aspects of the innovative land development projects (i.e. GLD and LPIR) to help achieve plan implementation and to augment urban land supply.

234 8. CO-ORDINATING MECHANISMS

Urban development is a multi-sectoral phenomenon where co-ordination in the activities of various agencies and participants is desirable to achieve an efficient and orderly urban development.

Among other things, co-ordination in urban development activities is necessary for:

making locational decisions as to where, when and how urban development should occur; providing the key physical infrastructure of public roads, water supply, drainage and sewerage, and electricity supply; providing land and housing to meet market demand according to type, location and price; providing social and community services and facilities, such as schools, hospitals, parks, play grounds and open spaces, public transport and other community facilities; and - • providing employment opportunities.

Urban development activities should be conducive to preserving the natural environment of an area and should provide a pleasing residential neighborhood.

The co-ordinating mechanisms proposed in this Thesis relate to urban land management, with emphasis on the provision of the key network physical infrastructure for achieving planned urban development and adequate land supply. However, the suggested mechanisms can be expanded to cover other areas listed above.

This Chapter briefly discusses the present urban land development process, which is identified as the main cause of many of the urban and land development problems. Recent Government initiatives in relation to co-ordinating arrangements and land development programs are assessed and proposals for reforms are made. These include

235 institutional set-up of a proposed development authority, co-ordinated land development programs, and establishment of a land market and supply information system.

8.1 Co-orciinating Arrangements

This Section briefly sketches the existing institutional arrangements for planning and development in the Valley. The manner in which land development takes place in the informal sector, through the activities of land brokers, is identified as the main cause of many of the problems related to urban and land development. The institutional arrangements for urban development in the Asia-Australia region are considered for developing co-ordinating arrangements in the Valley.

8.1.1 Existing Situation

There are over 20 separate central level and numerous district and local level agencies operating in the Valley which have major impacts on the urban development/expansion process (refer, Table 5.1). Each agency operates within its own sectoral annual program and under separate legislative mandate. It is widely recognized by individuals, government constituted task forces and government agencies that there is a pronounced lack of co-ordination among various agencies entrusted with responsibilities to develop and provide infrastructure facilities and services in the Valley (Shah, 1983; Rimal et al., 1986; MHPP,1988(a); Pradhan, 1988). As a planning authority, the Kathmandu Valley Town Development Committee (KDC) has not been successful in its primary role of co-ordinating the development activities of different agencies due mainly to its ineffective control over sectoral budget allocations (refer, Chapters 1,4,5 and 6).

The resulting urban planning and management problems include:

a lack of clarity in roles; unco-ordinated programming and budgeting; a lack of capacity to carry out planning, programming, and implementation in

236 an integrated manner for the Valley as a whole; emphasis on urban development control rather than positive measures to guide urban growth; lack of control over locational choices for development programs/projects; and lack of locally generated development resources- dependence on Government grants.

The physical manifestations of such an unco-ordinated approach have been:

destruction of valuable natural resources in Valley, particularly, agricultural land; deterioration of cultural/historic resources of national importance; deterioration of physical environment of urban areas in the Valley; haphazard, uncontrolled urban expansion; and failure of the existing institutional structure to deal with the above problems.

8.1.2 Causes of Problems

Most urban development problems have their roots in the manner with which land is developed for urban uses. Since 'raw' land requires a set of services, such as roads and public utilities, in order to be used for urban purposes, and as most of these services are delivered by public agencies their ability to meet demand on services greatly affects the supply of land. This ability is heavily dependent on local land development practices.

The experience in the Valley shows that as towns expand, agricultural land in their vicinity gets converted into urban uses mainly through an informal land development process (refer, 3.7.3). In this process, land brokers, in collaboration with landowners, take advantage of public investment in major infrastructure, such as main roads and water mains, to open up adjoining properties. This they do by establishing rudimentary access in newly subdivided plots. Once the area is developed, service agencies come in and install utilities in an incremental and often disjointed fashion. As more utilities

237 are installed, the land-price increases correspondingly, although the landowners themselves might not have contributed towards meeting the costs of providing them. Under this situation, benefit from public investment in services is retained by landowners in the form of increased value of land. The installation of public utilities, however, becomes expensive because of lack of a regular street pattern, thereby reducing the ability of agencies to provide services.

There has been official recognition that discrepancy between demand and supply of subdivided lots is great, especially for serviced lots (MHPP, 1988(b)). The MHPP paper further notes that a large and growing percentage of urban population fmds itself effectively excluded from having access to land and housing. At the same time, public agencies are finding it more and more difficult to serve a growing population which is deprived of basic services.

It is apparent that for planned urban expansion, be it for housing and other uses, ways and means must be found to capture some of the land value increments as well as to reduce the cost of development through rational layouts.

Thus, the main problems of urban land development, which stem from ineffective institutional arrangements to provide and co-ordinate physical infrastructure and to control haphazard land development practices, must be addressed simultaneously by devising a co-ordinating mechanism for providing services and by effectively bringing all land development practices under a regulatory framework. As well as providing guidance and support to the private sector in land development, government needs to take a more positive approach to urban development by undertaking some of the land and housing development in the public sector.

8.1.3 Experience in Asia-Australia Region

The mechanisms initiated to achieve co-ordination in metropolitan management in the Asia-Australia region include the following:

238 Metropolitan government, e.g. Bangkok, Brisbane, Canberra Capital Improvement Folio (Metro Manila) Urban Development Committee (Sydney) Urban Development Authority, e.g. Delhi, Bombay, Ahmedabad, Albury-Wodonga

In cities like Bangkok, Brisbane and Canberra, planning and development activities comes under the jurisdiction of a city/metropolitan administration consisting of elected representatives. Co-ordination in public sector urban development functions is greatly enhanced by the presence of a single metropolitan government. However, experience in these cities (excluding the limited experience of Canberra, where the Australian Capital Territory Government came into existence only in 1989), shows that metropolitan governments seldom enjoy an adequate degree of autonomy from nationaVstate governments, and a number of development functions continue to be handled by state departments and para-statal agencies (Haywood, 1990; Sivaramakrishnan and Green, 1986).

The Capital Improvement Folio (CIF) of Metro Manila provides a mechanism for the Metro Manila Commission (an appointed metropolitan government) to identify projects and channel public sector budgetary allocation to projects selected on priority basis on a metropolitan-wide scale. The CIF is a schedule of committed or proposed infrastructure projects with their corresponding cost estimates and is aimed at generating an inter-agency consensus about where to allocate resources. Although, as a management tool, the CIF has been positively assessed (UN, 1986), a World Bank report questions the practicability of trying to manage capital investment without an overall plan to guide all investment decisions (Lea and Courtney, 1985).

Multi-purpose urban development authorities have been created or recommended in several places (e.g. Bombay, Delhi, Ahmedabad, Albury-Wodonga) to assume responsibilities for planning and development at a metropolitan level. They usually undertake policy formulation works, operation of several regional services, and execution of large scale development projects. Experience, particularly in India, shows

239 that these authorities have not performed effectively and efficiently (Datta and Chakravarty, 1981). These authorities have limited autonomy, their resource base is not as strong as expected, there is absence of public participation, there is generally conflict over power and function between them and the municipal authorities at the local level, and between them and the centraVstate departments and para-statal agencies at the metropolitan level.

The Urban Development Committee (UDC) of Sydney advises the New South Wales Government on all matters of urban development (Department of Planning, 1990). The Urban Development Program of the UDC co-ordinates the release of residential land by matching the demand for and supply of land for housing. This ensures that urban development takes place in line with the provision of facilities and services by other state agencies. Although Haywood (1990) considers metropolitan management in Sydney more of a compromising approach which lacks central control and co-ordination, nonetheless, the Urban Development Program has been positively assessed and considered to be highly effective (Indicative Planning Council, 1990).

8.1.4 Opportunities in the Valley

As the national capital, the Valley provides opportunities for co-ordinated and efficient urban development. The advantages available to development agencies include:

direct accessibility to each other and to key decision makers; access to higher level of services, manpower, and expertise for development purposes than any other area; access to relatively high level of existing and potential resources for development purposes; and high visibility as a means of measuring effectiveness.

Currently, the main agencies which can play a vital role in achieving co-ordination in urban development activities include the following:

240 the National Planning Commission (NPC) which is responsible for the formulation of national plans, and for overall programming, co-ordination and monitoring of sectoral programs; the Ministry of Finance (MOF) which makes overall budgetary allocations for public sector works; the Ministry of Housing and Physical Planning {MHPP) with responsibility for policy development and implementation of housing and urban development programs; the Town Planning Central Co-ordination Committee (TPCCC), a central level committee chaired by the Minister for Housing and Physical Planning created to co-ordinate the activities of all town development boards in the country; and the Kathmandu Valley Town Development Committee (KDC) which is charged with regulatory, development and co-ordination functions to bring about planned urban development in the Valley.

As noted above (refer, 8.1.1), individually these agencies have, so far, not been very effective in providing a sound co-ordinating mechanism for urban development purposes. But there is potential to knit them in a single institutional arrangement by exploiting the opportunities provided by the creation of MHPP in December 1987 whereby the Departments of Housing, Building and Physical Planning (DHBPP) and Water Supply and Sewerage, and the Water Supply and Sewerage Corporation (WSSC) were brought under one umbrella. The Minister for Housing and Physical Planning can now foster co-operation among the housing, planning, water supply and sewerage activities. Similarly, the creation of a powerful Kathmandu Valley Development Authority (KVDA) to take over planning, development and co-ordination activities has been under Government's consideration for some time. An assessment of powers and responsibilities of the KVDA, as proposed by a Task Force (refer, Rimal et al., 1986) and suggested modifications therein are presented in Chapter 9. A brief description of how the proposed KVDA and other agencies can be institutionally linked to provide an effective co-ordination mechanism follows.

241 8.1.5 Institutional Setting of the Proposed Authority

Urban development is a complex process, which requires the input of various sectors and administrative and political bodies. This involvement serves to capitalize on the respective strengths of each agency and to avoid poor urban development decisions. To ensure an adequate supply of urban land, land supply objectives must be pursued hand in hand with planned urban development objectives, for which co-ordination and collaboration are required. To achieve this end, it is recommended that a development authority (i.e. the K.VDA) be established with the following fundamental functions:

to prepare physical, economic, and social development guidelines for the Valley as a whole - this would require collaboration with sectoral agencies and local political units; to serve as the co-ordinating body for programming and budgeting of urban development programs of the Valley; to make locational decisions for all major public and private development projects in accordance with the Valley development plan; to provide a framework for advice on the demand for and supply of land and dwellings in order to ensure that an adequate supply of land is available in various stages of development; and to exercise authority to plan and implement land development programs and special action programs requiring immediate attention.

Figure 8.1 presents the proposed KVDA in its institutional setting. It is administratively linked to the MHPP. However, on a program basis it would be linked with the NPC and the MOF. The Authority will have overall program and policy link with the TPCCC. Development programs of local nature may be integrated with the overall program by local panchayats at the NPC through normal sectoral channels. This would be facilitated by decentralization policies which allow for integrating local development programs at the district level (Sections 6 through 12 of the Decentralization Act, 1982).

242 Figure 8.1: Proposed Institutional Setting of Kathmandu Valley Development Authority (KVDA)

1 Town Planning Central Co-ordination Committee I I (pol icy decisions) I

I NPC I ·······• ····················· I·· I Urban Devp. Unit! I I Administrative Link I Management Board I Programatic and I ··················· I MHPP 1<····-·····················>1 KVDA 1<··················>1 .••....• -·················-·· Budgeting Link I ··················· 1··1 MOF I Urban Devp. Unitl

KVDA Commissioner

!Various Sub·committeesl<·-·····----··········>1 Functional Divisions I

• discussions, negotiations and • planning, design and execution consultations of selected projects • forum for wider deliberations planning, programing and to achieve co-ordination in budgeting of sectoral programs urban development activities (co-ordination function)

Composition of Management Board

Chairman Secretary, Ministry of Housing and Physical Planning (MHPP) Ml!ld)ers KVDA Commissioner Department Heads/Senior Officers (Finance, Roads, Housing and Urban Development, National Planning Commission, Panchayat, Water Supply and Sewerage Corporation, Local Development, Nepal Electricity Authority, Health, Education, and Labour) Mayors of the three municipalities

243 The creation of Urban Development Units within the NPC and the MOF would help to define the financial requirements of sectoral agencies for urban development purposes and co-ordinate their programs and budget allocations. At a later stage, the adoption of the CIF mechanism by the KVDA management board may be considered in order for it to help select priority projects requiring public sector budgetary allocations.

It is suggested that the existing TPCCC be reconstituted under the chairmanship of the Minister for Housing and Physical Planning with Ministers for Finance and Works and Transport, and the Vice-chairman of the NPC as members. This body would address all major policy issues which require attention within the Valley. The KVDA Commissioner would serve as the TPCCC secretary for all discussions relating to the Kathmandu Valley. It is also suggested that meetings of the TPCCC be co-ordinated by the Cabinet Secretariat.

The KVDA management board's function would be to co-ordinate major technical and management decisions involving the planning, management, and implementation of development programs. Conceptually, it is a management and not a political function. This board would refer all major policy decisions which require attention to the TPCCC. The decisions of the TPCCC should take effect following their endorsement by Cabinet.

The KVDA would basically work through two wings, viz. functional divisions and various sub-committees. Management functions and execution of selected projects would be undertaken through its functional divisions, while the various sub-committees would provide forums for wider deliberations where discussions, negotiations and consultation can take place. These two wings would compliment each other in fulfilling the Authority's co-ordinating functions.

The roles of specific development agencies in the Valley need to be indicated according to the scale of activities expected to be performed by them. The KVDA would have a cross-sectoral function primarily in the areas of planning guidelines, programming

244 and budgeting, system designs and standards. The KVDA should serve to co-ordinate programming for all sectoral programs in collaboration with each political jurisdiction within the Valley. However, it is suggested that it also perform specific functions related to land development for housing and other uses in order to provide it with a means of structuring development within the Valley. Monitoring of residential land situation would allow the KVDA to identify the gaps in its demand and supply and to take corrective actions. The undertaking of selective land development programs would allow it to augment the supply of residential land in the market.

8.2 Land Developineot Programs

The existing situation with regard to land development process in the Valley and the resulting problems have been highlighted in Chapters 1 and 3, and under Section 8.1 above. In summary, due to the absence of organized private sector developers and the limited government land development activities, most of the urban land and housing development is undertaken in the private sector as numerous scattered individual small projects, mainly through an informal land development process with the help of land brokers. Incompatible land uses, encroachment onto agricultural lands, haphazard urban growth, and lack/inadequacy of services have been the results of this process.

This Section assesses Government's recent initiatives on conservation and land development and suggests measures for improvement.

8.2.1 Government Initiatives in 1988

In June 1988, the Minister of Housing and Physical Planning outlined the 'Land Development and Conservation Scheme' with a view to restrict development in flood plain and low-lying agricultural areas, and to promote and encourage planned urban expansion and development in designated areas of the Valley (Archer, 1988; Chhetri, 1988(b)). The Minister also announced a six month moratorium on land subdivision and new building commencements in designated scheme areas so as to allow the preparation of plans for these areas. The programs were:

245 the adoption of conservation measures for designated flood-plain areas and low-land areas in Kathmandu and Lalitpur in order to preserve these fertile and productive lands for continued agricultural use; the preparation of implementation plans for the guided land development (GLD) for three town pauchayat wards in Kathmandu (Wards 4,5 and 10), for five town panchayat wards in Lalitpur (Wards 1,2,3,4 and 5), and for two village pauchayat wards in Bhaktapur District (Wards 1 and 8 of Lokanthali Village Panchayat), covering an area of about 500 hectares. Specifically, Maharajgunj in Kathmandu and Sat Dobato in Lalitpur were identified as possible GLD sites; and the preparation and implementation of land pooling projects for the subdivision and servicing of two designated areas in Kathmandu and Lalitpur (Gangabu and Balkhu) covering about 50 ha. of land.

All wards in Kathmandu selected for GLD program are residential suburbs and experiencing rapid development pressures. Most of these areas are already built-up or being gradually built-up, and land fragmentation is reported to be high (Chhetri, 1988(b)). Similarly, except for Ward 5 and some areas in Ward 4, most of the GLD areas in Lalitpur are being built-up at a fast pace. In Bhaktapur district, Wards 1 and 8 of Lokanthali Village Panchayat (Gatthaghar area) are situated along the Amiko Highway, to the West of Thimi, near Bhaktapur. These wards are still largely undeveloped and situated in .tar (elevated) land.

The designated land pooling sites at Balkhu and Gangabu appear to be appropriately located in terms of proximity to infrastructural mains. The areas are also not heavily built-up so that land pooling exercise may be carried out on these sites.

Following the announcement of the Scheme by the Minister, technical units were set-up in each of the Town Controller's Office and temporary staff recruited by the Ministry (MHPP). They comprised a planner/architect and a small group of technicians such as overseers, draftspersons, and cadastral mapping surveyors.

246 Planning had begun on the basis of available cadastral maps and additional information was obtained through field surveys, such as the House Count Survey. The technical units began the preparation of the roadway network and land use plans for the main wards, and for the Sat Dobato area designated for GLD. It was understood that until the end of 1989, actual implementation, on ground, of the ward level plans and the GLD schemes had not begun and work had not commenced on the two land pooling projects. [1]

8.2.2 Assessment

The imposition of moratorium and initiation of few GLD and LPIR projects is a major step forward towards conservation of valuable agricultural land and regulating or providing guidance for urban development purposes. These initiatives give an indication of the Government's serious intention to introduce planning control or guidance of urban development and land use, and experience gained from them can be utilized to refine the techniques.

Despite these positive initiatives, there are constraints to their effective utilization and some major flaws in the present approach to introduce the techniques in the Valley. Main problems with the conservation measures include the following:

the designated conservation areas are largely confined to Greater Kathmandu area (Kathmandu and Lalitpur town panchayat areas). For effective protection of valuable agricultural land in the Valley, such conservation areas also need to be designated outside the Greater Kathmandu area, especially along major water-ways; discussions with planning officials during the field trip in early 1988 revealed that the demarcation of flood-plain areas was largely based on individual

1. Information obtained from Associate Professor Ray Archer in January 1990 in Sydney.

247 judgements rather than on scientific observations. It was also noticed that opposition to the Scheme had been formally lodged to the Minister by residents of Baneswar; there was confusion among planning and implementing officials as well as those in town panchayats as to the implementation aspects of the conservation scheme; there is already scattered building development on some of these areas, and parts of these have been subdivided into small parcels too small for agricultural use and apparently sold as building plots. The hardship cases of the purchasers of small plots and the equity issues involved as they are prevented from building on their land need serious consideration. Payment of compensation in some form (cash or kind) and/or the use of land exchange arrangements for such disadvantaged landowners may provide a solution to this problem. The .GJ.Uhi Sausthan may be encouraged to acquire such land parcels and manage them in accordance with conservation guidelines; it is possible that extensive moratorium on land development and reservation of land for conservation purposes may contract the already constrained land supply situation thereby inflating prices unless alternative avenues for adequate land supply are opened up simultaneously. Given the slow progress made on the initiated land supply programs, as noted above, containing price increases appears unlikely.

As far as the land development programs/projects are concerned, major problems relate to the following:

the LP/R and the GLD projects have not been prepared for application in combination. It was argued earlier (refer, Chapter 7) that to be effective in implementing land use plans and to augment urban land supply, the techniques need to be applied in combination; the projects appear to have been conceived in isolation as they are not linked to a definite program. The initiation of such a large number of GLD projects covering about 500 ha of land appears to be ambitious given the lack of a

248 definite program to link them under a broad land supply program and the lack of experience with the use of this technique in Nepal; the current projects do not seem to have been conceived as a mechanism for positive plan implementation. Although believed to have been formulated in the context of the unadopted 'Draft Kathmandu Valley Development Concept' (Archer, 1988:4), these projects need to be accommodated within future metropolitan development plan for the Valley, which is yet to be prepared and announced; it is apparent from the discussions about the GLD sites made earlier (refer, 8.2.2) that except for the Gatthaghar area in Bhaktapur district and some areas of Wards 4 and 5 in Lalitpur, other sites selected for GLD application do not provide opportunities for its successful implementation. This is so because most of the designated sites have already been subjected to immense building and urban expansion pressure. Most of these areas would appear to be more suitable for urban upgrading and guided infill program rather than GLD; funding for the provision of infrastructure is not built in the GLD projects. The scheme relies on landowners to donate their land free of cost for the roadways and the sectoral agencies to install and upgrade the needed services over time • through their annual programs. Given the HMG's financial constraints, actual provision of infrastructure and services may be delayed considerably thereby frustrating expectations of the concerned landowners and local residents; it is not clear whether these projects would be able to fill in any identified gaps in demand/supply of residential land in the Valley.

