Hitting upon the idea of trading in scarce land as equity for slum redevelopment in areas governed by Coastal Regulation Zone norms, the state has plans to use land and floor space index of 3 offered for shanty redevelopment as its “equity”.
Apparently, as of now, for a slum redevelopment scheme, the developer has to pay 25 per cent of the ready reckoner rates as premium for encroached land.
Currently, for a slum redevelopment scheme, the developer has to pay 25% of the ready reckoner rate as premium for the encroached land.
While permitting slum redevelopment in areas falling under CRA regulations, the-then union environment minister Jairam Ramesh had made it mandatory for a 51 per cent government stake in the overhaul in such areas.
The step was undertaken to ensure that the larger public good, in the form of affordable housing, was served. The decision, Ramesh felt and categorically too, must not result in "profiteering" for the developer.
"We have proposed that in return for its investment, the developer must give the government 51 per cent of the saleable component in the form of small flats measuring 450 sq ft," said chief executive officer of the Slum Rehabilitation Authority (SRA) Zende-Patil.
“The purpose is to house the low-income and middle-income groups in the city.
“The flats will be given to Mhada to sell at its rates," he added.
The cost of land will be decided on the basis of the ready reckoner rate.
“These rates are announced every year and vary across the city. We are aware that unless there is a reasonable profit to be made, no developer will come forward. Therefore, we have now put forward the scheme for discussion," said Zende-Patil.
It is only after the land cost is fixed and the expense for rehabilitation, hidden costs such as payment to slumdwellers for consent, money paid for approvals, interest paid by the developer on money invested generated that one can compute the profits that a project will generate, feel sources.
"Currently, the minimum profit for an SRA project is in the range between 36 per cent and 40 per cent. Hence there is a strong builder's lobby in favour of slum redevelopment ," a source said.
CRZ norms stretch from Colaba to Dahisar in the Western suburbs and up till Mulund n the Cental suburbs. Chembur and Mankhurd in the eastern suburbs.
According to an SRA survey there are around 300 slums in these areas.