PRESENTATION AT CONFERENCE ON REAL ESTATE

ORGANISED BY WIRC

SLUM REDEVELOPMENT – IMPORTANT ISSUES

Presented by:Dipali Sheth, Partner, MDP & PartnersAt: Hotel Sea Princess, Mumbai On July 15,2011

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BACKGROUND• India is undergoing transition from rural to

semi urban society.

• People are migrating from rural to urbanareas.

• Mismatch between demand and supply ofhousing in cities.

• Disparity in prices of property and incomelevels leading to non-sustainable situation.

• Lack of equitable supply of land, shelterand services at affordable prices

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CONSTITUTIONAL RIGHT

• Article 14 of the Indian Constitution providesthat the State shall not deny to any personequality before law or the equal protectionof laws within India.

• Article 19 of the Indian Constitution providesthat the all citizens shall have the right tofreely move throughout India and also toreside and settle in any part of India.

• Article 38 of the Indian Constitution providesthat the State shall strive to minimize theinequalities in income and endeavour toeliminate inequalities in status, facilities andopportunities not only amongst individualsbut amongst group of people residing indifferent areas.

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HISTORYTill 1970 Demolition of slums by treatingthem as illegal squatters. Slums reappeared.Demolitions termed inhuman.

1970 to 1990: Slum improvement workstaken up. Census of slums was carried out in1976 and I-cards were issued.and occupied by slums was given on lease tothe slum dwellers. Soft loans were extendedto slum dwellers to take up slumupgradation works. The scheme could beimplemented only on non-reserved govt.lands.

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HISTORY

• 1990: A Special autonomous authority SlumRehabilitation Authority (“SRA”) wasestablished. The Developers were encouragedto develop the underlying land of the slumsand incentive of FSI for constructing tenementsfor sale in open market was allowed in lieu offree housing for slum dwellers.

• 1997: The Government of India sanctioned themodification to the Development ControlRegulation Nos.33(10), 33(14) and 60 of theDevelopment Control Regulations for GreaterBombay 1991 for implementation of SlumRehabilitation Scheme (“SRS”), as a part offinal Development Plan for Greater Mumbaiwhich came into force from October 15, 1997.(Source www. sra.gov.in)

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POWERS AND DUTIES OF SRA

• The powers, duties and responsibilities of SRA are as follows:

• to survey and review existing position regarding Slum areas in greaterMumbai.

• to formulate schemes for rehabilitation of slum areas.

• to get the slum rehabilitation scheme implemented.

• to do all such other acts and things as may be necessary for achieving theobjective of rehabilitation of slums.

• SRA can declare any area as slum rehabilitation area in accordance with SRS. Allslum rehabilitation areas come under the jurisdiction of SRA.

• SRA undertakes aforesaid functions through its departments such as Planning &Implementation; Building Permission and Supervision; Eligibility Certification,eviction on non-participants and declaration of slum areas and slum rehabilitationareas; Registration of co-operative housing societies; Land Management;Community Development; Accounts and Finance; and General Administration.

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DIFFERENCE BETWEEN SLUM REDEVELOPMENT AND SLUM REHABILITATION

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• Whilst Slum Redevelopment Scheme is forimprovement of living conditions of slum dwellers,and to make them habitable with basic amenitiessuch as clean drinking water, sanitary, street lighting,etc. However, Slum Redevelopment Scheme do notprovide for rehabilitation.

• SRS aims at providing good housing to the slumdwellers as specified in the SRS of an area consistingof 225* sq. ft. free of cost and self contained .

SALIENT FEATURES OF SLUM REHABILITATION SCHEME

• According to the Slum Rehabilitation Schemeof Government of India (‘SRS”) every slumstructure existing prior to January 1, 1995 arelegalised and treated as protected structure.

• Every slum dweller whose name appears in theelectoral rolls as on January 1, 1995 and whocontinues to stay in the slum is eligible forrehabilitation.