8.2.3 Suggested Remedial Measures

As indicated under Section 8.1 earlier, it is apparent that shortcomings of existing land development practices require a multi-pronged approach which essentially relies on judicious use of public power to influence the pattern of urban growth, introduction of innovative land development practices to ensure higher cost recovery, and institutional support to private sector land development, especially for bringing brokers' activities towards the main stream of land development practice.

249 The intensity of informal land development is a function of overall demand and supply of land for urban uses. As such, remedial measures should include alternative ways of supplying land as well. Also, the demand for land can be reduced to some extent by upgrading existing areas through urban renewal and by facilitating infill development in an orderly manner.

For land development to occur in a planned manner and in location and time the Government thinks appropriate, public investment in infrastructure should be guided and co-ordinated to fulfill urban development and land supply objectives. Accordingly, it is necessary to undertake following initiatives:

physical expansion framework to guide public investment in infrastructure as well as to direct private initiatives in land development; regulatory measures to ensure that development does conform to a set of standards; institutional set-up to achieve co-ordinated efforts in enforcing regulations, guiding developments and providing advisory services to citizens. Once the institutional set-up as outlined under Section 8.1 is in place, innovative land development programs, such as the GLD and LP/R, can be introduced to effectuate planned development; land development through organized private/public land developers to ensure planned development and adequate land supply; and guided infill land development in those areas where formal land development is not feasible or desirable.

Since this Thesis emphasizes the necessity for positive plan implementation measures through greater Government participation, such as by undertaking land development programs, both public and private land development programs must be co-ordinated in order for them to confirm to official land use plan. Land development is seen as a key issue requiring actions across all fronts of the proposed IMS. The actions required to further the above-mentioned land development initiatives include the following:

250 preparation and adoption of a new metro-level plan for the Valley. As mentioned in Chapter 1, the 'fingers' along elevated table land, as identified by the PADCO (1986) Study, are assumed to be the 'development corridors', for the purpose of this Thesis; preparation of a phased urban expansion program with staging of services provision. A policy of refusing services outside the planned area (i.e. out of the development corridor) and out of development phase must be established and implemented. Any developer or builder wishing to develop land outside this program should be made to pay up-front the necessary costs of providing services to such land; co-ordination in the provision of services. Here the emphasis is on the key network physical infrastructure. The maximization of sectoral powers for the provision of services through greater inter-agency co-ordination is expected to be achieved by adopting the proposed institutional arrangements as discussed under Section 8.1. Further discussions on issues, such as co-ordination aspects, generation of additional finance by tapping some of the relative land value increases, and equity implications of cost recovery policies, are discussed in Chapter 9; formulation of land development programs. Various land development programs, such as GLD, LP/R, sites and services, and programs for providing homesites for low-income households, should be prepared and implemented in both the private and public sectors. Appropriately located land needs to be identified, serviced and brought into the market. Specifically, Government land development programs need to be geared for demonstration purposes, for providing land for low-income housing, and for filling in any gaps left by the private sector; and co-ordination of land development projects in both the private and public sectors for ensuring an adequate urban land supply. For this purpose, a residential land market and supply information system (discussed in the next section) needs to be established to gather information and monitor the demand/supply situation of land (at various stages in the development pipeline). It is also necessary to regulate land fragmentation and subsequent development

251 with a view to bringing all informal land development in the formal process. One of the ways of achieving this is through instituting a unified land subdivision and building permit issuance system (discussed in Chapter 10).

8.3 Land Market apd Supply Information System

A land market and supply information system is needed to identify any gaps in the supply/demand of residential land in order that appropriate land supply strategies can be put in place to fill in such gaps. This section outlines the type and adequacy of available data in this regard and suggests measures to improve the quality of information. It also recommends the establishment of a land market and supply information system based on improved cadastral records and residential land monitoring mechanisms.

8.3.1 Cadastral Records/Property Records

The cadastral survey was introduced only in the early 1970's in Nepal (Pradhan, 1984). All transactions in property have to be registered with the registrar mainly for the purpose of paying stamp duty. The registration system simply records all transactions which involve a parcel and there is, at least in theory, a continuous record of rights held and any change which may occur in them.

However, cadastral records appear to be inaccurate, not well organized, inaccessible, and out dated with the result that land transactions usually pose risks of disputes regarding rightful ownership, and the shape, size or location of parcels (Archer, 1988; Chhetri, 1988(b); MHPP, 19889(a)). This inadequacy of cadastral records creates problems for planned land development.

To address this problem, an upgrading program needs to be initiated which will require new cadastral surveys and introduction of modem record-keeping and updating processes.

252 8.3.2 Residential Land Monitoring

In order to initiate land development programs/projects to correct imbalances in the residential land demand/supply situation, monitoring of residential land needs to be done with the establishment of a land market and supply information system. The demand-supply system can be summarized as follows:

Employment -·---l.-.. .. Demand for ~Supply of 'lllli<~-Home building generated housing l housing r population growth Lot production Action required r Land availability

The factors affecting demand and supply should be identified which will facilitate in determining information needs of the system. A brief description of the major factors, information needs and data sources currently available follows.

8.3.2.1 Population Growth: Population projection data are available from sources, such as the Demographic Unit of the Central Bureau of Statistics (CBS), consultants' studies dealing with the provision of infrastructure, and PADCO's urban land policy study (PADCO, 1986). The Valleywide population should then be disaggregated in terms of location (urban and rural areas), sex, age and other relevant parameters.

Employment related data refer to employment by industry sector and location, and their multipliers. The Department of Labor and the CBS publish regular information on employment.

8.3.2.2 Housing Demand: Up to date information on housing demand in the Valley is not available. Base level information is available from the 1961 Census records,

253 Household Budget Survey conducted by the Nepal Rastra Bank (the Central Bank of Nepal) in 1973-75, and housing survey carried out by the Department of Housing, Building and Physical Planning in mid 1970's {DHBPP, 1976). It is expected that housing related information will be included in the 1991 census counts.

On a broad scale, total housing demand can be calculated by dividing population by average household size. As far as possible, total demand should be disaggregated in terms of geographical location, price sub-market and housing type. Similarly, type of demand can be broken down into income categories, housing preferences, tenure and characteristics of population (e.g. age, marital status).

Information is needed on house and land prices, and on incomes and housing finance. Data on some of these items are available in isolated studies. The available data need to be supplemented through sample surveys and other methods. Opportunities for housing finance are limited at present (refer, 3.7.1).

8.3.2.3 Housing Supply: In order to comprehend housing supply situation, information is needed on land availability (by location, price and area, and when land can be made available), land development (total land stocks and rate of development), and dwelling construction (number of dwellings built by location, type and price over the years).

Although dwelling approval figures are available from town panchayats, actual commencements and completion figures are not available. This is so because regular inspection during construction phase and recording are not made, and there is no system in place to obtain 'occupancy certificate' from the approving agency to occupy a dwelling after its construction is completed. Hardly any data exists outside town panchayat areas.

The PADCO (1986) land policy study contains valuable information on land availability. Although this report can be used as a source to develop reliable data on land availability, the information needs to be updated and expanded.

254 8.3.2.4 Demand/Supply Balance: As a rough overall indication, dwelling demand can be derived by applying average household sizes to the population figures. Comparing lot production figures with dwelling/lot requirements in a given year (or over a period) then gives the demand/supply balance. It will indicate the shortfall or surplus lot figures. Depending on the situation, land supply strategies should be devised and put in place to restore the balance as far as practicable. Public sector participation becomes critical in restoring this balance.

The Government needs to encourage and facilitate the private sector to take part in the land development process. It is essential that co-operation from all relevant government instrumentalities (central, regional and local) be obtained. Apart from regulating and guiding activities, Government intervention in the process should be limited to undertaking projects for demonstration purposes and to fill in any gaps left by the private sector.

8.3.3 Concluding Remarks

There are deficiencies in the available data relating to land and housing. An improved land market and supply information system based on improved cadastral records and establishment of residential land monitoring mechanism is proposed. Given the complexities in the land development process and the type, level and volume of information needed for smooth functioning of the proposed system, there is no escape from adopting a computerized system to handle data. It is recognized that the establishment of a powerful and sophisticated system (based on main frame computer with access to various relevant Government agencies) may not be presently feasible on technical, financial and administrative grounds. Therefore, an incremental approach to establishing the system, such as through the use of personal computers, is suggested. Real improvements can be made by beginning to collect the available information and then gradually making the system more sophisticated as resources become available and as experience is gained with the use of the system. Co-operation of existing agencies and institutions, such as the CBS, the NPC, the National Computer Center, the Land Registration Office, and the Land Survey and Maintenance Office, should be

255 obtained in establishing the proposed system.

8.4 Chapter Conclusions

There are deficiencies in the existing institutional set-up for urban planning and development in the Valley. The inability to knit sectoral agencies in a co-ordinated manner and the present land development process, have been identified as the main causes of many of the problems related to urban and land development. Following an assessment of recent Government initiatives in these areas and considering the experience of the Asia-Australia region with respect to institutional arrangements for urban development, an institutional set-up, incorporating an expanded role of the Kathmandu Valley Development Authority (which is under Government's consideration for some time), is proposed for planning, co-ordination and development. The expanded role of the KVDA includes the preparation of co-ordinated land development programs, the undertaking of selecting land development projects, the establishment of a land market and supply information system, and using the KVDA as a forum for wider deliberations on all matters related to urban development in the Valley.

Although the co-ordinating mechanisms proposed in this Thesis relate to the provision of the key physical infrastructure for planned urban land development, the suggested measures can be expanded to cover issues related to the provision of social and community facilities as well as environmental preservation.

256 9. ORGANIZATIONAL AND INSTITUTIONAL ARRANGEMENTS

This Chapter deals with organizational aspects of the proposed Kathmandu Valley Development Authority (KVDA), which has been under Government's consideration for some time. It also discusses other supporting institutional arrangements. An assessment of the Task Force proposal for the KVDA (refer, Rimal et al., 1986), legal arrangements, financial resources and manpower situation is made, and improvement possibilities are suggested to help implement proposals of this Thesis.

9.1 Organizational Changes

A number of studies on different aspects of Kathmandu Valley's planning and development problems, and of the failure of the existing institutional structure to deal with them, have been carried out at various times (for example, Suwal et al., 1979; World Bank, 1982; Shah, 1983; PADCO, 1986; Rimal et al., 1986). These studies have made a number of proposals to restructure the planning organization in the Valley. The report of a Task Force constituted by the Government (Rimal et al., 1986) recommended a proposal to establish a strong and powerful planning authority under a separate legal mandate.

The Task Force proposed the creation of a KVDA, identified immediate and long term action programs in the field of planning, and further recommended activities for developing a firm data and information base for effective planning and co-ordination work.

The establishment of such an authority in the Valley to take up planning, co-ordination and development works has been under consideration by the Government for some time. Although no decision has yet been taken in this regard, this Thesis assumes that an authority of that kind is likely to be established.

257 In the interim, legal aspects of the proposed KVDA were analyzed and a draft Kathmandu Valley Planning and Development Act was prepared in January 1987 (West, 1987}, although it has yet to became a law; the Ministry of Housing and Physical Planning (MHPP) was established in December 1987 (previously urban planning activities were under the Ministry of Works and Transport); the Minister {MHPP) announced a 'Conservation and Land Development Scheme' in May 1988 followed by a six-month moratorium on development in designated areas; a new planning law came into force in November 1988; political unrest began in late 1989 resulting in the collapse of the panchayat system and establishment of multi-party democracy in Nepal in April 1990; a new constitution was promulgated in November 1990; general elections were held in May 1991; and the popularly elected Nepali Congress Government was formed in June 1991. Planning activities have been slow during the transitional period since 1989.

This Section briefly sketches the powers, functions and the structure of the proposed KVDA, identifies some of its problem areas, and makes suggestions for improvements.

9.1.1 Powers of the Authority

The proposed KVDA would be responsible for promoting and securing the planned development of the Valley, and for that purpose would have powers:

to acquire, hold, manage and dispose of property; to carry out building, engineering and other operations; to execute works or direct the execution of works in connection with the supply of water and electricity, disposal of sewerage, and other services and amenities; to enter into contracts; and to do all things necessary, proper or expedient for the purpose for which it is to be created.

258 9.1.2 Institutional Linkages

The proposed institutional arrangement is shown in Figure 9.1. A high level Policy Co-ordination Board (PCB), chaired by the Prime Minister, provides and approves general policy guidelines and procedures, and directs the actions of the Authority. A Kathmandu Valley Development Committee (KVDC) Commissioner would manage and administer the Authority.

A Board of Appeal hears cases against the enforcing agency's actions, decisions and directives, and may· interpret regulations (such as zoning) to provide relief in hardship situations.

It is also proposed to constitute Technical Advisory Group(s) to provide advice to the KVDC on various plans and programs such as those related to transport, environment and housing.

The Authority would carry out its functions and responsibility through the following four sub-committees:

Planning, Programming and Co-ordinating Sub-committee; Housing Sub-committee; Land Use and Enforcement Sub-committee; and Resource Mobilization Sub-committee.

9.1.3 Functions and Responsibilities of the Authority

The powers, functions and responsibilities of the Authority and its Sub-committees as per the proposed draft Act are as follows:

to carry out integrated planning and physical development within the Kathmandu Valley;

259 Figure 9.1: Task Force Proposal for a New Structure for Kathmandu Valley

Policy Coordination Board

Technical Kathmandu Valley Board of Advisory Group Development Committee Appeal

(Subcomml.ttees)1. I I. I. I I Plann1.ng, Hous1.ng Land Use & Resource Programing & Enforcement Mobilization Coordination

Composition Chairman - Prime Minister Vice Chairman! - Minister (MHPP) Vice Chairman2 - Vice Chairman NPC Members - Secretaries - Dist. Panchayat Presidents - Town Panchayat Mayors Member Secre. - Commissioner, KVDA

Source: Rimal et al., 1986: 63-64.

260 to formulate, evaluate and update long-range goals and policies for land use, population growth and distribution, urban expansion, development, open space, resource preservation and utilization, air and water quality, and other factors which shape development patterns; to assist in the preparation by appropriate government agencies, of intermediate and short-range functional plans to guide programs of transportation, water management, open space recreation and other functions; to evaluate plans and programs of government agencies, identify conflicts and omissions, and recommend new policies, programs, actions, or amendments to existing programs, as required, to resolve conflicts, advance Valley-wide goals and ensure that all policies and programs conform to the approved plan; to assist the Ministry of Finance (MOF) and National Planning Commission (NPC) in preparing an integrated program of priority actions to implement plans, ensuring that development funds are issued only for projects which are co-ordinated in conformance with the plan; and to co-ordinate the technical assistance provided by government agencies to local planners in order that Town, Village and District Development Plans achieve conformity with the approved plan.

9.1.4 Linkages with Local Panchayats

Mayors of the three town panchayats and presidents of the three district panchayats in the Valley are to be members of both the PCB and the Kathmandu Valley Development Committee (KVDC).

Development control functions are to be undertaken by town panchayats within their areas of jurisdiction through a town development and construction division, while those for areas outside municipal limits will be undertaken by district panchayats.

261 9.1.5 Assessment of the Task Force Proposals

It has become a necessity for directing sectoral agencies towards Valley-wide goals in their capital works programming, and in planning and providing infrastructure in a co-ordinated manner. In this respect, the proposed KVDA can be expected to fill in an important institutional gap. However, the proposal's following shortcomings need to be addressed:

the KVDA is entrusted with both development and co-ordination functions. Experience in the South Asia Region, particularly in India, is not very promising in this regard. Such authorities have, for financial reasons, often concentrated on their project execution role thereby weakening their co-ordinating role (Datta and Chakravarty, 1981). There is a danger that the KVDA may act as another sectoral agency having wider jurisdictions; the four Sub-committees are charged with executing and implementing roles. This casts doubts whether the KVDA can be an advisory body and can act as a forum for deliberating relevant urban development issues through wider participation; - • it is not clear how the KVDA is expected to direct execution of works through other sectoral agencies; the composition of the PCB and the KVDC do not seem to differ much from

the status Q.UO, and therefore, their effectiveness in bringing about the expected results may not be quite as dramatic as anticipated; it contains an excessive proposal to create a powerful PCB under the chairmanship of the Prime Minister, while most of its members would be drawn from the civil service; the Authority would have high powers to evaluate plans and programs of sectoral agencies and to recommend new programs or make amendments to existing programs. With such a superior role to dictate sectoral agencies, opportunities for consultation, negotiations and persuasions may be quite limited to bring about a co-ordinated planning approach;

262 in a democratic and multi-party system in Nepal at present, such an Authority, as proposed, is unlikely to survive or get adequate support from other sectoral agencies and local government bodies; and the highly centralized role expected to be played by the KVDA appears to come in conflict with the Government's desired development options based on decentralization policies.

In short, the Task Force proposals appear to have been motivated by the intention of trying to get as much power, authority and resources to the KVDA as possible in order for it to exercise complete control in the planning, development and allocation of resources in the Valley.

9.1.6 Opportunities for Improvements

As noted above, the Government has been considering the creation of a Valley-wide planning and co-ordinating body for some time. While there is a felt need for such a body, for reasons outlined above, the proposed KVDA needs to take a consultative rather than a dictatorial approach to perform its central tasks. Avenues available to the KVDA for enhancing its co-ordinating role include the following:

maximizing inter-sectoral powers, rather than competing with them, in providing infrastructure for guiding urban land development; undertaking only those activities/projects which other agencies may not do so that such activities are likely to remain undone; concentrating on its primary role of planning and co-ordination rather than on execution of projects. However, it should undertake innovative land development projects for demonstration purposes; providing a forum for deliberating important planning issues which can provide valuable advises to the Government to help it take informed decisions; collecting information and channeling it to various government and non-government agencies so that they could prepare their programs and activities on a much wider base; and

263 encouraging wider participation from all those concerned with urban development.

These improvement are necessary for the smooth functioning of the KVDA in view of prevailing political climate in the country, and these efforts would compliment the institutional mechanisms for co-ordination proposed in Chapter 8.

9.2 Legal Arrangements

The legal arrangements required to implement the proposals of this Thesis primarily relate to the establishment/designation of responsible planning and development authority, mechanisms for co-ordinating government development activities, powers to capture some of the land value increases to fund development works, and undertaking innovative land development projects.

9.2.1 Existing Situation

Legislation was passed in Nepal in November 1988 which replaced the earlier two planning laws (i.e. the 1963 and the 1973 Acts) by enacting a new planning law, the Town Development Act, 1988 (Nepal Press Digest, 1988). The purpose of this Act, as stated in its preamble is:

"to make necessary provisions with regard to providing essential services and facilities to the urban population and maintaining the health, convenience and economic well-being of the public by rebuilding, expanding, and developing the existing towns, as well as building new ones, in the context of the growing population and urbanization".

The Kathmandu Valley Town Development Committee (KDC) has now come under the purview of this Act. Among new provisions, this Act provides for the undertaking of a number of land development programs by a board (such as the KDC) constituted by the Act (Section 12). These programs are guided land development, land pooling and sites and services.

264 Among other things, the Town Development Board has powers to:

formulate a town plan and implement its proposals after the plan has been approved by His Majesty's Government (HMG); divide the town plan area into different land-use areas; make principal services and facilities available; regularize, control, or prohibit development activities and land uses by clear notification; and impose ban on fragmentation of land.

The Board has also powers to stop or demolish any activities performed in contravention to the provisions of the Act and penalties have been prescribed. Any dissatisfied person can appeal against the Board's decision to an Appellate Committee within a prescribed time period, and its decision would be final and binding to the parties concerned.

There are powers to mobilize financial resources to carry out the Board's business and the Board is asked to maintain co-ordination with HMG agencies to perform its functions. HMG has powers to acquire any land within the designated town plan area and make it available to the Board for implementing the town plan.

