Maharashtra govt introduces new cess for redevelopment of dilapidated, tenanted buildings

While Fadnavis has fixed Rs 5,000 per square metre as cess amount for now, the notification states that this rate shall increase by 10% every three years.

Questions are being raised in the construction sector over the proposal to levy a development cess. “There is already a provision where development charges for offsite infrastructure are collected while issuing building permits to construction project,” said a developer, who wished not to be named.

While the government has been collecting a “repair cess” from old and dilapidated cessed structures in the island city, sources admitted that the justification was that Mhada is responsible for repairs and maintenance of such properties. “No such role has been defined in the case of redevelopment of tenanted buildings,” the source said.

Incidentally, the state’s housing department, led by BJP’s Prakash Mehta, which had initiated the proposal regarding redevelopment of suburban tenanted buildings, had not recommended the cess.

While the BJP government has announced building area incentives for reconstruction and redevelopment of unsafe buildings in line with the promises it had made in the state’s housing policy, questions are being raised over certain riders that have been incorporated.

Mehta’s housing department had proposed that the incentives must be on par with those offered for redevelopment of cessed structures in the island city where a minimum floor space index of 3 or three times the size of the plot is permitted for such development. But Fadnavis did not approve the cap. Instead, the developers of the suburban buildings will be offered 50% of the built-up area used for rehabilitation of existing tenants as the incentive.

Some questions are also being raised over the condition mandating 70 per cent consent from tenants. “The incentives are being offered for dilapidated tenanted buildings, which are in urgent need of redevelopment. Binding the landlord or the developer to obtain consent of 70 per cent consent will delay the process,” said a developer. Government officials, on the other hand, argued that the norm existed even in the case of cessed structures.

Incidentally, Mehta had demanded that rules for the roles and responsibilities of the tenants, landlords, and the developers be formulated as part of the policy.

The housing department had also proposed time bound implementation of the redevelopment and had even proposed action against tenants found guilty of delaying it. But Tuesday’s notification does not define such responsibilities or action. On the lines of redevelopment in the island city, the redevelopment will be admissible on the entire plot area (or the gross plot area). The government has clarified that the incentive FSI policy will only be applicable for tenanted buildings that have been declared unsafe or unfit to live in by the municipal corporation. A government survey has revealed that about 2000-2500 out of 10,000 tenanted buildings in the suburbs are in decrepit condition.

Meanwhile, for construction projects involving composite redevelopment of a tenanted building and a non-tenanted building or a structure, the government has said that the applicable incentive shall be 50% of built-up area used for rehabilitation of existing tenants and the existing area occupied by the non-tenanted portion.

Replicating the cessed redevelopment model, Fadnavis has ruled that the residential tenants will have to be provided a minimum 300 square feet tenement free of cost in the rehabilitated building. His government has also capped the free rehabilitation component for a tenant to maximum 753 square feet, beyond which construction cost on the surplus area will be payable.

Incidentally, while Mehta had said that existing tenants in such buildings be termed eligible for rehabilitation, the CM’s department has ruled that only tenancies created before June 13, 1996, will be considered as per norms.

“The government may issue comprehensive guidelines for determination of eligibility of occupiers and tenants separately,” the department’s notification states. The government has ruled that such redevelopment projects would have to be completed within five years. The developers or the landlords have also been asked to create a corpus to “take care of the maintenance of the buildings for 10 years”.