• Under the SRS, every eligible residential slumstructure is provided with an alternativetenement admeasuring 225.00* sq. ft.preferably at the same site, irrespective of thearea of slum structure.

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SALIENT FEATURES OF SLUM REHABILITATION SCHEME

• Every eligible slum structure that isbeing used for commercial purposes isgranted an alternative tenementhaving area equal to the structuresubject to an upper limit of 225.00*sq. ft.

• Under the SRS, minimum of 70% ofeligible slum dwellers can form a co-operative housing society forimplementation of SRS. The slumdwellers can appoint a developer forexecution of SRS.

• The underlying land is used as aresource for the SRS.

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SALIENT FEATURES OF SLUM REHABILITATION SCHEME

• The developer puts in resources in the form of money, men and material forconstruction of free houses for the slum dwellers.

• The developer is compensated for his efforts in the form of free sale component.The developer is required to construct the rehabilitation tenements on the plotitself. The balance FSI left is allowed for construction of free sale tenements. Alongwith the free rehabilitation tenements the developers also have to provide spacefor amenities like a creche (Balwadi), society office, welfare centre.

• The developers are allowed to construct tenements for sale in the open market.The area allowed for sale in the open market is equal to the area of tenementsconstructed for Rehabilitation of slum dwellers.

• Floor Space Index (known as FAR elsewhere) upto 2.5 is allowed for SRS. The spillover entitlement to the developer is permissible for sale in the form oftransferable development right in the open market. These transferable rights canbe utilised on other non slum pockets subject to the provisions of DevelopmentControl Regulations, 1991.

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SALIENT FEATURES OF SLUM REHABILITATION SCHEME

• The plots which are reserved for public purposes and which are over run by slumscan also be taken up for implementation of a SRS. In case of plots reserved forunbuildable reservations, 33% of the reservation area is left free for the intendedreservation.

• In case of plots reserved for buildable reservations, a certain predeterminedproportion of the permissible built up area is to be constructed as per therequirement of user agency and handed over free of cost to the cityadministration as a part of SRS.

• Slum Rehabilitation Authority (“SRA”) is empowered as single window approvingauthority for development under the SRA.

• An additional 5% FSI incentive for commercial area is available to the projectsbeing implemented by either a society of slum dwellers directly or a NGO.

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SLUMS – A PROBLEM?

• YES because:

▫ it makes city look dirty;

▫ breeds poverty;

▫ high unemployment leading toilliteracy and child labour;

▫ high crime rate including thefts;

▫ also as it is illegal settlements onencroached public land, they donot pay the basic or civic utilitiestaxes and hence, burden oninfrastructure.

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PROBLEMS FOR SLUM DWELLERS

• Inhuman and dangerous livingconditions due to lack of security;

• Constant fear of losing their homes;

• No hygienic and sanitary facilities;

• No clean drinking water;

• No basic civic services like wastecollection and disposal;

• No properly maintained drainagesystem;

• No electricity or paved roads.

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ADVANTAGES OF SLUM REDEVELOPMENT

• Slum redevelopment facilitates proper andplanned development of large parcels ofland. Such planned development increasesthe supply in congested cities like Mumbaiand exerts downward pressure on existingproperty rates. Such planned developmentalso reduces burden on infrastructure.

• SRS encourages through public privatepartnerships (PPPs) facilitates access primeand large tracts of land. Due to theincentives of SRS including higher-than-normal floor space index (FSI) costs of landreduces thereby enabling developers togain higher margins on saleable portions.

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CHALLENGES IN SLUM REDEVELOPMENT

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• The Government should encourage the PPP model. Many SRA schemes that hasfollowed this model in past have been successful in Mumbai such as SRAdevelopment done by developers such as Ackruti, HDIL, Unitech and Hiranandani.

• Having said that there are certainly challenges to effective slum redevelopmentlargely depends on ownership of land. In case the land is privately owned, there isoften resistance from the owner in parting with it. Also it is difficult to ascertainthe existing slum dwellers as there is no authentic record upto date is available inrespect of all slum pockets.