9.2.2 Major Limitations of the Act

Although this consolidated Act is a significant improvement over the previous overlapping and at times conflicting planning laws (refer, 4.2), and grants wider powers to the Board to undertake land development programs and also establishes an Appellant Committee, the Act suffers from some major limitations as its predecessors. These include:

the emphasis of the Act is on town development and construction rather than on urban planning and development;

265 the procedures for plan preparation and sanctioning and hearing cases of injuriously affected persons are missing. The Appellant Committee has jurisdiction to hear cases against the Board's orders or decisions only; the Act is thin on inter-sectoral co-ordination (Subsection 11.2) and expects the Board to achieve it without setting out the necessary procedural matters or without requiring other government agencies to formulate their capital works programs according to the approved town development plan; procedural matters related to land development programs are missing. This may create confusion as to the correct procedures to undertake GLD, LP/R and sites and services projects authorized by the Act (project implementation aspects are elaborated in Chapter 10); although the Board has powers to mobilize financial resources to carry out its business, the accounting of the Board and its audit are governed by usual HMG procedures and practices. This casts doubts whether a functional funding arrangement, permitting expenditures to and revenue generated from one development area to be linked to each other, is permissible under the Act. With the usual procedures to get development expenditures sanctioned through annual budgetary allocations, the proposals of various land development programs (particularly that of LPIR) may prove too difficult to be implemented in time (further discussed in 9.3.3); implementation of land pooling projects requires the Board to have powers to hold land and moneys in trust and to deal with cases involving interests in project lands (e.g. encumbrances or mortgages). The Act is silent on these points; and the Act is silent on its relationships with other acts governing the functions and activities of other government agencies and local government bodies. On the ban on fragmentation of land, the Act says that the respective land registration office should act on the advice of the Board, but procedural matters and exemption cases (e.g. division of property among heirs, hardship cases ) are not spelled out.

266 9.2.3 Towards Solution

Given the current official thinking towards creating a Kathmandu Valley Development Authority, the creation of such an Authority to take over planning, programming and co-ordinating functions and development activities in the Valley is expected to fill in a major institutional gap. Until such time that the Authority is created, the Planning Law of 1988 and the KDC will continue to be the principal instruments of planning and guiding development activities in the Valley. Recent Government moves to initiate land development programs also call for necessary legislative back-up for their implementation. The following arrangements, through appropriate legislative means (e.g. amendment to the 1988 Planning Act, formulation of regulation and bye-laws) would appear to be desirable:

there should be cross-reference to other acts governing powers, functions and activities of other government agencies and local government bodies, and their relationships with the Board. This would assist in establishing clear demarcation of authority and sharing of powers for planning and development between various public agencies; procedural matters for undertaking land development programs should be spelled out. This can be achieved through amendment in relevant legislation. In the current situation, the Government could make detailed procedural arrangements by framing necessary rules (Section 26). The recently formed government may make major changes in legal arrangements; power to tap a part of land value increases to finance provision of infrastructure should be made available, and in such land development projects power to implement a functional funding systems of accounts and funds should be in place; a unified system of subdivision approval and building permit issuance should be instituted. Recent initiatives in this direction has been already taken by the Ministry of Housing and Physical Planning, but there should be a legal backing. A flow chart showing how such a unified system works is illustrated in Figure 10.1 (refer, Chapter 10); and

267 the gaps identified earlier under section 9.2.2 should be filled in by future legislative amendment to this Act.

The recent political changes allowing the re-emergence of multi-party democracy in Nepal may further create opportunities for greater inter-agency co-ordination through consultation, negotiations and persuasions and for greater popular participation in land development activities.

9.3 Financial Resources

The discussion of financial resources made in this Section is limited to those related to urban land development purposes only, especially for the provision of basic physical infrastructure like roads, water supply and electricity. While expenditure to the order of some 28,000 Australian dollars (at 1990 prices) is required to service one block of land in Sydney's fringes (The Sydney Morning Herald, 1990), it is not comparable to the scale of land development expenses in Kathmandu Valley, where only basic physical infrastructure is contemplated in this Thesis. This section briefly sketches the present financial situation of the KDC, local government bodies and the sectoral agencies for providing physical infrastructure, and suggests ways to augment financial resources for land development purposes.

9.3.1 Present Situation

Both the repealed 1973 Act and the new Planning Act of 1988 authorize a town planning board, such as the KDC, to borrow money, receive grants, or otherwise mobilize financial resources to carry out its business (Sections 13 through 15 of the 1988 Act). Accounts of the Board are maintained as per HMG regulations and all of its expenses are met from the fund.

Experience shows that the development works initiated by the KDC from its own funds have been insignificant due to lack of finance, because it depends wholly on Government budgets (Shah, 1983; Rimal et al., 1986).

268 The Decentralization Act, 1982 authorizes local pancbayats (towns and villages) to mobilize local resources for undertaking works of local nature. As stated earlier (refer, Chapter 4 ), property taxes and land registration taxes are all collected by Central Government in Nepal, so that local governments have a very narrow tax base. Local governments have limited capacity to provide an array of urban services and facilities due mainly to their narrow tax base, low revenue generating capacity, and heavy dependence on the Central Government for grants (Acharya, 1989(a)). So far local governments have played an extremely limited role in providing infrastructure for urban land development purposes.

Thus, it can be seen that finance for urban infrastructure has largely been channeled through budgetary allocations. The KDC along with other sectoral agencies forwards its programs and budget estimates to the National Planning Commission (NPC) through respective ministries. Once programs are approved by the NPC, the agencies then have to defend their programs and budget estimates before the Ministry of Finance (MOF) which finally approves the programs/projects for inclusion in annual budgets.

Since sectoral agencies work under different legislative mandate and have individual work priorities, their development works are seldom related to each other. Even so, as seen earlier (refer, Chapter 6), providing the key network infrastructure for urban land development is seriously constrained by inadequate funding for both capital works and maintenance purposes.

9.3.2 Limitations of Present Situation

The general pattern that emerges due to current funding constraints is that there is an inadequate supply of serviced land with all other consequences of price rises and affordability problems on the one hand, and the inadequacy of basic infrastructure and services on the other hand. The scale of demand caused by population growth rate and quality of services expected in the capital region further exacerbates the situation.

269 One of the consequences of fragmentation of executive responsibility for the provision of infrastructure and facilities between levels of government and sectoral agencies is that it makes rational allocation of funds even more difficult. This may result in:

some agencies having better access to funds than others, e.g. the Department of Roads received 15.9 per cent of the development budget in 1988/89 (Ministry of Finance, 1988: 12); duplication of works, e.g. local panchayats, Department of Local Development, Department of Water Supply and Sewerage, and the Water Supply and Sewerage Corporation (WSSC) are all involved in the provision of water supply in the Valley; delay in or inadequate provision of services, such as with the provision of electricity and water supply in the Kuleswor housing scheme area (Rimal et al., 1986; Kunwar, 1989); and lack of co-ordination in sectoral works creating problems of planning, programming and budgeting (refer, Chapters 1,5 and 6).

The development budget is heavily dependent on foreign assistance. For example, in the financial year 1988/89, some 45.5 per cent of the total development budget was expected to be met through foreign grants or loans (Ministry of Finance, 1988). This dependency puts additional limitations not only on the choice of the project itself but also on its planning and programming along with other complimentary or dependent projects. Two example may be cited.

During field visit in 1988, it was observed that a sizable tuberculosis hospital was under construction through financial and technical grants from the Government of Japan. The site is located along the Amik:o Highway, adjacent to the densely built settlement of Thimi, some 10 km east of Kathmandu near Bhaktapur. The site is also adjacent to one of the major urban expansion areas at Gatthaghar, which contains one of the designated GLD sites. Planning officials admitted it was not the best choice for the hospital site. It was also understood that planning approval for the project was not sought and the siting of the hospital violates the 'right of way' established for the Highway.

270 The construction of a 27 km long ring road is another example. Documented material on feasibility studies and environmental impacts of the project or its implications on planning have never surfaced, but the project was designed and implemented in mid 1970's through Chinese assistance. Proposals for such a Ring Road was not contained in the unadopted 1969 Valley Plan, but land use maps associated with the 1976 Plan showed the alignment of the Ring Road when its alignment and design were being finalized while the 1976 Plan was still under preparation. Perry Norton's remark on the project is worth repeating, " for a land use planner this was an outstanding discovery ... not to find written statements regarding the proposal and justifications of the Ring Road at such a scale" (Norton, 1974: 11).

While acknowledging the need for and perhaps the inevitability of foreign assistance for development works in Nepal at present, planning and programming of such works should be carefully considered with other planned or ongoing development endeavors.

The above discussion suggests that conventional means of financing infrastructure, especially for urban land development, is unlikely to meet the requirements of land and services caused by increasing population and rapid urbanization in the Valley. This calls for identification of new sources of finance as well as development of innovative financing mechanisms.

9.3.3 Ways to Overcome MJ\jor Shortcomings

The subdivision and development of 'raw' land for residential purposes involves planning and servicing tasks. Providing essential infrastructure and services for an expanding population is a major task that has to be performed continuously. Therefore, easy-to-adopt solutions for addressing serious constraints imposed by financial limitations do not exist. However, measures which can be adopted to overcome the major shortcomings identified earlier include the following:

increased government funding; identifying new sources of funding, e.g. sharing of tax with the Central

271 Government; raising initial working capital through means, such as creating revolving fund, floating of government backed bonds, market borrowings; capturing some of the related land value gains caused by the provision of infrastructure, e.g. development charges, undertaking LP/R and GLD schemes; adopting the principle of cost recovery as far as practicable; rational allocation of funds through sectoral co-ordination, that is maximizing inter-sectoral powers; incremental approach to providing services; involving the private sector for providing infrastructure; finding ways to mobilize local resources; and encouraging greater community participation in the urban land development process.

The major constraints and problems associated with financing infrastructure, as noted earlier, can be grouped into two main problem areas: inadequate finance and institutional constraints. Since the provision of public roads is a major element for opening up land for urban expansion, it is taken as an example to show bow the suggested measures might work in the Valley.

9.3.3.1 Augmenting the Finapclal Position: A number of measures can be adopted to augment the financial position for providing public roadways and access roads to open up urban fringe land. These include: fiscal measures, participatory approach, planning measures and continue to follow the present pattern.

The fiscal measures may include sharing of the vehicle tax between the concerned agency or agencies which provide(s) and maintain(s) roads in the Valley and the Central Government which collects the tax, and authorizing the agency to capture some of the land value gains through betterment taxes or development charges. The participatory approach recognizes the need to encourage and involve people to build local roads, such as the community and inter-community roads. Traditionally, this was the approach for opening up new roads in Nepal, which was widely practiced and very

272 successful. In this approach, concerned landowners are persuaded to give their land for the roadway free of cost and the local people provide free labor to build the rough earthen road. H an incremental approach to upgrading such community-built roads is accepted, this method can be adopted to open up access roads in urban-fringe areas of the Valley.

The planning measures include both positive and negative (i.e. regulatory) measures which the Government can adopt. In the positive measures, the concerned planning agency takes the initiative and participates actively in urban land development by adopting a number of techniques and measures, such as GLD, LP/R, and sites-and-services projects, with a cost recovery component attached to each of them. However, cost recovery policies should be designed to take into consideration equity issues involved and to assisting low-income households through built-in cross subsidy in the projects as far as practicable.

In the regulatory approach, the agency can enforce subdivision regulations by asking land subdividers or developers to provide the essential infrastructure in their subdivisions. It can also encourage the private sector to participate in land and housing development, for which the government must act as a facilitator by removing the major legal, institutional and financial constraints and bottlenecks. Alternatively, the Government can continue the present pattern of financing infrastructure through sectoral budgetary allocations, for which increased funding needs to be provided, otherwise the scale of operation may be quite limited to make any significant improvement in the situation. Since increased public sector funding for land development is likely to be an exception rather than the rule in view of budgetary constraints, [1] alternative financing mechanisms which include greater use of private sector funds, mobilization of local resources, and devising innovative financing mechanism through capturing related land value increases should be considered.

The suggested GLD and LP/R techniques provide mechanisms in which land development costs are financed by capturing some of the land value gains caused by the provision of infrastructure, and the community (e.g. landowners and local residents)

273 as well as the private sector are involved in the process (refer, Chapter 10).

As far as financing infrastructure through capturing some of the increases in land values is concerned, it is appropriate to conceive the system as a functional funding system of accounts and funds. In such a system, the revenue raised from a development area is used to meet the land development expenditures associated with that development area. Clearly, this means that expenditures and revenue related to each land development project area need to be kept on a project by project basis by maintaining separate accounts and funds for each project. This requires amendment to the current fiscal administrative arrangement which requires all revenue generated as well as grants or loans received by the KDC to be credited to a central development fund from which its expenses are to be met. Currently, the KDC needs to prepare a project along with its cost estimates, get HMG approval through appropriate channels, and await inclusion of its preferred project in the annual budget before it can make expenditures from its development funds. This fiscal administrative procedure hinders the smooth implementation of GLD and LP/R projects, and as such, needs to be amended.

9.3.3.2 Institutional Reforms: The institutional reforms needed for the provision and expansion of the physical infrastructure and services focus around two main points: designating appropriate agency to handle each of the task, and co-ordinating their activities. Being an autonomous and a single entity, the Nepal Electricity Authority (NEA) enjoys a unique position which facilitates it in making improvements in the generation of power and in its distribution and maintenance works (refer, Chapter 6). But there are many agencies at both local and central levels which undertake public roads, water supply and drainage works in the Valley. At the central level, it is desirable to designate the DOR and the WSSC, respectively, as the responsible agencies for providing and maintaining public roadways and water supply system in the Valley, but there is also a need to encourage greater participation from local panchayats, especially in providing and maintaining access roads and drainage lines. This necessitates a clear demarcation of authority between the DOR and the local pauchayats, while the construction of drains should preferably be handed over to the DOR, rather than remain uncertain as in the current situation, in view of their nature

274 of construction which is usually done along with the roadways.

As far as co-ordinating the infrastructure development works of these sectoral agencies is concerned, greater initiatives from the NPC, the KDC and the Ministry of Finance (MOF) is necessary. Since experience to date shows that both the NPC and the KDC had been rather poor co-ordinating agencies due mainly to their lack of effective control on sectoral budgetary allocations, the MOF should take a lead in this respect by establishing an 'Urban Development Unit', through which sectoral budgets and financial controls should be channelled to bring about the required co-ordination in the programming and performance of sectoral works. After the proposed Kathmandu Valley Development Authority is established, it can take a leading role in co-ordinating sectoral works, and thus facilitate MOF's activities. But this arrangement calls for preparing future sectoral plans and programs along with their costing, and selecting the priority works in accordance with some agreed principles and procedures. The 'Capital Improvement Folio' mechanism adopted in Metro Manila can be considered for application in the Kathmandu Valley.

In view of limited financial resources available in the country for investment in urban infrastructure, an incremental approach to providing the services should be adopted. Therefore, initially the infrastructure and facilities should be constructed at lower than the desired standards, and then, gradually upgraded and improved as resources become available. Besides these institutional reforms, ways and means must be found to involve local panchayats in undertaking development works of local nature by mobilizing local resources as envisaged by the decentralization policy. Similarly, greater citizens' participation, especially those of the beneficiaries, should be encouraged at all levels of the project undertaking, in identification, in planning and in implementation. These aspects are further discussed in Chapter 10.

9.4 Manpower Resources

It is idle to talk of effective urban land management without addressing the serious manpower problems involved. Metropolitan management requires skills distinct from

275 those needed in traditional and routine urban management.

9.4.1 Present Situation

There is a dearth of technical manpower in the field of urban planning and management in Nepal. Available manpower at present in the KDC, the Planning Team (KVTP1) and TPICs is not sufficient to effectively carry out the various land development programs currently initiated in the Valley (Schneider, 1987; Chhetri, 1988(b)). While the Planning Team would prepare the implementation plans and programs, field offices (at district level) would be expected to assume operational responsibilities.

In the past, most of the manpower for the KVTPT and the TPICs was provided by the Department of Housing, Building and Physical Planning (DHBPP). Although the Planning Team belongs wholly to the DHBPP, it works under the guidance of the KDC. The problems identified with personnel management in the KVTPT and the TPICs include the following (Schneider, 1987: 69-77):

there is a difference between approved and actual staff levels, particularly in the • high level technical manpower, mainly caused by: a large number of people on deputation due to studies and training, regular assignment elsewhere, and unusual deputation, poor personal management practices, because positions becoming vacant as a result of deputation or leave can not be filled in, some vacant positions in the KVTPT have not been filled in, as this needs to be channeled through the DHBPP; there is a general feeling in the KVTPT that the Department does not give priority in meeting the staffing needs of the KVTPT where it has less control over the latter's activities, and gives priority to providing staffing resources to planning teams of other regional centers where it can exercise direct control over their operational activities; and there is misutilization of skills, in that either the staff are wrongly placed or their skills underutilized.

276 Notwithstanding these pressing problems of personnel management, the Ministry of Housing and Physical Planning assigned engineers and planners to the TDICs to undertake the recently identified land development programs. It is apparent that not only there is a lack of personnel from other disciplines, they lack adequate field experience.

In addition to the technical people like planners, engineers, architects, land surveyors, overseers and draftspersons, others such as, administrative support staff, community (development) experts, land managers, land valuers and corporate managers are required to undertake complex and varied tasks related to urban land development and management. There is also a need for public relations experts knowledgeable in community relationships to communicate with the local people and motivate them to participate in various land development programs.

9.4.2 Manpower Needs

For effective metropolitan land development and management, it is necessary to bring together a wide assortment of staff from varying disciplines, levels, and background. The Government has often used all available manpower (such as deputing structural engineers as planners in Surkhet and Pokhara, construction engineer as project manager for managing housing scheme at Dallu in Kathmandu, and creating ward-level technical units to perfonn planning and development functions), hoping that experience and working procedures will be built up on the job itself. However, this approach has not been as effective as expected (Schneider, 1987), and at best, it appears to have satisfied a short-tenn need for greater manpower requirements for planning.

That approach has to change as new directions are now required of metropolitan management, such as information exchange systems (both vertical and horizontal), urban and regional research for policy preparation, strategic and corporate planning, and reliable long and short-term progress-monitoring systems. Enhanced capacities are also required in project development and evaluation, in the identification and marshalling of new sources of finance, in public information and communication, and

277 in manpower development itself.

Manpower development must be linked with the initiation of systematic career development programs. This calls for an urgent review of the broad categories of skills needed, the identification of the gaps in such skills that can be filled by training and retraining, and the formulation of training and career development programs.

9.4.3 Future Directions

It is not suggested from the above discussion that identified land development programs can not be initiated unless the shortage of manpower is reduced. Despite complexities involved in their implementation, the recommended techniques can be quickly picked up, as experience in Trichur (India) suggests (Acharya, 1987 (c)). Moreover, some HMG staff can contribute their valuable experience from land pooling projects in Pokhara in undertaking similar projects in the Valley.

However, to address problems caused by manpower shortage, future activities need to be directed at formulating unambitious projects and initiating training and career development programs.

9.4.3.1 Selection of Programs/PI"Qjects: Given the current staffing resources and the level of their skills and experience for undertaking land development projects, it is desirable to begin with unambitious programs and projects in the initial phase. The undertaking of simple, small and few land development projects/programs would provide opportunity for the limited staff to manage them properly and to gain valuable experience and skills for future refinement and undertaking of larger projects. This incremental approach to program/project selection and implementation should prove instrumental in the success of training and career development programs in latter years.

9.4.3.2 Training: Training for vocational and para-professional skills can be made available through existing campuses. Presently, limited opportunities exist for meeting the training needs of professional and managerial manpower in the country, although

278 the Engineering Institute runs degree courses in civil engineering and the Staff Training College of HMG and the Center for Economic Development and Administration run short term management courses for public sector officers. All of these facilities are located in the Valley. The scope of such courses should be expanded to cover inter-disciplinary and inter-sectoral issues. A short term training program on urban land development was run recently in the Valley through UNDP and the Management Support for Town Panchayat (MSTP) project support. Such programs need to be continued in the future.

External help may be available for training programs through bi-lateral and multi-lateral arrangements and through international agencies, such as the United Nations and the World Bank.

9.4.3.3 Career Development: The career development aspect of manpower development is also plagued with a number of problems. These include, unscientific categorization of services, limited career development opportunities, cumbersome procedures in selecting candidates for training, promotion or transfers, and low public service salary base resulting in frustration, low morale and lower productivity.

To improve this situation, steps ranging from managerial improvements to conditions of service to institution building should be considered.

9.5 Chapter Conclusions

In this Chapter, an assessment of the Task Force proposal for the KVDA, legal arrangements, financial resources and manpower development was made by highlighting existing situation, identifying their critical problem areas and, finally, suggesting improvement possibilities to help implement proposals of this Thesis.

It is noted that the highly centralized role expected to be played by the KVDA runs contrary to the Government's development intentions based on decentralization policies. Such a role is also considered not suitable in the present political climate, which calls

279 for taking a democratic and participatory approach, rather than dictatorial, to achieve required co-ordination. An improved and expanded role for the KVDA is suggested in which it becomes a forum for co-ordination, deliberations and negotiations. It also participates positively in urban development by undertaking selected land development projects, and encourages wider participation from all interested bodies.

