ENABLING SMART URBAN REDEVELOPMENT IN INDIA THROUGH FLOOR AREA RATIO INCENTIVES Apoorva Shenvi and Ron H. Slangen NO. 58 ADB SOUTH ASIA July 2018 WORKING PAPER SERIES ASIAN DEVELOPMENT BANK ADB South Asia Working Paper Series Enabling Smart Urban Redevelopment in India through Floor Area Ratio Incentives Apoorva Shenvi and Ron H. Slangen Apoorva Shenvi was a former ADB intern and has a masters degree in urban planning from Harvard No. 58 | July 2018 University. Ron H. Slangen is a senior urban development specialist at the Asian Development Bank. Creative Commons Attribution 3.0 IGO license (CC BY 3.0 IGO) © 2018 Asian Development Bank 6 ADB Avenue, Mandaluyong City, 1550 Metro Manila, Philippines Tel +63 2 632 4444; Fax +63 2 636 2444 www.adb.org Some rights reserved. Published in 2018. 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ADB recognizes “Hong Kong” as Hong Kong, China. Corrigenda to ADB publications may be found at http://www.adb.org/publications/corrigenda. CONTENTS TABLES, FIGURES, AND BOXES ......................................................................................................................iv EXECUTIVE SUMMARY ....................................................................................................................................... v ABBREVIATIONS ............................................................................................................................................... viii CURRENCY EQUIVALENTS ........................................................................................................................... viii I. INTRODUCTION: THE HORIZONTAL EXPANSION OF CITIES IN INDIA .......................... 1 A. Background ........................................................................................................................................... 1 B. Growing Need of Indian Cities to Mobilize Own Finance ..................................................... 2 C. Critical Role of Floor Area Ratio Incentives in Urban Redevelopment ............................. 3 II. POLICY AND REGULATORY CONTEXT OF URBANIZATION IN INDIA .......................... 10 A. The Urban Land (Ceiling and Regulation) Act, 1976 ............................................................ 10 B. Coastal Regulation Zone Notification, 1986 ............................................................................ 11 C. Rent Control Acts ............................................................................................................................. 12 D. Current Zoning Practices in Major Metropolitan Cities ........................................................ 13 E. Socioeconomic Impacts of Restricting Density .......................................................................14 F. The Jawaharlal Nehru National Urban Renewal Mission ..................................................... 15 G. The Smart Cities Mission ............................................................................................................... 16 III. CASE STUDIES: AREA-BASED REDEVELOPMENT APPROACHES IN INDIA ..................... 17 A. Cluster Redevelopment in Mumbai .......................................................................................................... 17 B. Local Area Planning in Ahmedabad ......................................................................................................... 28 IV. CONCLUSIONS AND RECOMMENDATIONS .............................................................................. 33 REFERENCES ......................................................................................................................................................... 37 TABLES, FIGURES, AND BOXES TABLES 1 City Center Floor Area Ratio Values in Different Cities ............................................................................ 14 2 Urban Profile of Greater Mumbai ...................................................................................................................... 17 3 Classification of Cess Properties in Mumbai .................................................................................................. 18 4 Floor Area Ratio for Redevelopment of Two or More Plots under DCR 33(7) ................................ 19 5 Incentive Floor Area Ratio under DCR 33(9) .............................................................................................. 20 6 Provision of Fungible Floor Area Ratio ............................................................................................................ 21 7 Area Distribution in the New Cluster .............................................................................................................. 23 8 Development Charges Paid to Municipal Corporation of Greater Mumbai for the Bhendi Bazaar Redevelopment ........................................................................................................... 23 9 Property Tax Schedule for Rehabilitated Occupants ................................................................................ 24 10 Municipal Corporation of Greater Mumbai Income in 2013–2014 ..................................................... 24 11 Analysis of Cluster Redevelopment in Mumbai .......................................................................................... 26 12 Urban Profile of Ahmedabad Urban Area ..................................................................................................... 29 13 Permissible Floor Area Ratio in Ahmedabad ................................................................................................ 29 14 Existing and Proposed Scenario for the Ahmedabad City Center ........................................................ 30 15 Expected Revenue from Premium Floor Area Ratio ................................................................................... 31 16 Analysis of Local Area Planning in Ahmedabad .......................................................................................... 32 FIGURES 1 Number of Metropolitan Cities in India ........................................................................................................... vi 2 Population in Metropolitan Cities....................................................................................................................... vi 3 Capital Expenditure Estimates by Sector 2012–2031 .................................................................................. 2 4 Financing Urban Infrastructure 2031–2032 .................................................................................................... 3 5 Municipal Finances: Declining Share of Own Revenue 2002–2003 to 2007–2008 ...................... 3 6 Floor Area Ratio Values in Cities in India .......................................................................................................... 4 7 Impact