ROAD BLOCKS ON SLUM REDEVELOPMENT

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• There exists no authentic and acceptable record of slum dwellers inrespect of most slum areas around the country. Hence, despiteregulations and policies being in place for SRA, the redevelopment is noteffectively implemented. Further, in order to avoid misuse of the liberatedland effective implementation is essential.

• Often due to apprehensions and objections of slum dwellers the SRScannot be effectively implemented.

APPLICABLE LAWS ON SLUM REHABILITATION

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The following are some of the important legislations in Maharashtra on slumredevelopment and slum rehabilitation:1. The Maharashtra Slum Areas (Improvement, Clearance and Redevelopment) Act,

1971;2. The Development Control Regulations for Greater Mumbai, 1991 (the “DC

Regulations”);3. The Maharashtra Regional and Town Planning Act, 1966;4. The Mumbai Municipal Corporation Act, 1888;5. The Maharashtra Prevention of Dangerous Activities of Slumlords, Bootleggers, Drug

Offenders and dangerous Persons Act, 1981;6. The Maharashtra Housing and Area Development Act, 1976; and7. The Bombay Provincial Municipal Corporation Act, 1949

IMPORTANT PROVISIONS OF DC REGULATIONS APPLICABLE TO SRS

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The most important are some of the provisions of DC Regulations which are describedbelow:1. Regulations 33(10) read with Appendix IV of the DC Regulations provides the

eligibility and method of redevelopment of slums including the pavements whoseinhabitants names and structures appear in electoral roll on or prior to January 1,1995. In the schemes approved under the provisions of this DC regulation, the slumsare rehabilitated on the same site.

2. Regulation 33(13) of the DC Regulations provides that FSI of 2.5 shall be available forthe development of sites reserved for resettlement and rehabilitation for the purposeof housing slum dwellers who are displaced by projects undertaken by the MunicipalCorporation. In the schemes approved under the provisions of this DC regulation, anowner of vacant unencumbered land can use it for construction of PAP tenements forwhich he is compensated by TDR for land and for construction.

IMPORTANT PROVISIONS OF DC REGULATIONS APPLICABLE TO SRS (continued)

3. Regulation 33(14) of the DC Regulations deal with transit camp tenements forSRS. It provides that temporary transit camp shall be provided by the developeron the site or closer to the site. Further, the area of temporary transitaccommodation shall be excluded from the computation of FSI. In this scheme,the landowner is allowed to consume the existing FSI potential of the land, ownedby him. The additional potential of 1.5 for suburbs, 1.66 for difficult area & 1.00for island city (only for government or public sector plots) is granted under thisscheme. The developer constructs transit tenements out of a prescribed part ofthis additional potential. The balance of the additional potential is allowed as freesale component.

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IMPORTANT PROVISIONS IN APPENDIX IV OF DC REGULATIONS PERTAINING TO SRS

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According to Appendix IV of the DC Regulations:• 5% of commercial FSI is granted to the society of slum dwellers or an NGO if the project

is undertaken by the society or NGO.• It is mandatory to provide one balwadi and welfare center and society office each of

20.90 sq.mt areas (225 sq, ft.) for every 100 rehabilitation tenements or part thereof.• Area of balwadi, welfare center, society office and common passage upto 2.0 m wide is

allowed free of FSI in rehabilitation building. Hence, the areas consumed for suchbalwadi, welfare center , society office and common passage is excluded for thepurpose of calculating the permissible FSI. The aforesaid areas together with area ofeligible religious structure, other social infrastructure such as school, dispensary,gymnasium run by public authority or charitable trust and incentive commercial area inaddition to FSI for rehabilitation tenements are termed as “rehabilitation component”.

• Sale component equal to 0.75 times the rehabilitation component in city areas; equalto rehabilitation component in suburbs and extended suburbs and equal to 1.33 timesthe rehabilitation component in difficult areas is allowed.