The analysis of the new Planning Law of 1988 reveals that although the new Act is an improvement over the previous planning laws (the 1963 and the 1973 Acts), it requires further improvements especially in relation to sectoral co-ordination, project implementation procedures, and fiscal administration.

Considering public sector budgetary constraints to finance urban infrastructure, alternative financing mechanisms are suggested for land development activities. These include, making greater use of private sector funds, mobilizing local resources, and devising mechanisms for capturing some of the land value gains.

The improvement possibilities suggested to address problems caused by manpower shortage include, formulating unambitious land development projects and initiating training and career development programs.

280 1. During field visit in 1988 it was observed that after the Minister for Housing and Physical Planning announced that a number of land development programs would be undertaken in the Valley, the Ministry of Housing and Physical Planning submitted a budget proposal of someRs 182 million for 1988/89 financial year. The MOF slashed most of those programs and offered to provide about Rs 49 million for 1988/89. The embarrassing situation for the Minister for Housing and Physical Planning was avoided to some extent after he took up the matter personally with the Minister for Finance and a revised budget of about Rs 94 million was assured in the budget (Ministry of Finance, 1988: 13).

281 10. PARTICIPATION AND IMPLEMENTATION

This Chapter discusses ways of encouraging participation from the main actors involved in land development and suggests a possible framework for implementing the innovative techniques of guided land development (GLD) and land pooling/readjustment (LP/R). This is expected to help address some of the main problems facing the Government in urban development, such as shortage of funds for providing infrastructure, weak implementation of plans, and inadequate supply of urban land.

Principal actors in land development are identified, and their relationships with one another and their roles and interests in the process highlighted. A brief description of issues involved in formal land development in both the private and public sectors and ways of assisting small as well as large land developers follows before moving on to discussing ways of encouraging participants in informal land development (i.e. landowners, tenants, land brokers, and the general public) and assisting them. Finally, constraints to implementing GLD and LP/R projects in the Valley are identified and opportunities as well as measures to overcome them are suggested.

10.1 Participants in Land Development

Landowners and tenants, land brokers, developers, government agencies, political leaders and the general residents can be identified as the main participants in land development in the Kathmandu Valley. This writer is not aware of any published research material which deals with the relationship among the main actors in the Valley, how that relationship changes over time and how some groups may exercise dominance over the other groups. Therefore, discussion in this Section is largely based on personal experience.

Although organized private sector land developers have not existed earlier, there are signs of their emergence at the present time (refer, 3.7) and the market could see their and their agents' activities in the near future.

282 Figure 10.1 shows possible linkages among the main participants. All the actors need one another to satisfy their interests and each is shown to help the others, but to charge a price for others to benefit. Therefore, other actors are allowed to take their share, but all the actors also try to keep others' share to a minimum. As experienced elsewhere also (Payne, 1989), this competitive alliance may have been the result of the intention to transform public means into private value.

The roles and interests of principal participants in land development and the benefits offered to them by the proposed land management system (LMS) was summarized earlier (refer, Table 7.1). The interests of the participants and how they interact with one another are briefly noted below.

Landowners' interests are in capturing as much of land value gains as possible, securing the availability of services at least cost and participating in the process. However, historically, they have played a low profile role in land development and subdivision, as the lead is often taken by land brokers in the initial phase of subdivision by bringing together landowners, tenants and buyers. This is facilitated by the land brokers' intimate knowledge of the land and housing markets, and price differentials between locations, knowledge of land ownership, contacts with landowners, tenants and prospective buyers of plots and their 'co-operative relationship' with land administration officials. Their interest is in maximizing their share in land transactions.

However, as the community develops, landowners progressively become local leaders and establish linkages with other actors to satisfy their interests. Tenants are interested in protecting their tenancy rights and in sharing any land value gains brought about by urban development opportunities.

Formal private sector land developers are slowly emerging in the Valley, such as the Kathmandu Housing Management and Construction Company's interest in developing land at Kisipiri (refer, 3.7.5). Based on their entrepreneurial ability and possible linkages with political and administrative leaders, they are oriented towards maximizing profits.

283 Figure 10.1: Participants in Land Development

Landowners r~ Political Leadership 1 : 1 Deiopers ~ Administrative Leadership

Land Brokers (Deve's Agents) l I I Administrative Personnel I 1 L------~ Residents

Source: Adapted from Payne {1989:29) with modifications.

One can look at land brokers and subdividers in their role as developers (for example, refer, PADCO, 1986); agents who acquire (or negotiate), subdivide and allocate plots with the tacit support of public officials, politicians, or both.

However, it would be naive to assume from this that these people are enlightened, socially responsible individuals, motivated by a desire to assume the responsibilities of the state in assisting the poor. All are motivated to a large extent simply by the opportunity for profit. Nonetheless, as a low-priced sub-market, their development activity fills a gap in land supply, and in this respect has to be seen as providing a service.

The interests of residents and the general public would be to participate in the land development process so as to help create a healthy and desirable residential neighborhood development and to ensure the availability of services and facilities.

284 Traditionally, government's main role has been that of a regulator and service provider and in fulfilling social equity objectives. A close interaction between landowners, land brokers and local officials has been a key element in the growth of informal land development practices. Government's expanded role in land development through active and positive participation is envisaged in the proposed LMS in which it liaises with and encourages other actors to participate in the process.

10.2 Issues in Formal Private Land Development

There are a number of issues that need to be resolved while embarking upon suggested land development strategies. Most of these are related to ways of Government assistance and interventions in private land markets. The Land Acquisition Act of 1977 empowers the Government to acquire land for a public purpose. Parcels were acquired at Galfutar to launch a sites-and-services project. Compensation to landowners was largely in the form of regular sized serviced plots with some cash adjustment. Land price at Galfutar was relatively quite low (indicating low development potential) and land owners were very few (refer, 3.7.4). When such a system is introduced in high priced areas, such as those within the Ring Road, compensation methods need to be worked out carefully.

Issues in privately initiated land development operations are mainly those related to land assembly, land registration tax, ceiling on land holding, approval procedure, and infrastructure connections. As discussed earlier in Chapter 3, an organized private sector developer was seeking Government help in land assembly and infrastructure connections and relaxation in the areas of land registration tax, land ceiling and approval procedure. Any form of Government assistance to private developers raises a number of questions. If the Government is to assist a private company to assemble private lands, what public purpose is served? Who amongst private developers should receive this assistance for a specific area? Should Government call for competitive proposals from developers to develop an area? If not, will that lead to a paternalistic relationship between developers and officials? Is it possible that, in the name of competition, incompetent developers might come in but only to jeopardize the land

285 development venture? What are the real sources of power from which the Government derives the right to designate certain areas under freehold for a particular mode of land development?

As a matter of policy, HMG should not demarcate areas within the 'physical expansion framework' specifically for private developers. This is because such areas could be developed, at least in theory, through other means, such as GLD and LP/R.

Developers should be expected to find by themselves potential areas for development. HMG's assistance to private developers should be based on the merit of the proposal to cater for the needs of low-income households and to contribute towards sustainable planned urban development. The Government may require the developers to come forward with a proposal which is acceptable to the majority of landowners. This would require a developer to win the confidence of and get support from landowners by encouraging them to participate in land development through a number of means, such as by offering equity participation and/or offering realistic market value for land from non-participating landowners.

The Government seems to have taken a sympathetic view towards the request made by the Kathmandu Housing Management and Construction Company to make it available private land at Kisipiri for housing development through the use of Government's compulsory land acquisition powers. In mid 1988, an official paper proposed that if more than a third of plots were earmarked for 'Basic Needs Target Group' and 25 per cent equity were held by 75 per cent of the landowners, then the Government should compulsorily acquire the land if negotiated purchase can not take place within three months from the date of HMG notice (MHPP, 1988(b)). A number of other conditions were proposed to be satisfied by a developer before Government assistance was made available. This writer is not aware of any recent development on the above matter.

It is debatable whether the Government should or could use its powers to compulsorily acquire freehold land for a private commercial agency whose prime motive in the land development operation is to make profit. However, it is considered desirable for the

286 Government to increase current ceiling on land holding for the purpose of private land development, otherwise commercial development would not be viable within a ceiling of 2.5 hectares (under one ownership) currently imposed by the Lands Act of 1964 (refer, 4.2). Similarly, relaxation is needed in land registration fee in that the Government should revoke that part of the land registration fee that falls on the company, both at buying and selling points. As a matter of policy, this fee relaxation should also be available to project landowners who wish to retain some of the serviced plots either through equity partnership or through fresh purchase. Government support should be provided in connecting the city's infrastructure to the project site and in the transfer of well-running services and utility networks to public agencies after successful completion of the project.

10.3 Issues in Formal Public Land Development

Issues in formal public land development, such as land pooling, are mainly related to methods of compensating the participant landowners. They can be compensated either on the basis of what it cost to develop the area and how much of new plots should be retained by the agency - calculated on the basis of after-development price, or in terms of price difference before and after the development. In the first method, increased land value is retained by original landowners, while in the second, this is partly captured by the agency. In both the cases, at what standard should the area be developed, at what price should plots retained by the agency be sold and to whom, are a few questions that need to be carefully addressed.

Government interest in planned development must encompass a broad view including, creating aesthetically pleasant and technically efficient layouts, increasing lower income households' access to serviced land, bringing about more equitable distribution of scarce land resource, protecting natural endowments which are critical to a healthy environment, and managing the land to the broader interest of the community. Being aware of and responding to these issues can be expected to guide Government in making decision in relation to urban and land development matters.

287 10.4 Regulating Land Development Process

It was noted earlier that current development control measures in the Valley have been ineffective (KVTPT, 1984; Rimal et al., 1986; Kaphle, 1987; Chhetri, 1988(a); MHPP, 1988(a); also refer, Chapters 1 and 5). Unclear drafting of regulations (zoning and building regulations), unclear demarcation of land use zones on site, absence of subdivision regulations, and weak implementation leading to violation of the regulations have been the main reasons for their ineffectiveness. The resulting problems include incompatible land uses, haphazard urban expansion, encroachment onto agricultural and low-land areas, lack or unsatisfactory level of services and high price of serviced land.

Reform in this area would require action across various fronts of the proposed land management system, which include formulating clear but simple set of regulations and bringing all developers, large and small, from public, private and informal sectors into the main stream of land development process. Since development control measures tend to infringe upon individuals' right to use properties, regulations must be based on public welfare concept while protecting individuals' rights.

10.4.1 Regulations

A simple zoning map showing division of Greater Kathmandu into principal zones (e.g. residential, commercial, institutional, industrial) should be prepared. The type and intensity of uses permitted in each of the zones should be listed out and technical matters, such as set backs, heights and ground coverage should be specified. Following the preparation of draft zoning regulations by the Planning Team, wider public consultations should take place in collaboration with municipal bodies. Both the KDC and municipalities should adopt the regulations.

In order to guide expansion and infilling of new areas, subdivision regulations should be prepared by the Planning Team, adopted by the KDC and municipalities, notified through Nepal Gazette and enforced by the municipal bodies, the KDC, the Land Revenue Office, and other relevant agencies. Subdivision regulations should provide

288 simple technical guidelines regarding minimum road width, plot shape and size, minimum size of public space required to serve a given area, and the like.

10.4.2 Unified Subdivision and Building Permit Issuance System

As indicated earlier in Chapter 8, the preparation of a medium term investment plan by the KVDA is necessary to co-ordinate development related decisions of various agencies. For implementing the plan, it should be supported by planning guidelines and planning permit issuance system. Currently, Government agencies do not obtain planning permit from the KDC, so that there is no prior knowledge about their development decisions, development works go unco-ordinated, and at times, it may be frustrating for the KDC to try to reverse or correct the situation.

One of the most critical area of controVguidance is in individually initiated constructions. Past experience suggests that in order to make the building permit issuance system effective, it will be necessary to expand this to cover land transaction and land uses as well. Households' commitment to building houses start from the day they invest in land. Control and guidance should, therefore, start from the day they are about to invest in land. The Government has already taken an initiative to institute such a 'Unified land Subdivision and Building Permit Issuance System' (MHPP, 1988(a), which is illustrated in Figure 10.2.

The System requires close co-operation and flow of information and documents among municipalities, town planning offices, ward level technical units, and land Revenue Offices. Available information on the permitted use(s) of subject land and government development intentions, if any, are provided by these agencies to prospective land buyers.

The current 1988 Planning Law does not make provision for such a system. It does, however, provide for the land Registration Office to follow instructions from the Town Planning Board concerning a ban on land subdivision within a town plan area for a specified period of time, as mentioned on the public notification imposing such a ban

289 F1gure 10.2: Unified Land Subdivision and Su1ld1ng Permit Issuance System

FLOW CHART TECHNICAL SUPPORT AND ADVICE (a) Information on permitted use made available to SEARCH FOR NEW PLOTS <------buyers and sellers by municipalities, Town Planning BEGINS Office (TPIC) and the ward level Technical Unit Information on service extension programs, if any, is also made available to buyers. ALTERNATIVl LOCATIONS

(b) Buyer will finalize the deal if his intention ,_L,,, <------·------behind the search conforms with permitted use. Suppose, a person w1shes to buy land to start a vehicle workshop. If this use IS not permitted by by the regulations 1n the area where he 1s about to buy a parcle, then he should be made aware of this before he buys the land. APPLICATION SUBMITTED TO TECHNICAL UNIT FOR <---·------·----·-- (c) Technical Unit approves the subdivision on the SUBDIVISION APPROVAL basis of: 1. Intended use 2. Access 3. Easement Right 4. Future Government plan 5. Compliance with its recommendation to LAND TRANSACTION FINALIZED ON THE buyers and sellers regarding how land BASIS OF APPROVAL FROM TECHNICAL UNIT sould be subdivided. (LAND REVENUE OFFICE) I +------+

OFFICIAL I COPY OF ISSUANCEI OF NEW <···-·- (d) Land Revenue Office records subdivision in SUBDIVISION SENT TO TPIC LAND TITLE Cadastral Maps (as usual) and forwards one copy of FOR FUTURE REFERENCE a newly introduced form to Technical Unit for future reference.

+----> REQUEST FOR BUILDING PERMIT SUBMITTED TO TECHNICAL UNIT • (e) Technical Unit checks application as to whether +------> it conforms with: 1. Permitted use 2. If the Cadastral Map conforms to original recommendation (item c above) TECHNICAL UNIT CHECKS <-- 3. Building Regulations APPLICATION AND DRAWINGS 4. Others, like special regulations of municipality, if any +<--(rejected)-----1 The application is endorsed by ward chairman before it Is sent to municipal office.

RECOMMENDED AlPLICATION SENT TO MUNICIPAL OFFICE FOR FINAL (PPROVAL (f) Municipal Office assesses taxes and fees but does not check if the application conforms to its building regulations because TPIC and Municipal +<--·------···------BUILDING PERMIT ISSUED Office should not have two different regulations and all regulations must be checked by the Technical Unit for reliability, convenience and identification of responsibility. One copy of the permit sent to the Technical 1::::.::::.::.:::::::::.::::: "''''"'!'" ""'' Unit. field check by Technical Unit I

CONSTRUCTION ENDS

Source: MHPP, 1988(a):9 (with modifications).

290 (Section 8). It is desirable for the introduction and working of such a 'unified system' to be closely monitored and assessed for its effectiveness, and to make improvements as necessary.

10.5 Encouraging and Assisting Land Brokers

Under the current land development practice, land brokers are the principal agent to help households get residential plots. Therefore, brokers must be brought under the fold of planning guidance to improve the efficiency of the land development process. This can be done through a number of means, such as providing technical specifications in the form of minimum planning standards in subdivision, encouraging brokers to follow the standards, and providing them with incentives.

10.5.1 The PADCO Proposal

The PADCO report (1986:90-91) put forward a number of proposals to encourage and assist land brokers. These included:

recognizing the role of brokers in land development by encouraging them to formalize their activities through voluntarily registration of their business; making brokers directly responsible for all land transactions and holding of titles (the initial transfer of land titles to brokers was expected to enable them to use the land as collateral for development loans); providing appropriate guidelines and support for physical standards and provision of services; authorizing brokers to witness all land transactions within designated development areas; formulating unambitious income evaluation procedures to assess brokers' income for tax purposes; requiring brokers to use development standards and to reserve land for public open space or facilities in subdivisions; formulating and implementing a metropolitan infrastructure extension program,

291 particularly for roads, in order to provide for a planned framework for brokers to operate on; and initiating public awareness campaign and upgrading cadastral data.

10.5.2 Government's Response

The Government seems to be taking a supportive approach in assisting brokers to improve their role in land development. An official paper (MHPP, 1988(b)) recognized that although brokers work could be supported by way of planning regulations, care must be taken to offset any increase in cost of development which such a practice may bring about by providing them with incentive measures. Besides financial incentives to brokers, other measures advocated included providing advisory services to land owners and buyers.

The paper proposed the following measures to encourage brokers to comply with regulations:

requiring them to register their operations; requiring brokers to attest transaction under their purview; making tax assessment procedure simple and clear; and providing registered brokers with a land registration fee rebate of some two per cent.

The paper also suggested that above measures should be complemented by local planning to guide house construction, land transaction and fragmentation, but no details were provided. In effect, the paper appears to support the proposals put forward by the PADCO (1986) report. However, Government's formal commitment in this respect, if any, is not known to this writer.

292 10.5.3 Recent Review

The PADCO proposals were also viewed positively in a recent literature review of informal land and housing subdivision in Third World countries (Payne, 1989). Commenting on options for a new relationship between government agencies and traditional land brokers, the review remarked (p.53): "This [P ADCO's proposal] balance of benefits and obligations illustrates how a new relationship can be achieved which recognizes the primary interests of all parties involved by leaving them to concentrate on what they individually do best."

10.5.4 Strategy for Assistance

It is recognized that land brokers play an important role in providing residential lots which cater for households' needs in terms of location, site area and price. In this context, their activities should be supported and assisted, but at the same time, rationalized planning guidance needs to be in place so that the subdivision layout becomes more efficient and services can be provided more economically.

However, excessive formalization/regularization of informal land activities may become counter-productive, in that it may increase the cost of development. This may increase land prices with adverse impact on housing affordability. It is also questionable whether the proposed form of financial incentives to land brokers can be justified. If allowed, this precedence may encourage other participants in the land development process to demand similar levels of subsidies/grants in their operations.

Therefore, for an appropriate course of action to be taken, the Government needs to maintain a balance in which land brokers are assisted to comply with regulations without the Government having to expose itself to serious public backlash. Perhaps, the Government needs to develop strategies which attempt on a very minimum level of regularization to bringing land brokers into the fold of planning controls without giving too much in return.

293 10.6 Landowners', Tenants' apd Cjtjzep's Groups

As outlined at the beginning of this Chapter, the proposed LMS offers significant benefits to all participants (e.g. government, private developers, landowners, tenants and the general public) in the land development process. Table 7.4 outlined major obstacles and opportunities in the adoption of the proposed system. In a nutshell, as far as tenants' and citizen's groups are concerned, the obstacles stem from a conflict of interests between the various groups, and opportunities lie in exploiting the use of existing agencies and mechanisms to foster co-operation between the groups and encouraging them to participate in the development process. These aspects are elaborated below.

10.6.1 Landowners and Tenants

Conflicts between landowners and tenants tend to arise as land value appreciates when rural land is converted to urban use. According to the Land Act of 1964, tenancy rights are hereditary. Tenants have a right to 25 per cent of land area or land value when the property is sold. They can also retain some land over this limit for residential purposes. Landowners are often reluctant to give so much to the tenants easily. The tenants usually stick to their rights, and this causes delays in quickly selling the land. It is widely believed that a large number of such cases are awaiting arbitration throughout the country.

Such delays and conflicts are costly and can frustrate any land development project. In recent years, higher land value appreciation and the need to sell off land quickly are believed to have forced many landowners to give up between one-third and one-half of the land value/area in exchange for relinquishing their tenancy rights (Chhetri, 1988(b)).

