Though the concept of TDR (Transferable Development Rights), largely aimed at improving the financial status of Urban Local Bodies (ULBs) with a view to boost urban infra, is quite old, yet only a few states have adopted it as a policy, and with just a handful of success stories.
At the global level, TDR has been used as a policy measure for optimising cost of land acquisition and to counter the restrictive Floor Space Index (FSI) or Built Up Area (BUA). In India, TDR policy has been introduced by some states by amending the relevant Municipal/Town Planning Act for building rules as an incentive for various public purposes related to infrastructure development. These include development and preservation of parks, playgrounds, water bodies, development of roads, strengthening of trunk infra, development of public parking, city-level facilities, slum rehabilitation, public housing redevelopment, development of affordable housing, and preservation of historical buildings and heritage structures.
TDR policy offers commercial opportunity by saving ULBs from spending huge funds for land acquisition for public purposes. As per existing guidelines of states and ULBs in India, TDR can be awarded only when such lands are transferred to the ULB or city development authority by way of registered gift deed. The award would be in the form of a TDR certificate issued by the sanctioning authority.
The Development Right Certificate (DRC) obtained in lieu of the TDR, entitles the receiver to an extra built-up area that extends more than the authorised/permitted FSI for the receiving area. These certificates can either be traded in a different location for extra built-up area.The TDR trading follows the open market principle wherein the pricing is entirely driven by demand and supply.
TDR in Mumbai
On the TDR landscape, one can look at the cities of Mumbai, Hyderabad and Ahmedabad, where this policy has made a positive impact. In fact, Mumbai is a TDR success story. TDR finds mention in the Development Control Regulations of Greater Mumbai 1991. The compensation in terms of TDR is permissible for land under various purposes like roads, heritage structures, housing for slum dwellers and redevelopment.
TDR prices are controlled by market forces. With the prospects of limited horizontal expansion due to linear geography and land constraints, Mumbai paved the way for a successful TDR policy. This is quite evident from the fact that with 3178 DRCs, the Municipal Corporation of Greater Mumbai (MCGM) has generated over 12.93 million square metres area, out of which only 0.5 million square metre of TDR remains unutilised till date.
TDR in Hyderabad
In Hyderabad too, the concept of TDR has taken off well. The TDR here came into being in 2006 with Revised Common Building Rules issued by the state government. These rules were later modified in 2012 and 2017. The guidelines for issuance and utilisation of TDR are specified in these rules.
Hyderabad is making use of TDR mostly for infra development as well as conservation of lakes, besides heritage buildings. As a policy, the city authorities avoid issuing TDR certificates in congested areas and these certificates are issued only in new developing areas where infrastructure is available. The TDR certificates generated within the Greater Hyderabad Municipal Corporation (GHMC) limits can be used in Hyderabad Metropolitan Development Authority (HMDA) and vice versa. Since 2006, more than 600 TDR certificates have been issued in Hyderabad. The Greater Hyderabad Municipal Corporation (GHMC) has set up an online TDR Bank where digitized version of TDR certificates is being issued. The platform is connecting buyers and sellers in a transparent manner.
TDR in Ahmedabad
In Ahmedabad, the way was paved for TDR after the Gujarat government modified the Gujarat Town Planning act 1976. The TDRs issued in Ahmedabad are meant for the purposes of slum rehabilitation, heritage conservation and public housing redevelopment projects. For the development of trunk infrastructure, another concept of land pooling is successfully used.
Notwithstanding these few examples of successful implementation of TDR policy, the TDR landscape, according to a Niti Aayog paper, is dotted with several hurdles. The land/property owners have apprehensions about the economic value of TDR. The TDR certificates have FSI credits but their monetary value depends upon the overall property market in a particular city, and it is uncertain. Timely compensation is not guaranteed as suitable buyers may not be available when money is required by the DRC holders.
As such, there is a need for a TDR policy to ensure citizens acceptance, prevent fraudulent transactions, and enhance commercial value of TDR certificates.
Making TDR Policy Effective
Niti Aayog document underlines several success factors for the TDR policy. Simply adopting a TDR policy does not warrant its success. A TDR policy can be effective only when it simultaneously meets two basic conditions. Firstly, landowners should be voluntarily willing to accept the TDRs in lieu of monetary compensation under the right to fair compensation and transparency in ‘Land acquisition, Rehabilitation & resettlement Act (LARR 2013).
Secondly, the city should have a real estate market wherein private sector developers/real estate market players are interested to buy TDRs to utilize them in designated receiving zones - the basic concept of demand and supply. The strategic selection of sending zone and receiving zone, based on the market demand assessment and infrastructural carrying capacities, lays the foundation stone for the success of a TDR policy.
ULBs and city authorities need to take market participants into confidence and ensure policy level consistency to build confidence about TDR instrument and its future predictability of incremental FSI/ BUA in the receiving areas. ULBs should accord importance to maintain the face value of TDR certificates and TDR policy may not restrict increment in the overall FSI in the city. Overall, to inspire more trust in the market and ensure better transparency, municipalities should undertake requisite governance and accounting reforms before notifying the TDR policy. This may also be done as per the context of issuance of municipal bonds.
TDR Reform & Policy Measures Suggested
Several regulatory policy measures are suggested by Niti Aayog as a way forward for the TDR policy. The Ministry of Housing & Urban Affairs, Department of Land resources (DOLR), Ministry of Rural Development, should consider incorporating TDR as a voluntary option while acquiring land for public purposes.
A prescribed Authority for regulation of TDR policy may be formed at the state level to function as a regulator, mediator, enabler, implementing and dispute redressal authority. This Authority should ensure minimum base selling price of DRCs and regulate the time period for validity/revision of TDRs.
To begin with, states should focus on implementing TDR policy in select cities with a population of more than one million and class 1 cities, before expanding its scope to other cities. In order to keep the entire TDR process transparent, ULBs may ensure that sending and receiving zones are marked in digital spatial database of the city, and the same may be available at the web portal of the concerned ULBs/planning authorities for public viewing, soon after TDR policy gets notified. Also, a suitable governance redressal mechanism may be developed.
The convergence of TDR policy with other schemes of the centre, states and ULBs may be considered - like using TDR method for implementing infra projects like Transit Oriented development (TOD). A regular monitoring and evaluation of generated TDR certificates may be undertaken by concerned central, state governments and their agencies.
Further, capacity building exercises such as training, workshops and other associated activities for concerned officials at specific levels may be undertaken by state governments for enhancing the use of technology of various stakeholders for effective implementation of TDR policy.
Finally, once the TDR market matures, it may also be considered as an advantage under PPP projects. In such cases, prior to the bid, the Authority can package DRCs along with other project specific rights under a suitable PPP model. This would enhance the overall visibility of the project as the concessionaire would get cross-subsidised through incremental value of DRCs. All these reforms and policy measures would pave the way for a healthy TDR market.