IMPORTANT PROVISIONS IN APPENDIX IV OF DC REGULATIONS PERTAINING TO SRS (continued)

• Maximum permissible FSI to be consumed at any site shall be restricted to 2.5 andbalance can be claimed as TDR, to be sold in open market.

• Minimum density on plot shall be 500 tenements per net hectare.• All the activities existing in the slum even if non-conforming with the zone of the

area shall be allowed to be relocated.• All reservation plots upto 500 sq.mt. in area under slum shall be cleared of slums

and the slum dwellers shall be relocated elsewhere.• Plots reserved for non-buildable reservations and encumbered with slums shall be

cleared if the area is less than 500 sq.mt. or they are encumbered to an extent lessthan 25%.

• Special concessions in building requirements are granted. Viz. Relaxations in openspace requirement; Relaxations in room size requirement.

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Stages of Slum Rehabilitation

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Stage I

• As stated earlier, all slum dwellers residing on the plot prior to 1/1/1995 and are inuse of the structure are eligible for rehabilitation. Consent of at least 70% of theslum dwellers and such slum dwellers co-operative housing society (see ShivajiKrishna Zunjare Vs. State of Maharashtra & Ors. 2004(4) Mh LJ 764);

• Appointment of a chief promoter. Collection of share capital of Rs. 50/- permember and Re. 1/- as entrance fee. This is then deposited in the name of theproposed housing society in the Mumbai District Central Co-operative/Maharashtra State Co-operative Bank Ltd.;

• Society collects documents of title of the land. The plot is then measured and theslum structures are surveyed, properly demarcated and numbered on the plan. Adetailed list of house numbers and the name of the occupant is prepared.

• Developer is appointed by the society and the developer then appoints Architect/Licensed surveyor; structural engineer; etc.

• The developer then enters into individual agreements with all the slum dwellersagreeing to participate in the scheme and a proposal enclosing requisite plans;annexures and documents is submitted by the architect to SRA.

STAGES OF SLUM REDEVELOPMENT (CONTINUED)

Stage II• The Sub-engineer of SRA’s office undertakes initial scrutiny of the proposal. If all

requisite documents are submitted along with the proposal, the amount ofscrutiny fee to be paid is worked out by the sub-engineer and paid by thedeveloper.

• Thereafter, Annexure II (details of land occupied by slum dwellers, number andtypes of structure, consent to join the scheme, list of eligible and non-eligibleoccupants, etc.), is forwarded to the competent authority for certification.Simultaneously, Annexure III for assessing financial capability of the promoter isforwarded to the financial wing for scrutiny Thereafter, Annexure I (ownershipdetails, slum dweller details, FSI available), reservations, amenities, etc.) is sent forscrutinisation by the engineering wing.

• After Annexure II & III are certified by the competent authorities, approvals to LOI,layout. Intimation of Approval and commencement certificate to the first buildingfor work upto plinth are processed.

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STAGES OF SLUM REDEVELOPMENT (CONTINUED)

Stage III

• The society draws lots for allotment of the tenements to the members who areready to participate in the scheme. Draw for the non- participating members fromthe remaining tenements is also drawn.

• The developer arranges transit accommodation for the slum dwellers either on-site or off site as mutually agreed between the slum dwellers and the developers.

• In case transit accommodation cannot be arranged on site due to site constraints,SRA helps the developers to locate suitable site in the vicinity for construction oftransit camps and to obtain permissions from concerned authorities.

• Draw of lots for allotment of transit tenements is drawn.

• Thereafter, the slum dwellers are shifted to the transit camps and their hutmentsdemolished. The slum dwellers who do not agree to participate in the scheme aregiven notice by the society staling the allotment details and requesting them toparticipate in the scheme.

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STAGES OF SLUM REDEVELOPMENT (CONTINUED)

Stage III (continued)

• If the non-participating members do not agree to participate within 15 days of theapproval of the proposal, they are physically evicted from the site under theprovisions of Sections 33 and 38 of Maharashtra Slum Areas (Improvement,Clearance and Redevelopment) Act, 1971, to ensure that there is no obstruction tothe scheme.