The proposed LMS provides avenues for resolving conflicts, fostering co-operation and encouraging the groups to participate in land development. These include:

294 the Government can act as a mediator between landowners and tenants, since the Government actively participates in land development and provides a framework for land management; tenants legitimate rights can be protected in the proposed system by involving them early in negotiations and project management. Their active participation would enable them to obtain their fair share in land value gains (this measure can also reduce the number of potential court cases); tenants legitimate places of residence can be guaranteed (tenants will have a first choice of the developed lots after land is provided with services, and they can retain such lots as part of their compensation package. This was one of the major lessons learnt from the Kuleswor and Galfutar housing schemes to satisfy both landowners and tenants), (refer, Muller, 1981; Malla, 1987; Kunwar, 1989); existing social and cultural institutions can be utilized to persuade and convince both landowners and tenants to resolve their differences and to participate in the land development process. These may include: &Whis (philanthropicireligious organizations), caste hierarchy, socio-cultural and religious institutions (e.g. local social or sport clubs, local library, religious groups assembling for bhajans and kirtans (the chanting of religious hymns); high profile people, who are generally respected in the local community, can also be mobilized to foster co-operation in land development. These include: priests and other religious minded people, professionals (e.g. teachers, doctors), popular political leaders and community workers.

10.6.2 General Public

Inadequate levels of services and facilities, limited avenues for popular participation, bureaucratic corruption, ad-hocism in planning and progression of undesirable development (especially, incompatible development and encroachment onto low-lying and flood-prone lands) are some of the major concerns of the general public in

295 relation to land development. The proposed system offers opportunities to address these concerns (refer, Table 7.4), but the key to their success is the creation of avenues for wider participation.

Ad-hocjsm in planning and in the delivery of services can be countered through measures such as:

announcement of Government's political commitment to and creating avenues for wider participation (opportunities are provided by the establishment of multi-party democracy in April 1990 and the formation of an elected Nepali Congress government in June 1991); and the adoption of systematic planning and staged urban development programs (opportunities are provided by the adoption of the proposed LMS which builds upon a form of staged provision of services in designated development corridors and the adoption of positive land development techniques of LPIR and GLD).

Bureaucratic corruption can be reduced through a number of measures, including the adoption of clearly laid down procedural matters, making the land development system open enough for public scrutiny, and encouraging wider public participation. The institutional framework for the establishment of the proposed development authority, detailing procedural matters by amending relevant legislation (refer, Chapters 8 and 9) and the adoption of a unified system of land subdivision and building permit issuance (refer, 10.4) can provide a setting for making procedural matters more clear.

Encouraging wider participation and making the system more open can be achieved through measures identified above in this Section and by encouraging wider public debate in the media and seminar forums, and by involving the public (landowners, tenants and residents) in the management of land development projects by inviting them to join various committees and sub-committees charged with identifying, selecting, preparing and implementing project proposals. In this context, the lead taken by the Ministry of Housing and Physical Planning in 1988 by involving local residents

296 to identify, share costs, and manage local surface drainage projects (refer, Chapter 6) should be expanded to cover other land development projects.

10.7 Prn,ject Implementation

A discussion on Government initiatives in land development following its announcement in 1988 was made in Chapter 8. This Section highlights a possible framework for implementation of GLD and LPIR projects in the Valley.

10.7.1 Introduction

Existing arrangements to initiate and prepare GLD and LPJR projects and some of their inherent problems were discussed earlier (refer, Section 8.2). The main problems were: inappropriate selection of project areas, especially for GLD; metropolitan context missing, i.e. projects selected in isolation rather than on the basis of a metropolitan plan; GLD and LPIR techniques not prepared for use in combination; no apparent linkage with land supply programs; no funding arrangements for implementing GLD projects, so that projects were likely to remain as mere paper exercises; and no apparent attempts to learn lessons from the Pokhara experience with LPIR projects.

Suggested remedial measures, made mostly in the metropolitan context, to improve land development (refer, 8.2.3) were:

preparing and adopting a metro-level plan. It is understood that work has begun in this direction; preparing a phased urban development program with staging of service provision; co-ordinating the provision of services; and co-ordinating land development projects of the private and public sectors for

297 ensuring an adequate supply of urban land.

10.7.2 Guided Land Development

The GLD concept was formulated in Jakarta (Indonesia) in late 1970's to guide informal private land development in urban-fringe areas (Archer, 1988). The GLD approach conceived in Kathmandu relies on planning authorities taking a lead to mobilize landowners, land brokers and community members to participate in land development efforts (Chhetri, 1988(b)). In this approach, planning authorities select sites for GLD application and the local community is informed of this intention. The authorities prepare an access road layout plan of the area. This plan is then presented to the local community including landowners and land brokers, discussed, finalized, officially sanctioned, and then implemented by the local units of the planning authorities with local community support.

Land for the roadways is expected to be donated free by the relevant landowners, and infrastructure is to be provided by sectoral agencies through annual budgetary allocations.

It should be recognized that the Kathmandu version of the GLD approach is a positive step in regulating informal land activity towards a planned pattern of land uses. The making of GLD plans on cadastral maps gives added benefits to translate the road pattern onto the ground and helps its implementation. In contrast, the drawing of the GLD plan on topographical maps may have been one of the main reasons why it was never implemented in Jakarta (Archer, 1988). In view of limited government capacity to fund provision of infrastructure, reliance on community support to donate land for roadways free of cost deserves merit.

However, there are many hurdles in implementing GLD projects in Kathmandu which arise mainly from heavy fragmentation of land and an absence of funding mechanism to implement the GLD proposals. These aspects are highlighted below:

298 There is a high degree of land fragmentation. For example, land registration records (cadastral maps and field books) in Gatthaghar (one of the designated GLD sites) in 1988 showed that there were 217 landowners within an area of 7.73 ha of land which contained some 353 land parcels, of which nearly 65 per cent was less than 200 sq m in area. Although information on tenants was not available from field books, the number of tenants can be expected to be high in rural and urban-fringe areas. A housing study project group (TESG, 1985: 34-35) found in 1985 that in a town extension area located to the east of Bhaktapur, some 19 landowners owned the project site of about 2.4 ha, which was divided into 34 land parcels and contained 21 tenants. Thus, there is a need to deal with a large number of landowners and tenants in any given land development area. Mechanisms need to be developed to deal with cases of disputed boundary which can result from existing high land values and such a level of land fragmentation. There is a risk of opposition from potential vested interest groups who may suffer a financial loss because of government undertaking a land development project in an area. Opposition is also likely from some landowners whose land parcels are too small and who are likely to lose all or most of their land for roadways and other public purposes. Existing cadastral records are inadequate in that they are not updated regularly, cadastral numbers are confusing, and there may be difficulty in identifying actual landowners and tenants (Archer, 1988; Chhetri, 1988(b)). The GLD concept does not include a funding mechanism to implement its proposals even if land for the roadways is provided free of cost by the relevant landowners. Funding would be required for implementing a number of items, including fees required for physical demarcation on site, compensation to some adversely affected landowners and tenants, transfer fees for boundary changes, and construction of roads and other utilities and services on the roadways land. The reliance on sectoral agency funding for providing services means that there is no guarantee of the time frame within which GLD proposals would be

299 implemented. This may frustrate the expectations of local residents, earn bad reputation for local leaders, community workers and the Government, and replicability of such projects could be at risk.

Despite the above hurdles, there are opportunities which can be exploited to advantage and a number of measures can be devised to address these problems. These include, administrative arrangements, measures to deal with problems caused by fragmentation, encouraging wider participation, providing infrastructure, and funding and cost recovery arrangements.

Administrative and institutional arrangements are necessary to bring together a number of government agencies to work towards implementing GLD proposals. Chapters 8 and 9 dealt with institutional and co-ordinating arrangements. At the local level, co-operation is required to make changes in the cadastral maps and to help plan and construct physical infrastructure (roadways and water, drainage and electricity lines). This would require the involvement of the District Survey Maintenance Unit, land Revenue Office and land Administration Office for surveying and demarcating public roadways and for registering land parcels and amending cadastral maps. In view of the inadequacy of the present cadastral recording system, it needs to be modernized as discussed earlier (refer, 8.3.1).

As the new roadways network generated through the GLD process will be creating many blocks of land parcels, there is an opportunity for a wide variety of approaches to be adopted in land assembly, servicing and subdivision of those blocks by landowners, land brokers, developers and government agencies. land pooling could be one of the viable options to develop such blocks. land pooling could also help in the assembly of fragmented land parcels for development and could provide an avenue for paying compensation in kind so as to deal with problems faced by adversely affected landowners/tenants by giving them land elsewhere in the project.

There are a large number of motivational factors at work to encourage wider participation, and the GLD process provides an opportunity to satisfy the interests of

300 all participants in land development. Ways of encouraging participation was discussed earlier in this Chapter.

Experience shows that landowners and tenants willing! y participate in the land broker-managed land development process because the benefits accruing from the land after the access roads have been opened up far exceed the cost of losing a part of their land for the access road (Chhetri, 1988(b)). Archer (1988: 19-20) indicated a possible land value increase of six times due to the provision of public road access alone. Field interviews with landowners, tenants, land brokers and other residents at Gatthaghar area confirmed this figure (range was 3 to 20 times). It was also found that with the provision of the key physical services in an area (say, within 3 to 4 years), land values could go up by about 10 times, with access road accounting for as much as 53 per cent of the increase, followed by water supply (26 per cent) and electricity (21 per cent).

Land brokers' operations are successful because their actions are directed to personal benefits for both landowners/tenants and land brokers. The sharing of land value gains by these groups motivates them to participate in the GLD process.

A well laid-out road network provides a basis for installing efficient infrastructure services and helps evolve an attractive residential neighborhood. This will provide satisfaction to the local community. Such planned development initiatives through local efforts could be a political asset to local leaders who can claim public recognition for mobilizing the community.

The government derives enormous planning and political gains through such development endeavors. Besides, load on the public purse is reduced by virtue of landowners' contribution of land for roadways and community facilities and adopting other funding arrangements to provide infrastructure.

Funding arrangements for the provision of infrastructure and implementation of GLD proposals should be built into the project. Section 9.3 dealt with various funding options available. Essentially these involve a combination of direct government

301 funding, sharing of costs between the government and the local community, and tapping part of the relative land value gains. These options need to be explored further to assess their appropriateness, however, there is merit in considering some form of development charge to finance the cost of infrastructure. Although full cost recovery should be aimed for, it should be done gradually over time (because so far the Government has provided infrastructure through public moneys without directly recouping the costs involved). Careful consideration should be given to equity implications and political issues involved in implementing such proposals. In view of the demonstration nature of pilot projects and their value in the learning process, the Government should provide funds to initiate a few pilot projects, perhaps in partnership with landowners and private developers.

10.7.3 Land Pooling/Readjustment

Land pooling being conceived in Kathmandu is similar to the Western Australian model, in which the ownership of land in a project area is transferred from landowners to a planning authority, and following subdivision and development of land, landowners receive delayed payment of returns in kind (i.e. developed lots, with any cash adjustment, after the project is completed) (Archer, 1980).

In the Kathmandu version of land pooling (MHPP, 1988(b)), landowners within the project area agree to pool their parcels and hand over the title (temporarily) to the planning authority. The authority prepares a subdivision plan of the area, estimates cost of development, obtains general agreement from local government and the community, and develops the area. Some of the developed lots are retained for meeting development costs and the other lots are returned to original landowners.

This approach recognizes that a LP/R project is essentially a partnership of the participating landowners and the government implementing agency for the unified design, servicing and subdivision of the land with the equitable sharing of project costs and benefits. It involves landowners in implementing the project, and also provides a mechanism for land development without having to spend public money on

302 infrastructure, because the project is funded through a credit finance which is quickly paid off through the sale of some of the developed lots.

However, in addition to the problems created by the inadequacy of existing cadastral records and heavy land fragmentation as noted earlier (refer, 10.7.2), a number of other hurdles need to be crossed in implementing LP/R projects in the Valley. These include the following:

some landowners not willing to participate in the project; involvement of landowners only after acquisition notice for project land is served on them; administrative complications in clearing original titles for the project to proceed and establishing titles for new plots and distributing them to landowners; fees and stamp duty in clearing old and setting new titles; not clear bow tenants' interests are protected; and possibility of many landowner and tenant farmers losing their only means of livelihood although the market value of their land asset may have appreciated.

Opportunities are available to take a number of actions to address the above problems. These include measures, such as applying the GLD and LP/R techniques in combination, involving participating landowners and tenants at an early stage of project inception, mobilizing the local community to support the project, government waiving stamp duty in some cases, modernizing the cadastral recording system, and creating alternative employment opportunities for farmers. Most of these measures were discussed earlier in this Chapter, others are briefly elaborated below.

The project area should be selected on the basis of its development potential, its financial feasibility and the support of the majority of landowners and tenants. Field interviews at Gatthaghar showed that almost all interviewees supported the concept of LPIR and GLD, and were willing to part with some portion of their land for roadways and other public purposes. Many were also willing to provide additional land for financing infrastructure if it was provided quickly.

303 Community persuasion can be expected to motivate landowners to participate in the project. In case it fails, the LP/R implementing agency can give a threat of expropriation to minority holdout landowners with the intention of seeking their co-operation. In extreme cases, it may acquire their lands compulsorily, and build up its own equity in the project. The agency will require legal powers and access to appropriate finance to do this.

Considering the pioneering nature of LP/R projects, the Government should waive all stamp duty in initially transferring land titles to the implementing agency and also for transferring titles back to the participating landowners and tenants. A legal agreement could be drawn up between the parties authorizing the agency to manage the project land, thus circumventing the need to make claims for and receive payment of compensation. The Government can also assist landowners and tenants, who depend on their land for a living, in finding alternative employment through measures, such as guiding them to find cheaper farm land elsewhere, providing priority employment opportunities in some areas, and creating employment related training programs.

10.7.4 Framework for Implementation

The above discussion on encouraging wider participation and project implementation suggests that the following general matters should be considered in devising a framework for implementing land development projects at the local level:

institutional and administrative arrangements to obtain co-operation of various government agencies at both central and local levels; selecting a few pilot projects for demonstration purposes and also for gaining experience with various land development tools; mobilizing local community support for project proposals; encouraging landowners, tenants and the community to participate in the project through various committees; involving the above interest groups in project identification, site selection, plan preparation, implementation, and sharing of costs with the Government;

304 managing each project by a competent team; devising funding mechanisms for implementing project proposals with cost recovery component attached through the adoption of a functional funding systems of accounts and funds; and monitoring each project with a view to refining the techniques for future application.

10.8 Socio-Cultural Constraints

The proposed LMS builds on the active participation of all concerned groups to facilitate implementation of its proposals. It also expects to utilize existing social and cultural institutions and high profile people to persuade concerned groups to participate in land development activities.

Despite these opportunities for the application of the LMS in the Valley, there are a number of constraints, which emanate from deep rooted social and cultural practices, and these should be noted.

Two of these, ad-hocism in planning and bureaucratic corruption, were noted earlier (refer, Section 10.6) and ways of overcoming them were highlighted. In addition, "favoritism" is another social practice, which can take various forms, e.g. source-force, doing for friend/family, and flattery. This practice can be a major constraint to development in Nepal, as correctly observed by Caplan (1971), Stiller and Yadav (1978), Shaha (1982), and Kondos (1987). The practice of favoritism can be counter-productive to development endeavors, because it can be applied directly or indirectly to influence decisions relating to appointments to key positions, selecting development projects, selecting location of projects, awarding of tenders for supply of materials and/or construction of works, availability of development finance and the like. It is not known to this writer how far this practice has been or will be prevalent in relation to land development activities. However, the constraints posed by such a practice should be carefully considered in developing strategies for implementing the proposed LMS in the Valley and their effects need to be monitored in evaluating the actual implementation

305 of the system.

10.9 Chapter Conclusions

This Chapter discussed means of land development through the adoption of innovative techniques of guided land development and land pooling/readjustment. It discussed ways of encouraging wider participation from concerned groups (landowners, tenants, land brokers, developers, and the community) and suggested a framework for implementing land development projects, based on the Government taking a lead role and making political commitments to achieve intended results.

Encouraging and assisting land brokers and private developers, and instituting a unified subdivision and building permit issuance system were suggested as mechanisms for formalizing informal land development activities. The use of GLD and LP/R in combination was suggested as a mechanism to facilitate project implementation helping to obtain planned land use patterns and increasing the supply of urban land. These tools could also be instrumental in creating diverse opportunities for land and housing through a mix of various plot sizes and dwelling types. Such an outcome could be considered a win-win situation, because the proposed land management system offers opportunities for satisfying the interests of all parties.

Obstacles to implementing GLD and LP/R were identified and measures to handle them were discussed. Experimenting with a few pilot projects was suggested for demonstration purposes and for gaining experience with these techniques.

The Chapter also highlighted the need to consider policy implications from a wider perspective. These included, equity implications and political issues of cost recovery and the desirability of integrating. land development programs with employment programs. If a number of land development programs and projects are co-ordinated, such an integration becomes possible in the metropolitan context. At the same time, it provides opportunities for obtaining a planned pattern of land uses and an adequate supply of urban land with the cost of development internalized in most cases.

306 11. CONCLUSIONS AND EPILOGUE

This final chapter of the Thesis provides an overall summary, conclusions and recommendations of the study. Chapter 7 provided a brief summary of the existing situation and limitations of current land development and planning activities, leading to an adoption of a land management system in the Valley. Chapters 8,9 and 10 focused on some of the main features of the system and the measures for establishing it in the Valley. The focus of this Chapter, therefore, is to recapitulate matters covered in previous chapters. This is done by reflecting on the three "Priority Issues" and the four "Objectives of the Study", which were outlined in Chapter 1.

During the preparation of this Thesis, significant political and administrative changes occurred in Nepal. Although these changes were highlighted in the Preface and also in later parts of the Thesis, their possible influence on the implementability of the Thesis' proposals are briefly summarized in this Chapter.

The overall conclusion of the study is that opportunities for guiding the Valley's future urban growth through conventional planning mechanisms are limited and that a new approach to urban development should be adopted. An improved land management system (LMS), for guiding planned urban expansion and providing adequate land supply, is suggested. Such an LMS is then formulated for adoption in the Valley.

11.1 Reflecting on Priority Issues

Three priority issues needing attention with regards to urban development activities in the Valley, more specifically the land development activities, have been identified in Chapter 1 (refer, 1.6). These being:

307 2. Recognizing that the government institutions responsible for providing the key network infrastructure of roads, water supply and electricity, also influence and contribute to urban land development, then how can the timing and location of their construction works be co-ordinated so as to achieve optimum utilization of scarce resources and also to give direction to urban land development?

3. Recognizing that some kind of planning and development authority is required for undertaking co-ordinating and regulatory functions in the Valley, then how can such an agency be strengthened (or set-up) with adequate legal and organizational powers and the necessary expert manpower and financial resources?

A brief summary of how the above priority issues were addressed in the Thesis follows.

11.1.1 Encouraging and Guiding Private Sector's Land Development Works

Most urban land in the Valley is privately owned and privately developed, and any system which tends to heavily interfere with this established practice has little chance of succeeding. The literature review in Chapter 2 highlighted a number of limitations with land development systems currently operating in most Asian cities and suggested the development and adoption of a mixed private and government land development system in the Valley.

Under this system, most land would still be developed by the private sector, but the government would participate positively to implement official land use plans and to augment land supply by installing key network infrastructure mains in urbanization promotion areas and by undertaking selective land development projects. In this system, the government acts as a regulator and facilitator, and encourages the private sector in land development while it also undertakes some land development activities, especially to fill in the gaps left by the private sector.

308 This can be achieved by adopting a land management approach to urban development rather than relying exclusively on regulatory measures to guide urban expansion (refer, 11.2.3 and 11.2.4). Experience in the Valley shows that a large number of urban problems have a bearing on the way land is being developed in the private sector as numerous scattered individual small projects, mainly through the activities of land brokers (refer, Chapters 3 and 8).

The corrective measures required to address these problems require actions across all fronts of the proposed LMS, such as making institutional reforms, planning of urban development in the Valley, initiating phased urban expansion programs, co-ordinating the provision of infrastructure, regulating and directing urban growth, and ensuring adequate urban land supply. These aspects have been dealt with in Chapters 8 and 9. Providing incentives to the private sector and regulating its land development activities (such as, through bringing land brokers into the main stream land development process, instituting unified land subdivision and building permit issuance system, and encouraging wider participation) have been discussed in Chapter 10.

11.1.2 Co-ordinating Provision of Infrastructure

It is recognized that the government agencies responsible for providing the key network infrastructure of roads, water supply and electricity, can influence and contribute to urban land development. An assessment of the operation of these agencies (as discussed in Chapter 6 and summarized in 11.2.2) shows that they have not been effective in guiding the course of urban land development. The main problems appear to be related to inadequate finance and institutional constraints.