• After demolition of the structures, work upto plinth is completed. The SRA thenchecks the plinth dimensions and if found in order further permission to carry outconstruction beyond plinth is granted.

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STAGES OF SLUM REDEVELOPMENT (CONTINUED)

Stage IV• Plans for the further buildings both for sale and rehabilitation are then

approved.• Building permissions for the sale buildings are given in the proportion of

the permissions given to the rehabilitation buildings.• Upon completion of rehabilitation building/ wing, list of allotment is

drawn up. The allotment is done in the joint name of the head of thehousehold and the spouse.

• Building completion certificate is submitted by the architect.• After checking of the building and compliance of the IOA conditions

Occupation permission to the building is granted. The slum dwellers as perthe allotment list are given possession of the tenements.

• SRA issues identity cards to the slum dwellers.

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STAGES OF SLUM REDEVELOPMENT (CONTINUED)

Stage V

• Further construction of the remaining building/s is then taken up.

• Further building permissions as well as occupation permissions to thebuildings is then granted in due course.

• Upon completion of the last buildings in the layout, the underlying land istransferred on lease to the society of slum dwellers. In case of Governmentlands, the lease rent is nominal.

• Separate property cards for the rehabilitation building plot and the salebuilding plot as well as for the reservation plots to be handed over areprepared. SRA acts as facilitating agency in case of any difficulty with therevenue authorities.

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LATEST DEVELOPMENT IN SLUM REHABILITATION

• Slum dwellers, meeting the existing cut-offdate of January 1, 1995, will get free housing inrehabilitation buildings and those settling post-1995, might have to pay a portion of theconstruction cost of the houses.

• An expert group is formed by the Governmentof India to look into re-settling people, whobuilt slums after 1995. Over 13 lakh familiesstay in shanties in Mumbai; among those 5lakh reportedly built their shanties after 1995.

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• Recently, a panel headed by state chief secretary Ratnakar Gaikwad and comprisingofficials from the housing and the SRA, the BMC and MMRDA discussed the feasibilityand the amendments of various legislations required to implement the centrally-sponsored Rajeev Awas Yojana (“RAY”) to overcome the slum problem in the city. It ispertinent to note that the RAY scheme, where the Government of India pays 50% of thefund, specifies no cut-off for rehabilitation.

62%

38%

Families in Slums (in Lakhs)

Prior to 1995 After 1995

LATEST DEVELOPMENT IN SLUM REHABILITATION

The Government has announced a new scheme called Rajiv Awas Yojana (RAY) forthe slum dwellers and the urban poor. This scheme aims at providing support toStates that are willing to assign property rights to slum dwellers. RAY envisages a‘Slum-free India’ through encouraging States/Union Territories to tackle the problemof slums in a definitive manner. On the basis of the recommendations of the industryexperts and Expenditure Finance Committee the Minister is in the process of movingthe Cabinet for the approval and the draft Cabinet Note has been circulated forinter‐ministerial consultation on 31‐12‐2010.

RAY endeavours the following:• Bringing existing slums within the formal system and enabling them to avail of

the same level of basic amenities as the rest of the town;• Redressing the failures of the formal system that lie behind the creation of

slums; and• Tackling the shortages of urban land and housing that keep shelter out of reach

of the urban poor.

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LATEST DEVELOPMENT IN SLUM REHABILITATION

RAY envisages that each State would prepare a State Slum-free Plan of Action(POA). The POA would need to be in two stages viz;

• Stage-1 regarding the upgradation of existing slums. In Stage-1 the Statewould need to survey and map all exiting slums in selected cities proposedby the State for coverage under RAY. ; and

• Stage-2 regarding the action to prevent new slums. In Stage-2 the Planwould need to assess the rate of growth of the city with a 20 yearperspective, and based on the numbers specify the actions proposed to betaken to obtain commensurate lands or virtual lands and promote theconstruction of affordable Economically Weaker Section (“EWS”) houses soas to stay abreast of the demand. This part would need also to makenecessary legislative and administrative changes to enable urban landexpansion, and in town planning regulations to legislate reservations forEWS/Low Income Group housing in all new developments.