These three agencies have been created under different statutes, so that their decision making hierarchy, their priority works, their plans and programs, and their funding pattern are all different and not related to one another. This has brought about a number of co-ordination problems in the timing, pace and direction/location in the delivery of their services (refer, Chapter 1). Due to lack of any effective control over budgetary allocations, the National Planning Commission as an apex body to sanction

309 all programs and projects of line agencies and the KDC as a planning and executing agency for urban development in the Valley, have been largely ineffective in securing the required co-operation and co-ordination from these three main network provision bodies to provide guidance to both public as well as private sectors for urban expansion and land development activities.

As discussed in 8.2.3, for land development to occur in a planned manner, where and when the Government thinks appropriate, public investment in infrastructure should be guided and co-ordinated to fulfill urban development and land supply objectives. Initiatives to be taken in this regard include, preparing a physical expansion framework to guide public investment in infrastructure as well as to direct private initiatives in land development, establishing institutional arrangements to achieve co-ordinated efforts in enforcing regulations, guiding developments and providing advisory services to citizens, and undertaking land development through organized private/public land developers to ensure planned development and adequate land supply. The actions required to further these initiatives include, preparation and adoption of a new metro-level plan for the Valley, preparation of a phased urban expansion program with staging of services provision, co-ordination in the provision of services, formulation of land development programs, and co-ordination of land development projects in both the private and public sectors.

The maximization of sectoral powers for the provision of services through greater inter-agency co-ordination is expected to be achieved by adopting the proposed institutional arrangements as discussed under Section 8.1 and summarized later in 11.1.3. Further discussions on issues, such as co-ordination aspects, generation of additional finance by tapping some of the relative land value increases, and equity implications of cost recovery policies, have been made in Chapter 9.

The proposed KVDA's functions in relation to co-ordination tasks include the following:

to prepare physical, economic, and social development guidelines for the Valley as a whole in collaboration with sectoral agencies and local political units;

310 to serve as the co-ordinating body for programming and budgeting of urban development programs of the Valley; and to make locational decisions for all major public and private development projects in accordance with the Valley development plan.

The KVDA would be linked with the National Planning Commission (NPC) and the Ministry of Finance (MOF) on a program basis. The creation of Urban Development Units within the NPC and the MOF would help to define the financial requirements of sectoral agencies for urban development purposes and co-ordinate their programs and budget allocations. At a later stage, the adoption of the CIF mechanism by the KVDA management board may be considered in order for it to help select priority projects requiring public sector budgetary allocations.

11.1.3 Establishing Planning and Development Authority

Urban development is a multi-sectoral phenomenon where co-ordination in the activities of various agencies and participants is desirable to achieve an efficient and orderly urban development.

An assessment of co-ordinating roles played by existing agencies (refer, Chapters 1,5,6 and 8) shows that there is a pronounced lack of co-ordination among various agencies entrusted with responsibilities to develop and provide infrastructure facilities and services in the Valley. As the planning authority, the Kathmandu Valley Town Development Committee (KDC) has not been successful in its primary roles of both co-ordinating the development activities of different agencies due mainly to its ineffective control over sectoral budget allocations, and regulating public and private land development activities due mainly to its weak administrative and legal base and the poorly drafted development control measures and their ineffective implementation.

The deficiencies in the existing institutional set-up for urban planning and development in the Valley have been highlighted in Chapters 1,5,8 and 9. The inability to knit sectoral agencies in a co-ordinated manner and the present land development process,

311 have been identified as the main causes of many of the problems related to urban and land development. These problems need to be addressed simultaneously by devising a co-ordinating mechanism for providing services and by effectively bringing all land development practices under a regulatory framework.

Following an assessment of recent Government initiatives in these areas and considering the experience of the Asia-Australia region with respect to institutional arrangements for urban development, an institutional set-up, which knits together existing key agencies and incorporates an expanded role of the KVDA (which has been under Government's consideration for some time), is proposed for planning, co-ordination and development. The expanded role of the KVDA, as discussed in Chapter 8, includes the preparation of co-ordinated land development programs, the undertaking of selective land development projects, the establishment of a land market and supply information system, and using the KVDA as a forum for wider deliberations on all matters related to urban development in the Valley.

In undertaking its regulatory functions, as discussed in Chapters 9 and 10, the KVDA would need to prepare a metro-level plan for the Valley, prepare staged urban expansion program, formulate simple and realistic development control measures, institute a unified system of land subdivision and building permit issuance system, and provide guidance and support to the private sector in land development. The KVDA would need adequate legal and administrative powers and the necessary expert manpower to undertake the above tasks. Ways of providing the necessary support to the KVDA have been discussed in Chapter 9 and briefly summarized in 11.2.4.

11.2 Reflecting on Objectives of the Study

As noted in Section 1.8 earlier, the general objective of the study was to formulate an LMS to guide urban expansion in the Kathmandu Valley so as to achieve planned urban development and adequate land supply. For this, the four operational objectives were:

312 1. To review the land development system currently operating in the Kathmandu Valley, to identify its main features and to assess its strengths and weaknesses.

2. To review and assess the government involvements in this land development process and its existing measures for guiding/controlling urban development and land use in the Valley.

4. To assess constraints and opportunities in adopting the proposed system and to show how it could be modified to fit with local situation in the Valley.

11.2.1 Assessment of Urban Land Development System

Three land supply mechanisms have been identified in the Valley (refer, Section 3.7). These being:

Land supplied under informal land development process, in which land brokers play a pivotal role in establishing internal road networks; Land supplied under formal or organized land development process, in which a formal agency, government or a private company, acquires land, develops it, and sells the plots to buyers; Land occupied under the squatter development process, in which poor families occupy public or non-registered land illegally to build simple shelter.

The urban fringe land in the Valley is heavily fragmented, and apart from rudimentary access usually through a trail, other services are generally not available. A system of dual ownership of land prevails, with the sitting tenants having a significant interest on land (refer, Section 4.2).

313 The assessment of informal and formal land development processes shows that most land development and supply since 1970's has been taking place in an informal way through the activities of land brokers. Although, a pragmatic approach, this informal process is unregulated, so that land development takes place at random, even on flood plains, without any systematic layout. The access roads are usually irregular, ziz-zag, follow property boundary of necessity and contain numerous bends.

The development of residential land through the formal process has been quite limited in the Valley. Although there are indications of a private sector interest in this field, it has yet to embark on any major land development projects. The experience with public sector residential land development has been limited to the three sites-and-services schemes at Kuleswor, Dallu and Galfutar. However, the public sector's share of the overall residential land development between 1971 and 1981 has been only about five per cent.

In summary, due to the insignificant role played by organized (commercial) private sector land developers and the limited government land development activities, most of the urban land and housing development is undertaken in the private sector as numerous scattered individual small projects, mainly through an informal land development process with the help of land brokers. Low density urban sprawl, incompatible land uses, encroachment onto agricultural lands, haphazard urban growth, and lack/inadequacy of services have been the results of this process.

The Government took some initiatives in 1988 by announcing a 'Land Development and Conservation Scheme' with a view to restrict development in flood plain and low-lying agricultural areas, and to promote and encourage planned urban expansion and development in designated areas of the Valley by undertaking a few GLD and LP/R projects (refer, 8.2). Although these initiatives signify the Government's serious intention to introduce planning control or guidance of urban development and land use, their assessment shows that there are serious constraints to their effective utilization and some major flaws in the approach to introduce the land development techniques (GLD and LP/R) to the Valley. These reflect, to a large extent, the continuation of the practice

314 of ad-hocism in planning.

11.2.2 Assessment of Government Role in Land Development

Most land in the Valley is privately owned and privately developed but the government participates in the development process through the provision of network infrastructure (public roads, water supply and electricity supply) and through a statutory planning control system designed to regulate urban development in the Valley.

The provision and extension of network infrastructure influences the direction of urban growth by encouraging land and building development in proximity to its location. Government agencies responsible for the provision of these infrastructure works and services are the Department of Roads, Department of Water Supply and Sewerage, and Nepal Electricity Authority, respectively.

The government land development in the Valley has always been limited and the bulk of the urban land and housing development has been undertaken in the private sector through numerous individual small projects in an informal way (refer, 11.2.1). This process has given rise to a number of problems, as noted above.

From an assessment of the operation of these agencies, it is found that the provision of electricity supply was adequate but the provisions of public roads and water supply and drainage were not. Indications were that expanding infrastructure facilities for

315 future population growth would be problematic except perhaps for electricity supply. Further, although the electricity and water supply agencies had future plans and programs to extend their services in the Valley, the Department of Roads had no such plan prepared to date.

The major problems in the inadequate provision of infrastructure have been identified as the lack of finance, lack of clear responsibility, lack of future plans and programs, lack of co-ordination, and lack of public participation. In the main, these problem areas relate to inadequate finance and institutional constraints.

The development of the Valley has always been accorded a high priority by the Government. Since modem urban planning has a relatively short history in Nepal, the various components of the planning machinery are, however, still evolving. The Government established the KDC and adopted the Valley Development Plan in 1976 to guide the growth and development of the Valley and the use of urban land through land use planning control system. From an assessment of the current planning system (refer, Chapters 4 and 5), it is found that current planning efforts have not been very effective in guiding urban development in desired locations resulting in a number of serious problems. These include: haphazard and unplanned urban sprawl, encroachment onto low-lands and agricultural belts, incompatible land uses and violation of regulations, inadequate provision of urban infrastructure and services in new housing areas, rapidly increasing land values and declining affordability of residential land, deteriorating housing situation, and unco-ordinated sectoral works resulting in piecemeal and ad hoc urban development activities.

These urban land and development problems in the Valley are serious and most of them have been officially recognized and acknowledged. Major reasons for the failure of planning activities can be attributed to:

the reliance on negative control mechanism as a means to implement the official land use plan rather than the adoption of a more positive government action to provide guidance and direction to urban growth;

316 the limited administrative capability of the KDC and its week legal base to effectively control haphazard urban growth; the shortage of funds for the provision of infrastructure and facilities; the lack of inter-agency co-ordination in the timing, pace and delivery of physical and social infrastructure; the negligible efforts to bring more developable land in the market. The shortage of development land in accessible locations encouraged excessive encroachment onto low-lands and flood-plains close to built-up areas; the inability to tap the tremendous potential available through citizens' participation in urban development works; and the corrupt practices among officials in the use of discretionary powers in carrying out planning duties.

11.2.3 Formation of a Land Management System

As the conventional planning mechanisms have failed to achieve the intentions of guiding the growth and development of the Valley, more effective measures are needed. The literature review (refer, Chapter 2) shows that experience elsewhere in Asia also depicts a similar picture. The review highlighted a number of limitations with current land development systems and suggested the development and adoption of a mixed private and government land development system in the Valley adopting a land management approach to urban development.

In order to achieve the objectives of planned urban expansion and adequate land supply, the Thesis formulates a metropolitan land management system designed to monitor and co-ordinate the various land development projects being undertaken and to initiate such additional projects that are needed to fill the gaps. A brief outline of the LMS is presented schematically in Figure 7.2 (refer, Chapter 7).

In the system, a responsible authority, equipped with necessary powers and resources, operates as a metropolitan planning and development authority with responsibility to ensure planned urban development and an adequate supply of urban land. Various land

317 supply programs are initiated both for opening up land for planned urban expansion as per metropolitan strategy and for bringing adequate quantity of serviced land onto the market. The extension of main roads and trunk utility mains is geared towards developing land in urbanization promotion areas. The provision of physical infrastructure (e.g. public roads, water supply, drainage, and electricity supply) and social services and facilities by various government agencies is co-ordinated. Additional funding for servicing new areas is obtained by capturing some of the land value gains generated by the provision of such services.

The LMS offers significant benefits to all those concerned with urban and land development and to project landowners and tenants having interest in land. Table 7.1 summarizes the major roles/interests of principal participants of the system and the benefits available to them.

318 11.2.4 Proposed Measures for Adopting the LMS in the Valley

Although the overall LMS accommodates some 11 measures and techniques (refer, Section 7.4), focus is placed on some of the key elements of the system (e.g. co-ordinating mechanisms, institutional arrangements, adequate funding arrangement for the provision of infrastructure, and the use of the GLD and the LP/R techniques). However, it is noted that the adoption of the LMS in the Valley requires action across all sections of the system, and these have been discussed in Chapters 8,9 and 10.

In the latter parts, the Thesis describes the proposed arrangements necessary for adoption of the LMS in the Valley; discusses constraints and opportunities in adopting the system and its various techniques and measures; suggests how these can be modified to fit in with local situation, taking account of recent government initiatives and political changes; and shows how these measures improve opportunities for plan implementation in the Valley.

In summary, the proposed measures for adoption of the LMS in the Valley include:

The establishment of an institutional set-up, incorporating an expanded role of the Kathmandu Valley Development Authority (as a land management authority) is proposed for taking over planning, co-ordination and development tasks. The expanded role of the KVDA includes the preparation of co-ordinated land development programs, the undertaking of selective land development projects, the establishment of a land market and supply information system, and using the KVDA as a forum for wider deliberations on all matters related to urban development in the Valley.

319 Until such time that the KVDA is duly established, the KDC and the current Planning Law of 1988 will be the principal instruments of urban planning and development in the Valley. Therefore, further improvements in the Planning Law are desirable, especially in relation to sectoral co-ordination, project implementation procedures, and fiscal administration.

The GLD and LPIR should continue to be adopted as innovative means of land development, by improving the techniques for adoption and by using them in combination, as suggested. A number of ways of encouraging wider participation from concerned groups (landowners, tenants, land brokers, developers, and the community) are highlighted and a framework for implementing land development projects is suggested, which is based on the Government taking a lead role and making political commitments to achieve intended results.

Encouraging and assisting land brokers and private developers, and instituting a unified subdivision and building permit issuance system are suggested as mechanisms for formalizing informal land development activities. The use of GLD and LPIR in combination is suggested as a mechanism to facilitate project implementation helping to obtain planned land use patterns and increasing the supply of urban land.

320 Obstacles to implementing GLD and LPIR are identified and measures to handle them are suggested. Experimenting with a few pilot projects is suggested for demonstration purposes and for gaining experience with these techniques.

Also, the need to consider policy implications from a wider perspective is highlighted. These include, equity implications and political issues of cost recovery and the desirability of integrating land development programs with employment programs. It is noted that if a number of land development programs and projects are co-ordinated, such an integration becomes possible in the metropolitan context. At the same time, it provides opportunities for obtaining a planned pattern of land uses and an adequate supply of urban land with the cost of development internalized in most cases.

11.3 Implications of Changed Political Situation

It was noted at the Preface to the Thesis that the study, generally, analyses information obtained until July 1988. Therefore, the operation of the new planning law, which came into force in November 1988, has not been covered, although an assessment of its salient features appears in Chapter Nine.

Two other events of 1988 have not been covered in the Thesis: the enactment of the Kathmandu Valley Development Authority Act, 1988, which has not yet been enforced and the creation of the Department of Building and the Department of Housing and Urban Development from the previous Department of Housing, Building and Physical Planning (DHBPP). Throughout the Thesis, the DHBPP has been referred to as 'the Department', which no longer exists, although the proposed institutional setting of the KVDA in Figure 8.1 refers to the newly created Department of Housing and Urban Development.

321 democracy in Nepal in April 1990. A new Constitution of Nepal was promulgated in November 1990, which replaced the previous Constitution of 1962. General elections for parliament were held in May 1991 and the popularly elected Nepali Congress Government was formed in June 1991. Planning activities have been slow during the transitional period since 1989. However, the following activities should be noted: considerable experience has been gained with the implementation of GLD and LPIR in Greater Kathmandu (an assessment of these land development activities has been made in Chapter 8), and the 'Kathmandu Valley Urban Development Plans and Programs Report' has been issued (a reference to the progress of this work has been made in Section 10.7).

Since a major part of this Thesis was completed before the above-mentioned political changes occurred in Nepal, the administrative, legislative and political arrangements under the old panchayat system appear intact in the Thesis, as if they still existed. Although recent political changes and opportunities provided by the new democratic system are highlighted in the adoption and implementation of the proposed land management system, the analysis of the existing situation is confined to the planning system which operated under the panchayat system. However, the following changes should be noted: presently, there is no town or village panchayat, but any reference to either of them should be understood to mean a reference to a local government; the previous unicameral legislature, i.e. Rastriya Panchayat, does not exist, instead, there is a bicameral legislature; and the previous zonal administration and the position of zonal commissioner have been abolished.

As the new democratic set-up and the elected government get established over a period of time, significant legislative changes are likely to be made. The Government's major emphasis is likely to be on the genuine "participatory" approach to development, which will be different to the one generally prevailing during the panchayat period. However, this positive likelihood should be taken with a word of caution.

In order to satisfy expectations associated with the new found freedom and aspirations of party workers and sympathizers (who remained subdued for three decades), the

322 Government may, at times, take decisions on grounds of "favoritism". As noted in Section 10.8, the practice of "favoritism" can act as a constraint on development. This will be unfortunate but perhaps unavoidable in the circumstances. Nonetheless, the general situation is likely to be more optimistic for development endeavors and innovative ideas.

The democratic and consultative role expected to be played by the KVDA is in line with the Government's desired development options based on decentralization policies. The KVDA and its land management approach to development has a greater chance of succeeding in the Valley, because it builds on the existing socio-administrative and political arrangements, and thus, is likely to receive support from the Government and other interest groups. For example, KVDA's co-ordinating role would include (refer, Section 9.1):

maximizing inter-sectoral powers, rather than competing with sectoral agencies, in providing infrastructure for guiding urban land development; and

encouraging wider participation from all those concerned with urban development.

As noted in Section 9 .2, the recent political changes resulting in the re-emergence of multi-party democracy in Nepal may further create opportunities for greater inter agency co-ordination through consultations, negotiations and persuasions and for greater popular participation in land development.

This provides an excellent opportunity for adoption of the proposed LMS, which provides avenues to safeguard the interests of all concerned groups and relies on their active participation to implement its proposals.

323 APPENDIX A: URBAN LAND POOUNG PROJECTS IN POKHARA

Situated at a distance of about 200 km west of Kathmandu by road, Pokhara enjoys an economically strategic location in the Western Mid-hills with good road and air connection to Kathmandu and other parts of the country (refer, Figure 1.1). It is an important urban center in the area. Its main functions are tourism, administration and trade. Pokhara is the designated Regional Center of the Western Development Region (one of the five such regions in the country). Administratively, Pokhara is both a zonal (Gandaki) and a district (Kaski) headquarters. [1]

Based on fieldwork in Pokhara in June 1988 and discussions with planning and implementing officials as well as with panchayat leaders, this Appendix reports on land pooling projects undertaken in Pokhara. The writer also obtained the opinions and suggestions of the project landowners through separate interviews. However, the data and information presented here must be viewed with caution. Rather than being precise, the purpose of exploring Pokhara's experience with land pooling projects is to understand how the technique was used there and what lessons could be learned from them. It was difficult to get full information about the projects, because all project related documents were not available, and in some cases, relevant information was not documented. Therefore, the writer often had to rely on incomplete information, and memories of the planning and implementing staff and of project landowners.

This Appendix briefly describes the urban land development situation in Pokhara in its institutional setting before presenting two case studies on the Pokhara experience with urban land pooling. The final part identifies the main problems in the case study projects and notes lessons which could be learnt from them.

1. Discussions in this Appendix relate to information obtained until June 1988. Therefore, it does not cover discussions of the new Planning Law which came into force in November 1988, and other changes which occurred following the collapse of the Panchayat System and the emergence of multi-party democracy in Nepal in April 1990.

324 A.l Urban Land Development in Pokhara

The town grew from 3,577 inhabitants in 1953 to 46,642 in 1981, more than thirteen-fold increase in less than three decades. Between 1971 and 1981, Pokhara grew at an annual rate of 8.5 per cent. The 1987 population of Pokhara Town Panchayat (PTP) was estimated at about 71,000 persons which was expected to grow at 5.5 per cent annually through 1987-2002 period to reach a population of 158,470 persons in 2002 (MSTP, 1987:46-51).

A.l.l Institutional Arrangements

The government approved the Physical Development Plan for Pokhara in December 1973 through the provisions of the Town Development Plans (Execution) Act, 1973. The Pokhara Town Plan Implementation Committee (TPIC) was also created to implement the 1973 Plan. The TPIC jurisdiction covered the whole of the planning area, i.e almost all of the Pokhara Valley, accommodating some 59,417 persons in 1971 spread over an area of 180 sq km (DHBPP, 1974). The Pokhara TPIC is headed by the Gandaki Zonal Commissioner as chairman with three vice-chairmen and 12 other members including the Senior Planner of the Pokhara Physical Planning Team. The Planning Team is an organ of the Department of Housing, Building and Physical Planning (DHBPP), which was set up to provide the necessary planning inputs to the TPIC during the course of plan implementation.

A.1.2 Land Development Activities in Pokhara

Prior to 1973, public land acquisition and development activities in the town were mostly routine, such as those required for sites for government premises, and sites for public and social facilities. Following the approval of the 1973 Plan, the TPIC needed to acquire large chunks of land in different parts of the town so as to implement public sector components of the land-use plan for Pokhara. For example, the 1973 Plan designated some 145.75 hectares (ha) of land for a government center and staff housing areas, out of which nearly 56 ha were proposed for compulsory acquisition.

325 Between January 1974 and June 1985, the TPIC compulsorily acquired about 143 ha of land, and developed most of them. A 'Revolving Fund' was created for the TPIC during 1976-77 with initial government contribution of Rs 2 million.

Besides such massive land acquisition activities, other development projects initiated by the TPIC included buildings and road construction, and projects related to the preservation and improvement of the environmentally sensitive areas.

Despite lack of legislative framework to guide the formulation and implementation of land pooling/readjustment (LPIR) schemes in Nepal, four such projects have been undertaken in Pokhara- three government and one privately initiated. The Pokhara TPIC has so far used the land pooling concept at three places, two for opening new roads, and one for creating a new bus station, as shown in Figure A.l. The 1973 Planning Law authorizes the TPIC to perform all functions related to town planning, and there are powers for regulating the construction and development activities, and for compulsory land acquisition, but there is no mention of LP/R in the 1973 Act. So land pooling projects have to be implemented through the negotiated agreement and co-operation of the landowners, all of whom have to voluntarily transfer their land to the TPIC. Landowner agreement is achieved partly through project benefits going to each landowner, partly by negotiating the plan of subdivision and the final plot distribution arrangements, partly by appealing to the landowner's community spirit, and partly by showing government's administrative powers (e.g. threat of compulsory acquisition).

A.l.J Land Pooling Projects in Pokhara

The TPIC had been active in initiating large-scale land acquisition programs since 1974. Its initiatives to begin development works in notified areas prior to the completion of the land acquisition procedures faced serious opposition from the public, so that construction works at some places had to be delayed, such as those at the government center. Thus, when it wanted to open up land in the Chipledhunga area by constructing a new road in April 1975, as profit making development project by

326 ·------Figure A. 1 :Land Pooling Projects in Pokhara

...~ __....:...__;- .... ·-· CatS 1110 UICI UW' It"

' I ' ' ' \ ' ' \

...... ' ) / t,"'

~ --·- IIQI --··--·. li"l ·-· ..-- I···-· ~~l ~ Chipledhunga Road Project ~ ~ ~agdhunga - Khahare Road Project It ~ Bh3irabsthan Bus Station Project ~ ~ Privately Initiated Road Opening Project .______.S;uC.AOU-.;.P.l..S: e._:_ .l'.Qk.,h a r 3 TP I c 19 es .

327 excess condemnation of land, it did not receive cooperation of concerned landowners. So, it decided to use the land pooling technique to involve landowners as partners in the development process. Initiated in January 1975, the Chipledhunga Road Project is a linear development project which covered some 13 ha of land in a strip 91.5 meters wide for the whole 1.5 km length of the new link-road (refer, Figure A.2). The scheme consisted of making a 30.5 m wide metalled road with plots of 30.5 m depth on each side of it. The co-operation of landowners was obtained in implementing this pooling project. All lands in the project area were dedicated to the TPIC free of cost, which upon subdividing and servicing was to be used as follows: 50 per cent to be returned to landowners, 33.3 per cent for the road, and the remaining 16.7 per cent to be kept by the TPIC to finance the project costs.

The positive results of land value increases due to the new road, as shown by the Chipledhunga project, and the initial lessons learned there was soon followed by the undertaking of a second land pooling project for the 3.3 km long Nagdhunga-Khahare road in September 1976. This linear scheme comprising 76.2 m wide strip of land for the whole length of the road, consisted of making a road of 15.2 min width with plots of 30.5 m depth on each side of it. The TPIC revised the plot distribution formula in this project to facilitate the implementation works; the landowners were to receive 60 per cent of their land back in the form of serviced plots, some 20 per cent would be for the road, and the remaining 20 per cent was to be retained by the TPIC to meet the project costs. Although land for the roadway was obtained free of cost, only about half of the project landowners actually parted with the required 40 per cent of their land.

These two projects had great impact on land values in the project areas and adjoining properties. The local people also realized the importance of an access road in enhancing land values. This positive recognition encouraged some landowners at the Bhairabsthan area to come forward in December 1981 and offer more than two hectares of land to the TPIC free of cost to establish a new bus station in that area (refer, Figure A.3). The TPIC was to service and develop the land by providing a driveway and making a bus-parking area, by extending the water and electricity lines there, and by

328 creating building plots of 22.87 m depth on all sides of the bus-park. Then, it was to return some one-third of the original land area in the form of serviced plots to landowners, designate the site as a bus station, and retain some plots to finance the project costs.

The TPIC received good co-operation from the Cadastral Survey Maintenance and Land Registration Offices in implementing these projects. The double title transfers were done at a little cost by fixing low land values. The cadastral survey maps of the sites were reasonably accurate with good information on land parcels and landowners. Since there was only one tenant in the Bus Station project area, there was no tenancy problem in these projects.

The project sites were largely undeveloped with a few small sheds/houses, and were used mainly for agricultural purposes. This situation provided an excellent opportunity for easy replotting of the land parcels. Despite these good precursors, no scheme was prepared with necessary documents and project proposals. [2] There was no cash-flow analysis and no proposals for implementing the infrastructure works. One of the key elements of land pooling schemes, namely the financing of the project costs by raising a short-term external credit funds and the prompt repayment of the loan through the revenue generated by the quick sale of building plots, was missing in all projects.

Many problems were encountered during the implementation of these projects. Two of the three projects undertaken by the Pokhara TPIC, i.e. the Chipledhunga Road Project and the Bhairabsthan Bus Station Project, are presented as case studies below.

A.2 Cbipledbunga Road Prqject Case Study

The Chipledhunga Scheme is a linear development project of opening up a new parallel road to the airport-Mahendra pol road with commercial plots on either side of it.

2. TPIC staff remarked during discussions in June 1988 that if there was a scheme, it was probably confined to the Senior Planner's mind.

329 A.2.1 Initiation of the Project

Following the TPIC's January 1975 decision to co-operate with the Pokhara Town Panchayat in opening up a new road in the mixed residentiaVcommercial area, the 1.5 km long Chipledhunga Road project was conceived with proposals to acquire 91.5 m wide project land of some 13 ha in area, developing it by constructing the road and providing essential services, and then reselling the serviced plots in the market. Financing of the project was to be met by using loan money budgeted for land acquisition in Pokhara, which was to be repaid when revenue from the project would start accumulating through the sale of some of the serviced plots.

There was strong opposition from landowners to the TPIC's land acquisition moves. The TPIC could not dare to use its compulsory acquisition powers to acquire the project land for commercial development, because there was the case of a recent court defeat for the acquisition of land by the DHBPP in Kathmandu for the Kalimati housing scheme (Acharya and Kammeier, 1986/87: 180). So, land acquisition for the scheme could not proceed immediately and the funds available at the Zonal Commissioner's Office were inadequate for the market purchase of the scheme land for which nearly Rs 2.1 million was required. In order to hide its embarrassments and to implement the project proposals, the TPIC decided to obtain the co-operation of the landowners by inviting them to participate in a land pooling scheme.

As discussed earlier (refer, A.1.3), the fresh land pooling proposal required landowners' participation in surrendering their land to the project and in agreeing to receive half of their land area in return in the form of serviced plots.

There was opposition to this new proposal also. Most farmer-landowners from the middle portion of the scheme area were happy with the good income which they used to derive by reaping three harvests a year. So, many of them showed less interest in joining the scheme because they were unaware of the commercial potential of their land after the implementation of the project. Upon persistent efforts, persuasion and motivation by the Zonal Commissioner, other government officials and local political

330 leaders, landowners agreed to participate in the pooling scheme.

A.2.2 Agreements on the Scheme

Negotiations between officials and landowners began soon after the TPIC offered its new land pooling proposals in November 1975. A number of meetings, mostly informal, with the landowners culminated in an agreement in May 1976 to implement the project.

Under the agreement, of the 129,427 sq m project area, 64,713.5 sq m of land would be returned back to landowners, 43,142.3 sq m was for the road, and the remaining 21,571.2 sq m to be held by TPIC. The TPIC would bear all responsibility for developing the land and title transfers. The plots were to be of a minimum 10 meters in width and increasing at the 5 m intervals (i.e. larger plots would have widths such as 15, 20, 25m). It was also agreed that a landowner would receive at least a plot of 305 sq m in area (10m by 30.5 m) if the area of his land included in the project was 288 sq m (9 .miM) or more. A landowner, with less than 288 sq m land in the project, was not entitled to a plot. The landowners were required to construct buildings on plots within one year of receiving them as per the model plans to be made available by the TPIC. However, the agreement contained neither financial plans nor the time-frame for the completion of the project proposals by the TPIC. The original land parcels and final plots lay-out are shown in Figure A.2.

Since this linear road project had the project land in a strip of 91.5 m in width, not the whole area of all land parcels touched by the scheme boundary were included in the project. Of the 23.3 ha of land parcels touched by this scheme, only 129,427 sq m (55.6 per cent) was included in the project. The proportion of land parcel included in the project varied from 0.84 per cent to 100 per cent of the parcel area. There were in total135 original land parcels included in the project belonging to 109 landowners, which were kept in 107 landownership records.

331 t 5 0.. ~ ~~~t- w r w I\) ORIGINAL LAND PARCELS 0f v~ 5: ~

FINAL PLOTS LAY-OUT E3 PROJECT BOUNDARY

0 50 100 ZOOM CHIPLEOHUNA ROAD PROJECT I I I I $

Figure A.2: Chipledhunga Road Project Source: Pokhara Town Planning Office. 1988. A.2.3 Implementation of the Project

Although the TPIC wanted to realize the financial benefits of this project, it was slow in implementation. On landowners' objections, it decided to give a 10 m wide plot (i.e. 305 sq m) to any landowner whose land included in the project was up to 8 anas (254.5 sq m) in area. But it was indecisive on the question of smaller land parcels included in the project. It was apparent from the beginning that TPIC wanted to reap all financial benefits of the project. The Rs 200,000 loan fund obtained from the Zonal Commissioner's Office was not entirely spent on the project. The TPIC made frequent requests to concerned line agencies to provide the road, water supply and electricity supply lines in the project area. There were increasing pressures from the landowners to provide the necessary infrastructure. But it could sell plots from the project to generate revenue only after the land was serviced. Although such a policy on the sale of plots was again confirmed by a TPIC meeting in July 1977, it deviated from this policy many times by selling plots before services were provided. It was, nevertheless, reported that those facilities (road, water and electricity) were extended to the site by the time the settlement began to take shape.

In early 1979 the TPIC began to distribute plots back to the landowners. Some landowners did not receive their full 50 per cent land share back, because of the fixed plot sizes, while others, whose lands were less than 8 iDlM. (254.5 sq m), neither received any plot in the scheme nor any compensation for the land loss. In the initial period, as increases in land values were modest, landowners did not complain if they did not receive the full share of their land. Later, when land values began to appreciate rapidly in the project area, such landowners began approaching TPIC to get land back as per the share or some reasonable adjustment for their land loss. A number of offers made by TPIC to solve these problems from May 1979 did not satisfy the landowners, so that in October 1981, it decided to compensate for land loss by giving the required area in a regular sized 10m width plot, and the concerned landowner or his nominee was free to buy the remaining portion of the plot at the set price of Rs 65.6/sq m. But this rate was very low compared to the average land price of Rs 118.1/sq m obtained through auction sale in January 1979. Some interviewees in

333 Pokhara suspected that in a situation when TPIC was acting against its financial interests, the landowners' pressures probably caused financial temptations to some of the Committee members.

In the meantime, some of the landowners (out of the total14) who had only a small portion of their lands included in the project, had already began mutual consultation by forming different groups. When their cumulative land share was big enough to make a regular sized plot, they approached the TPIC to have the plot title transferred to them jointly or to a nominee. Thereafter, they sold such plots in the market and distributed the proceeds. Besides, five of them received individual plots, including a landowner with only 102 sq m of his land in the project (while three others with larger areas received no plots).

Even with these improvements in plot distribution, not all cases of inadequate land returns and non-compensation for land loss were settled. Field interviews revealed that, as of June 1988, there were still as many as 51 landowners who did not receive their full share of land or its compensation.

Gravelling on the road began in 1978 and most of the civil works were completed by 1982. Following TPIC's request, agencies began to extend water supply and electricity lines to the project area in mid-1979 through their own development budgets. For the construction of the road also, the TPIC did not have to make cash expenditures. A semi-government construction company constructed the road, and its bill totalling about Rs 1.9 million was adjusted against its payment due to TPIC on account of its purchase of land at the central corporation zone. Including an estimated administrative expenses of Rs 0.22 million, the total project costs to the TPIC (which exclude the electricity and water supply works) is estimated at Rs 2.45 million. On the revenue side, the TPIC started selling plots as early as in March 1977, and the total revenue generated through the sale of plots (at different dates with different unit rates) was reported to be in the order of Rs 2.2 million, implying thereby that, at least in records, there was a deficit of someRs 25,000 in the project. Table A.1 summarizes the main events of this scheme.

334 Table A1: Time Sequence in the Chipledhunga Road Project, Pokhara

1. TPIC decides to open up a road in the mixed residential area Jan 1975

2. TPIC Engineering Unit prepares the road design Mar 1975

3. TPIC sanctions to implement the Chipledhunga scheme Apr 1975

4. Land acquisition moves by the TPIC and objections from landowners May 1975

5. TPIC proposes a land pooling project Nov 1975

6. TPIC prepares a land pooling scheme Nov 1975

7. Negotiations and agreement on scheme proposals Apr 1976

8. Agreements between TPIC and landowners signed May 1976

9. Implementation of scheme begins Jun 1976

10. TPIC makes changes on plot distnoution approach: lands up to 254.5 Sep 1976 sq m receive a plot of 305 sq m

11. TPIC requests the road, water and electricity agencies to provide Sep 76 to infrastructure and services from their funds Nov 1978

12. Auction sale of fJISt scheme plot for cinema ball site before services Mar 1977 are provided in the project area

13. TPIC reconfirms its policy to sell plots only after the project land is Jul1977 developed by providing services

14. Road construction commenced Apr 1978

15. Distnoution of plots back to landowners begins Early 79

16. Water and electricity supply work commenced Mid 1979

17. TPIC decides on cases of inadequate plot distnbution and Feb 1980 compensation for land loss to smaller land holders

18. Decision to give land in a regular plot to cover the deficit in plot Oct 1981 area at minimum rate of Rs 65.6/sq m

19. Completion of road, water and electricity infrastructure Dec 1982

20. TPIC decides to conduct survey in the scheme area to find out its Mar 1985 assets and obligations

21. 51 landowners still awaiting full settlement with TPIC Jun 1988

Source: Pokhara TPIC Records, and discussions with officials, June 1988.

335 A.2.4 Main Benefits of the Project

The formulation and implementation of this scheme by pooling together lands belonging to different landowners and providing infrastructure by the TPIC has resulted in many benefits. The Pokhara TPIC was able to operate a self-financing project to open up an important link-road for urban expansion and for extension of the existing market center. Although the project appeared to have resulted in a net financial deficit of Rs 25,000, there were enormous planning gains accruing to the TPIC. Even on strict financial terms, the probable revenue through the sale of plots available to TPIC (the 16.7 per cent of the project area) is estimated by this writer to be nearly Rs 4.4 million. This would have produced a clear margin over the expenditures incurred in the project, but for the faulty pricing and plot distribution policy discussed in Section A.4.

The other obvious advantage is of mutual co-operation between the landowners and the authorities, who became partners in progress. This project has a distinct importance on its own right because it was executed with the co-operation of the concerned landowners and the local panchayat. Through this project, the TPIC was also able to demonstrate that there is the possibility to get local support for urban development purposes, and that urban land development works can be implemented by mobilizing local efforts and by effectively tapping some of the related land value increases caused by the provision of services.

On the aesthetic fronts, there is the possibility of obtaining uniformly developed buildings facing the street. By requiring landowners to complete all building development works within one year of receiving the plots, the TPIC wanted not only to realize the timely urban development in a desired pattern, but also to prevent land withholding and speculation on serviced land. However, the TPIC did not enforce this requirement strictly.

Although the scheme landowners were entitled to only 50 per cent of their land included in the project, the execution of this project appreciably increased their land values, from Rs 8-16 per sq m for 'raw' land in early 1975 to as high as Rs 1,192.2 per

336 square meter for serviced land in June 1986. The interviews with landowners revealed that most of them were highly satisfied with the way the negotiation turned out in the end, although some of them were 'not quite so satisfied' in the initial round of talks with the officials. Many of them were highly impressed with the official persuasion for development purposes. This was made possible through the support and constant efforts of the Zonal Commissioner, the Senior Planner, and local panchayat leaders. All but a few of the landowners had no doubt as to the genuine interest and integrity of the officials concerned, although many were dissatisfied with the TPIC's faulty plot distribution policy and the inadequacy of side-drains.

The landowners supported the concept of LP/R and felt that it was possible to apply it in other parts of the town, because people had realized the importance of access roads in increasing land values, yet they suggested to make wider information dissemination and greater efforts to persuade people to support a scheme. All of them supported the idea of making development in-depth rather than linear land development, and suggested that more roads should be opened up. Besides panchayat leaders, they desired to have landowners' representation in project management. People's acceptance of the principle of land pooling was demonstrated by a privately initiated road opening project under progress some 100 meters to the west of the present project site; but it was reported to have been suffering from implementation problems due mainly to the lack of involvement of the public agencies.

A.3 Bhairabstban Bus Station Project Case Study

The Bhairabsthan new bus station project was conceived as a means of giving a boost to the old bazaar area by establishing a new bus station and re-routing some long-distance buses from there.

A.J.l Initiation of the Project

The idea of establishing a new bus station was suggested by the then Gandaki Zonal Commissioner in late 1981, provided local residents could make available about 1.5 ha

337 of land free of cost.

This idea was taken up by local residents, and after forming a 'New Bus Station Management Committee', a site of about 2 ha was selected for the bus station. On receiving consent as to the appropriateness of the site from the Senior Planner of the Planning Team, they began persuasion activities. They persuaded concerned landowners and also motivated those landowners who previously showed no interest, to participate in a land pooling project. Local pressure and the prospects of good commercial value of their land, motivated landowners in joining the land pooling project. After a general consensus was reached, a joint request was made to the TPIC on 1 December 1981, in which the 12 concerned landowners agreed to surrender some 2 ha of their lands for the new bus station site free of cost, and would be satisfied if they received back some serviced plots from the TPIC.

A.3.2 Agreements on the Scheme

Following the TPICs approval of the landowners' joint request, some 30 meetings were held between landowners' representatives (together with Committee members) and the officials over three months and reaching a final agreement with the TPIC on the project on 5 March, 1982. Most of the meetings were informal in nature, meaning thereby that no minutes were recorded. In eight meetings, all the 12 landowners participated.

It was agreed that distribution of land between TPIC and landowners would be in the ratio of 2:1. A uniformity of land values was assumed to prevail throughout the scheme area both before and after the proposed development. The joint agreement signed on 21 March 1982 stated that TPIC would develop the area and return serviced plots having a depth of 22.87 m as far as possible. Landowners were to bear all costs related to registration and title transfers.

338 A.3.3 Implementation of the Project

Both parties were eager to implement the project as soon as possible. Landowners began surrendering their lands to the TPIC immediately, and all transfer of titles was completed by 5 March, 1982. The TPIC Office prepared an 'area development plan' of the bus station, which provided for building sites on all sides of the bus-park, and then it began distributing plots to landowners in June 1982. Figure A.3 shows the original land parcels and final plots lay-out and Table A.2 presents the landowners' lands before and after the pooling proposals.

The 2.02 ha of the project land was divided into 14 original land parcels belonging to 12 landowners. The parcel sizes varied from 67 sq m (one of the parcels of J) to 7,857.6 sq m (K's parcel) averaging about 1,439.6 sq m per parcel or 1,679.6 sq m per landowner. The final plots were to be distributed in the ratio of 2:1, but the actual distribution worked out in the ratio of 2.03:1, so that only two landowners received the exact one-third share of their original land area, the rest receiving slightly less area than they were entitled to. The 18 finally distributed plots to the original landowners totalled nearly 6,651.3 sq min area, averaging about 369.5 sq m per plot. The TPIC received some 10 plots totalling about 1.4 ha in area, some 67 sq m more than its share. The main bus park area covered nearly 11,788.5 sq m, while other plots were in the form of building sites, mostly 10m wide {but one plot was as narrow as 4 m wide).