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LATEST DEVELOPMENT IN SLUM REHABILITATION

• In the meantime the preparatory phase of RAY has already commenced underSlum‐free City Planning Scheme from March 2010 and States are being assisted todraw up their Slum‐free Plans of Action to proceed towards the goal of Slum‐freeCities/States in a systematic and time bound manner. Under the RAY, a sum of Rs.60 crores has been released to 20 States for preparing Slum free City Plans during2009‐10. Budget of Rs1,270 crores has been allocated for the year 2010‐11 for thescheme.

• Further detailed guidelines have been issued for Slum Free City Planning underRAY.

• Ministry of Housing and Urban Poverty Alleviation, Government of India(“MHUPA”) has selected 30 cities across 16 states for initiating the ‘National SlumFree City Campaign’.

• The MHUPA had in February 2009 also issued modified guidelines for Projects ofIntegrate Housing and Slum Development Programme.

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SOME FACTS ON SLUM REDEVELOPMENT

• Around one-third of the urban population indeveloping countries – nearly one billion people– lives in slums, according to estimates.

• UN-Habitat estimates the world’s slumpopulation will be 889 million by 2010.

• More than 70 per cent of Africa’s urbanpopulation lives in slums. The majority of slumdwellers in African cities are between the agesof 15 and 24.

• Slums are often economically vibrant; today,about 85 per cent of all new employmentopportunities around the world occur in theinformal economy.

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67%

33%

World Population in Slums

SOME FACTS ON SLUM REDEVELOPMENT• Between 2000 and 2010, the number of

slum dwellers increased by six millionevery year.

• The number of slum dwellers isestimated to grow by nearly 500 millionbetween now and 2020, according toUN-HABITAT. (Source: UN-HABITATState of the World’s Cities Report 2010-2011)

• It has been realised that effectiveplanning for slum redevelopment has tobe more participatory, involvingcooperation from NGOs, private sectorand the slum dwellers themselves,mostly represented by Community

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0

200

400

600

800

1000

1200

1400

1600

No of Slum dwellers (in million)

Slums

DHARAVI PROJECT

• Dharavi is reputes to be one of Asia’s largestand highly dense slums. 57,000 families aresqueezed into 535 acres of Dharavi area.

• Dharavi redevelopment project in Mumbai,which is talked about for more than a decadenow went into bureaucratic limbo. Dharavifalls in a prime locality between BKC and theLower Parel mill district. This means thatprojects there would naturally cater to high-end property buyers. With the applicable FSI of4 there being difficult area instead of the usualSRA ceiling of 2.5, the Dharavi redevelopmentproject can house numerous luxury housingprojects after rehabilitation of existinghutments.

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DHARAVI PROJECT

• The Government of Maharashtra has vide itsresolution dated February 4, 2004 resolved toimplement Dharavi Development Action Plan andfor SRA is declared as Special Planning Authority.The detailed information , guidelines and rulesand regulations on Dharavi RedevelopmentProject is under finalisation.

• As we know, this project is currently insuspended on the grounds of pendingGovernment approvals. Also even after approvalsdue to bureaucratic approach in all Governmentoffices, the time-frame for completion cannot bepredicted.

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65%

35%

Population of Mumbai(in million)

Normal housing Slums

THANK YOUPresented by:

Dipali ShethPartner

MDP & PARTNERSAdvocates & Solicitors

1st floor, Udyog Bhavan,29, Walchand Hirachand Marg,Ballard Estate, Mumbai 400001

Tel: - +91 22 6686 8900 I Fax: - +91 22 6686 8989Email:- dipali@mdppartners.com

Website: - http://www.mdppartners.com

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