This writer observed in June 1988 that, except for some minor works, the scheme area was still largely undeveloped. Gravelling works on the driveway and the terminal building were constructed at a cost of Rs 350,000 during the fiscal year 1983-84. The TPIC also spent some Rs 5,000 for extending water and electricity lines to the site, but landowners considered the supply lines to be inadequate for any future need. The initial financing of the project was met by general development budget of the TPIC. Although it sold seven plots totalling nearly 1,394.8 sq m in area on auction in August 1987 for Rs 1,017,239, the money could not be spent on the scheme without HMG's prior approval. The TPIC had proposed a budget of Rs 200,000 in the fiscal year

339 TO BHAIRAB TOLE r. --:::::-----..----._.______..., ___ ..... __ _ _... ___ ..... ___ r--·--·--·---...... ·--...... ,...... __ .__ ...,..

., .., · ·-, w ,j:>o. G i 0 .I { I I J I' i /. i 0 . i i

i i i ·-"'--./. ORIGINAL LAND PARCELS FINAL PLOTS LAY-OUT B SCHEME BOUNDARY ~TPIC PLOTS 0 25 50 lOOM NEW BUS STATION PROJECT I I I I I $

Figure A.3: Bhairabsthan New Bus Station Project Source: Poxhara Town P1anning Office, 1988. Table A.2: Landowners' Transaction Statement, New Bus Station Project, Pokhara

Lands-In Lands-out Area deficit (sq m) Landowner Parcels Area Plots Area % (sq m) (sq m) returned

A 1 1,190.0 1 387.5 32.55 9.3 B 1 1,575.9 1 524.6 33.29 0.7 c 1 155.0 1 51.7 33.33 0.0 D 1 2,521.8 1 824.7 32.70 15.9 E 1 1,325.5 1 433.2 32.68 8.6 F 1 266.3 1 87.4 32.82 1.4 G 1 2,130.3 4 687.7 32.28 22.4 H 2 1,605.7 2 528.6 32.92 6.6 I 1 860.5 1 286.2 33.26 0.6 J 2 401.4 1 133.1 33.16 0.7 K 1 7,857.6 3 2,619.2 33.33 0.0 L 1 264.3 1 87.4 33.07 0.7 TPIC 0 0.0 10 13,503.4 -66.9

Total 13 14 20,154.7 28 20,154.7 0.0

Source: Pokhara TPIC Records, June 1988.

341 Table A.3: Time Sequence in the Bhairabsthan Bus Station Project, Pokhara

1. Joint request from landowners for a new bus station December 1981

2. Joint request from 35 neighboring landowners to maintain the old approach road to the project site December 1981

3. Some land transferred to TPIC by landowners January 1982

4. Landowners reach agreement with TPIC and sign joint agreement March 1982

5. Landowners surrender all lands and its official transfer to December 1981 TPIC to March 1982

6. TPIC prepares an outline pooling scheme Apr-May 1982

7. TPIC starts distributing plots back to the landowners as per the scheme lay-out June 1982

8. TPIC begins to prepare a detailed plan and decides to begin preliminary works accordingly October 1983

9. Gravelling on driveway and construction of terminal building FY 1983-84

10. TPIC fixes the minimum price for a 228.66 sq m regular plot of 10 m width at Rs 55,000 July 1985

11. Auction sale of 7 plots (1,394.4 sq m) for Rs 1,017,239 August 1987

12. The detailed plans still unimplemented June 1988

Note: FY - fiscal year

Source: Pokhara TPIC Records, and discussions with officials at TPIC, June 1988.

342 1988-89 for gravelling the entire bus parking area. Table A.3 presents a brief profile of major events of this project.

A.3.4 Main Benefits of the Project

The joint undertaking of this land pooling project has resulted in a number of benefits. The TPIC received some 13,503.4 sq m of land, i.e. 67 per cent of the scheme area (nearly 1,715 sq mas commercial plots for sale and the rest for bus parking) free of cost and without any legal complications. Besides the land obtained for the bus parking area, the value of commercial plots is estimated at Rs 1,217,000 against its likely expenditures of Rs 555,000 on area improvement. This benefit has accrued to the TPIC for its role as the initiator, the negotiator with landowners, and the land developer.

The landowners received regular building plots, with enhanced development potential and appreciation of value, instead of the earlier irregular agricultural land parcels. The 2.02 ha of their original land valued at Rs 396,000 in December 1981 was converted into 0.67 ha of building plots valued at Rs 4.85 million in August 1987. Although landowners received only about 33 per cent of their land back, the designation of the scheme area for bus station and doing some physical development works there by the TPIC, had enhanced their total land value by about 12.3 times while the unit price of land had increased to about 37 times on the average within five and one-half years.

The planning gains obtained by the TPIC in locating the new bus station for re-vitalizing the economic activities there, the emergence of mutual co-operation between the landowners and the authorities, and the generation of a spirit of team work among staff of the TPIC Office, local administration and local panchayat workers, are other obvious advantages of the project. It also demonstrated the possibility of mobilizing local resources for local development as envisaged by the decentralization policy adopted by the Government.

343 The landowners' discontent with the implementation part was mainly due to the inability to operate long-distance buses from this station, and the failure of TPIC in developing the area although it generated more than Rs 1 million through the sale of project lands. The LPIR technique was thought to be replicable in other parts of Pokhara, provided that the TPIC demonstrated its capability to implement the project proposals in an effective way. The landowners wanted their representation in project management, in making policy decisions, and in allocating and spending the project revenues for developing the scheme land.

A.4 Constraints and Problems

The constraints and problems associated with the realization of these land pooling projects are many, and the advantages were achieved through great efforts. It is apparent that the preparation of a land pooling scheme requires a very careful initial survey of the plots and their assessment, and precise reconstitution in proportion to the benefits received. This has to be done in consultation with the landowners, and is a time consuming process requiring considerable technical and administrative skills. For the Chipledhunga Road project, being the first of its kind in Nepal, there was no precedent for guidance. These projects required great skill in negotiating with landowners, and the constant efforts for persuasion demanded commitment and determination on the part of the officials.

Some of the major problems associated with these projects are: (i) lack of adequate information dissemination about the merits of the projects and the way these were going on so far; (ii) inadequate project preparation, such as the inability to identify priority project works, how money obtained through sale of plots was to be spent, and lack of cash-flow analysis, leading to implementation delays and creating doubts about the financial viability of the projects; (iii) unequal sharing of project benefits among participant landowners; (iv) lack of functional funding in the projects; (v) lack of landowners' representation in project management, leading to implementation problems and delays; (vi) inability to tap the benefits of development spillovers, as reflected in the increased land values in close proximity to the project areas caused by the project

344 proposals; (vii) inability to meet the project intentions; and (ix) problems of linear development. Some of these are detailed out below.

A.4.1 Inadequate Project Costing and Revenue

The development costs associated with these projects, as noted earlier, do not represent the true project costs. In the Bhairabsthan Bus Station Project, project costs were not carefully worked out as the administrative costs of TPIC Office (about Rs 100,000 until June 1987) and the interest payable for cash required to finance the project costs (about Rs 184,000 had the TPIC borrowed Rs 550,000 it was likely to spend on the project in installments in the open market at a rate of 13 per cent per annum for a period of, say, three years) were not taken into consideration. It was also not clear how much money the TPIC needed to make physical improvement in the scheme area. This means that the TPICs financial benefits in this project would be less than the amount estimated earlier.

In the Chipledhunga Road project also, the development costs charged to the project were limited to the construction of road and side-drains, compensation for demolition of two small houses, and some estimated amount of administrative costs. But these costs were not carefully worked out. The costs of supplying electricity and water, and the probable interest payable for any market borrowings for initial financing of the project were not taken into consideration. This means that the TPICs actual expenditure in this project might have been more than the amount mentioned earlier. But there are also a number of serious gaps on the revenue side. If the TPIC would have sold all plots available to it as per the terms of the agreement, it could have generated about Rs 4.4 million (study estimates) through appropriately selling plots by auction sale. This would have probably covered all project costs.

Major reasons why the TPIC could not generate the expected amount of revenue from the Chipledhunga Road project include:

345 A.4.1.1 Faulty Plot Distribution Policy: The faulty plot distribution policy adopted by the TPIC allowed it to give a final plot which was more in area than the portion of an original land parcel included in the project without any cash payment from the landowner concerned (e.g. a landowner was entitled to a plot of 305 sq m even if his original contribution to the project was only a 'raw' land of 254.5 sq m). Also, many landowners either received plots which were smaller than their share of land or they received no plots if their lands were smaller in area. This caused great deviation between the required area to be redistributed and the plot area actually distributed to the landowners, because no landowner was given back a plot of required area as per the terms of the agreement. Since the average percentage of redistributed plot area was 121.16 per cent of the required plot area, many landowners benefitted from such a practice. The TPIC received no payments for distributing 4,807.2 sq m of more land area to 48 landowners than it needed to do so, while the problem of making good for the land loss to 44 landowners of some 3,514.2 sq m of area remained under its responsibility. This problem was aggravated by the fixation of final plot widths, because the plot areas differed by at least 152 sq m between any two different regular plot-widths, which is considerably large to make any reasonable adjustment.

The plot distribution policy was also influenced by including in the scheme only a portion of land from an existing land parcel because of the linear nature of the project. Thus, lands outside the 91.5 meters width were ignored in formulating the final plots. The problems arising from this arrangement are: the finally available plot becomes irregular in shape; the owner of a small land parcel receives no plot in the scheme, while a owner of 254.5 sq m of land receives a full plot of 305 sq m without having to contribute anything to the project; and some landowners are likely to receive back plots of same size, although areas of their original land parcels included in the project may be quite different. This clearly shows the existence of inequity in the sharing of project benefits among participant landowners.

A.4.1.2 Unrealistic Pricing Policy: The TPIC also adopted an unrealistic pricing policy for the sale of plots, so that many plots were sold at less than the prevailing market prices. Table A.4 shows how the TPIC was manipulating land prices in the

346 Table A.4: Official Records of Land Value Changes - Chipledhunga Road Project, Pokbara

Date Frontage x Depth Front width Rate Remarks of plot (m) rate (Rslm) Rs/sqm

Mar 77 58 X 30.5 2,690 88.2 Auction sale for cinema hall site

Feb 78 10 X 30.5 2,000 65.6 Minimum rate set by Committee

Jan 79 124 X 30.5 3,600 118.1 Auction sale of 7 plots

MarSO 10 X 30.5 3,000 98.4 Plot sold to a govt. dept.

Mar 80 10 X 30.5 2,000 65.6 Sold to a landowner who was given a smaller plot before

Jul80 20 X 30.5 2,000 65.6 Sold to a person at minimum rate as his land was acquired at strategic place elsewhere

Jul80 10 X 30.5 2,000 65.6 Sold to a person as a favor for his help in project

Oct 81 10 X 30.5 2,000 65.6 To be sold to a landowner to make the full 50% return

Jun 82 30 X 30.5 273.2 Expected sale price

Oct 83 50 X 30.5 6,000 196.7 Expected sale price Mar 85 570,000/plot 934.4 Expected revenue

Apr 85 <7 X <30.5 34,000/plot Sale price set for small plots

Jun 86 12 X 30.5 408,518/plot 1,192.4 Sold in fiscal year 1985-86

Aug86 <10 X <30.5 8,100 Sale price of plots

Nov 86 10 X 30.5 8,500 278.7 Minimum sale price for regular plots

Source: Minutes of Pokhara TPIC Meetings, Pokhara, June 1988.

347 scheme area. It also gave a large plot worth Rs 976,000 to the PTP free of cost in November 1985 for the Town Hall site, although actual financial deficit was recorded in the project.

A.4.1.3 lnadeQ.Uate Project Preparation: The TPIC did not make adequate initial preparation of the projects. This created a lot of confusion on what procedures to follow; and on receiving pressures from the landowners, it made decisions on an ad hoc basis which quite often went contrary to the interest of the projects. This lack of consistent policy in project management lengthened the project duration period, increased the project costs, and earned bad reputation for the TPIC.

A.4.1.4 lnadeQ.Uate Legal Provision: The lack of legal provisions regulating the undertaking of the land pooling schemes created a number of procedural and administrative problems. Inadequate legal safeguards did not allow the TPIC to obtain land from all landowners who directly benefitted from the project.

A.4.2 Inequitable Sharing of Project Benefits

In both projects, the benefits accruing to participant landowners were not distributed properly. The inequity present in the Chipledhunga Road project was noted above. In the bus station project, the TPIC returned some 33 per cent of the total land in the form of developable plots. But the TPIC was not careful enough on the details; for example, the returned land share should have been 33.33 per cent for all participant landowners. Only two of the twelve landowners received the exact one-third of their land back, all others received less than their share (refer, Table A.2). Since the discrepancy was small, landowners did not realize this problem, because land measurement in Pokhara is usually done by linear measure of plot frontage; but if they do, their dissatisfaction could grow further, which may hamper the future replication of land pooling schemes in Pokhara.

348 A.4.3 Lack of Functional Funding in the Projects

Inadequate legal provisions has prevented the possibility of any functional funding system in LP/R projects in Nepal. Although all revenue generated through the sale of plots and other development efforts of TPIC are credited to a 'Development Fund', the TPIC can not make expenditures from this fund for executing its projects without getting government's approval for which such projects must be included in the annual programs of the government. This process not only delays the execution of projects, there always remains the risk that projects selected and proposed by TPIC may be rejected by the Government.

A.4.4 Inability to Meet Project Objectives

Inadequate project preparation, legal inadequacy, implementation problems and delays, lack of funds, and lack of landowners' representation in project management, have all contributed to TPIC's inability to realize major objectives of these projects. For example, there was a financial deficit in the Chipledhunga Road project, although the TPIC ventured in it as an economic proposition. In the bus station project, contrary to its original intentions, as of June 1988, the bus station was not shifted there (except for some mini-buses operating in local routes, other buses did not use this terminal), and no commercial activity developed around this place.

A.4.5 Lack of Inter-agency Co-ordination

The effects of the absence of inter-agency co-ordination in development activities was demonstrated by impacts of the ongoing Pokhara-Baglung Highway project on the new bus station project. Until pegging for the highway alignment and actual earthworks started in late 1987, even the TPIC, which has a co-ordinating role to play for all development works in the Pokhara Valley, was uninformed of the road alignment. Some of the landowners were on the brink of economic collapse as a result of their participation in the LP/R project, since the Highway passes through the western end of the bus station, and because no compensation is payable to keep a 50 m wide right

349 of way for highways.

A.4.6 Problems of Linear Development

Both projects appear to be isolated projects bearing little relationship to the overall urban development programs. For example, contrary to the necessity of encouraging development in-depth (to open up interior land), the Chipledhunga Road project was prepared for linear development, which may create serious traffic and land development problems in the future. An in-depth development would have avoided many of the problems of plot distribution, and there would have been no need to include only a portion of land parcel in the project.

A.S Lessons from the Pokbara Experience

The discussion and critical assessment of the two LP/R projects provide some useful lessons which should be considered in undertaking similar projects in other parts of Nepal, particularly in the Kathmandu Valley. Some policy implications emerging from these experiences are: the necessity to co-ordinate development endeavors of the sectoral agencies within an urban area, and the need to formulate land development policies in relation to employment policies (with training component, if necessary, because of the possibility of farmers changing their occupations when the rural lands are converted to urban uses).

Despite the absence of legal provision on land pooling, experimentation with three projects in Pokhara through the co-operation of landowners shows that the LP/R technique is a feasible technique for application in Nepal. Although there were implementation problems in all projects, these projects can be considered as reasonably successful in view of their pioneering nature and in view of the lack of relevant expertise and experience in handling LP/R projects in Nepal. The experience gained from the first two projects (Chipledhunga and Nagdhunga-Khahare Road projects) led to making many refinements in the formulation of the third project (the Bhairabsthan Bus Station project). But as the LPIR concept is slowly emerging as a powerful and

350 viable technique to handle many urban land development problems, there are many areas where further improvements are desirable. Major lessons to be learned from the Pokhara experience are presented below.

A.S.l Legal Provisions

There should be adequate legal provision for guiding the preparation, finalization, approval and implementation of LPIR schemes with procedural details clearly spelled out. Lack of initial project preparation had been one of the major constraints which brought about many implementation problems in the case study projects. The initial project preparation part should be supplemented by necessary documents which must identify the items to be charged to the project, and specify how revenue generated through the sale of plots is to be spent and how project benefits are to be distributed among the participants. It should also require the land pooling agency to prepare a cash-flow analysis of the project which should be supported by plot distribution and pricing policy and funding arrangements.

A.S.2 Site Selection

Selecting an appropriate project site is important, because the economic viability of a project depends on generating significant land value gains to provide the infrastructure and services, and to ensure a good amount of returns to the participant landowners. The case study projects sites were strategically located with good commercial potential. The LPIR project sites should be both economically and physically ripe for development with main access roads and trunk utility mains nearby, and there should be sufficient market demand for serviced plots in such locations. Further, the scheme area should be moderately large enough for making possible development in depth, for capturing some of the spillovers of development benefits, and for managing the project more efficiently in an economical way.

351 A.5.3 Project Funding

As land pooling projects are based on financing infrastructure through capturing the 'plus values', they should be based on a functional funding system of accounts. A financial institution to provide credit loans for undertaking land development, housing and urban development works needs to be established. The land pooling agency can, then, raise a short-term credit finance to meet its project costs, which can be repaid promptly through revenue generated by the sale of serviced plots in the project. Suitable legal and institutional reforms and arrangements are necessary to accommodate these proposals.

A.5.4 Equity in the Project

All participants of a land pooling project should share the project costs and benefits proportionately. For this purpose, landowners' initial contribution to and returns from the project should be proportional so that the project equity is maintained for all of them. This calls for precise valuation of plots both before and after the development scenarios. However, in situations where uniformity of the intensity of land-uses and prices can be expected, such as in the bus station project, an area method to determine the project equity ratio can be adopted.

A.5.5 Project Management

Each land pooling project should be separately managed by a project manager supported with necessary personnel. There should be an advisory committee to oversee and advise the project manager's work. Such a committee should include representatives from the key infrastructural agencies (roads, water supply and electricity), the land survey, records and registration offices, the TPIC, and the Planning Team; as well as from the landowners, local citizens and political workers, and the project management team. Project landowners should be encouraged to participate actively in the management of project affairs.

352 A.5.6 Monitoring and Information Dissemination

Being an innovative land development technique, each LP/R project should be carefully monitored with a view to making timely refinements in the project as well as to making improvements in undertaking similar projects elsewhere. For this purpose, data and information should be regularly collected and documented, and project related documents should be properly maintained for quick reference. Greater information dissemination about the merits of the LPIR technique and how it was being used in the projects should be initiated for the benefit of all interested groups. Such efforts will help to build a positive public opinion and also motivate prospective landowners to join LP/R projects.

353 APPENDIX B: LAND RESOURCES MAPPING PROJECT TABLES

Table B.1: Land Systems of the Kathmandu Valley

Main System Area (ha) Per cent

1. River Channels 825 1.38 2. Alluvial Plains 10,300 17.26 3. Alluvial Fans 3,775 6.33 4. Non-dissected Tars 9,125 15.29 5. Dissected Tars 9,850 16.50 6. Moderate Mountainous Terrain (5-30 degrees) 16,450 27.57 7. Steep Mountainous Terrain (> 30 degrees) 9,350 15.67 Total ------59,675 100.00

Source: PADCO, 1986:24, Table II.3 (based on LRMP Map, 1984).

354 Table 8.2: Land Capability and Land Utilization in Kathmandu Valley (1979)

Land Category Area in ha % of total

Land Capability * I 20,704.75 34.70 II 13,399.25 22.45 III 16,447.25 27.56 IV 9,123.75 15.29

Land Utilization 1. Urban Area 2,850 4.78 2. Rivers 825 1.38 3. Lowland Agriculture 31,650 53.04 4. Upland/Slope Agriculture 6,000 10.05 5. Grazing 75 0.13 6. Forest and Shrubs 18,275 30.62

Total 59,675 100.00

* Note - Land Capability Classes: I: Few limitations on agriculture or forestry II: Terracing or contouring needed for agriculture III: Terracing mandatory for agriculture IV: Due to excessive slopes suitable for forestry only Source: PADCO, 1986: 27 (Tables II.4 and II.5).

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