Government agencies have raised strong objections to a proposal that they claim seeks to pass “undue benefits” estimated to be Rs 700 crore to the developer of One Avighna Park — a twin 64-storey super luxury project coming up in Parel — billed as Mumbai’s new luxury landmark.
The Nish Developers project, which includes “sky villas and sky mansions”, is also Mumbai’s first cluster redevelopment project.
The bone of contention is a proposal by the developer for grant of floor space index (FSI) incentives for rehabilitation of commercial tenancies that his own firm and an investor firm acquired from “non-cooperating” tenants. FSI is a development tool that defines the extent of construction permissible on a plot. It is the ratio of built-up area to plot area.
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The tenancies under question are spread over a staggering 2.54 lakh square feet. Official sources have claimed that the developers have approached the government for grant of FSI incentives meant for residential tenements under the revised cluster redevelopment policy, arguing that the policy provided for such a conversion in user.
For a cluster redevelopment project of One Avighna Park’s size, current norms permit 70 per cent FSI incentive over area occupied by residential tenants with the developer allowed to use a proportionate built-up component for his sale area.
This simply means the developers have approached the government for permitting an additional built-up area of about 4.3 lakh square feet. With real estate market rates in Parel averaging close to Rs 30,000 a sq ft mark, government sources said approval for such a
move would augment the developer’s sale component by Rs 700 crore or more.
But after the office of the deputy director of town planning raised strong objections asking “how the developer could be entitled for incentive FSI for rehabilitating himself”, Municipal Commissioner Ajoy Mehta, who also heads a high-powered committee for cluster redevelopment projects, has sought a report on the issue from the Maharashtra Housing and Area Development Authority (MHADA), which owns the land under redevelopment. “I have asked MHADA to look into the issue,” Mehta said, declining to elaborate further.
His predecessor Sitaram Kunte, however, had vehemently opposed the move. “FSI incentives (under cluster redevelopment) are offered as a welfare policy for the social objective of rehabilitating bonafide eligible tenants. The developer becomes entitled to FSI perks only because he performs rehabilitation of such eligible tenants,” an official note, accessed by The Indian Express, quotes Kunte as saying.
“The essence of rehabilitation of tenants was missing in the case of the developer’s proposal with the developers/other companies acquiring 46 tenancies. Question arises as to whether the developer is entitled for FSI perks for rehabilitating himself, along with all consequential benefits of fungible FSI without the levy of premium. In the absence of an owner/tenant relationship, benefits of incentive FSI were undesirable,” Kunte further says in the note.
For the record, Nish Developers has claimed that the 46 tenancies had been in existence for over 80 years. “The tenants occupying these structures were unwilling to wait for nine-ten years for the redevelopment, and hence offered to surrender their tenancy rights. We invited investors to acquire these through legal means,” said Kailash Agarwal of Nish Developers.
Official records, however, show that almost all of these were acquired either by Avighna India, a firm where Agarwal himself holds 10 per cent stake, and one Assay Developers.
But the deputy director (town planning) has claimed that such a tenancy transfer was “illegal”, citing restrictions imposed under Maharashtra Rent Control that do not recognise creation of new tenancies post June 13, 1996.
“Transfer of tenancies after this 1996 cut-off amounts to a new tenancy,” he has claimed, citing an October 2013 report of former state’s advocate general Darius Khambatta, which was submitted to the government in reference to a South Mumbai redevelopment project.
“Only tenancies constructed before June 13, 1996 can be considered eligible for rehabilitation,” the town planning office has claiming, adding, “the transfer of tenancies in the instant case had been done to facilitate appropriation of premises in the redeveloped building by the builder to boost his sale in the open market for gains.”
Agrawal, who has submitted a legal opinion from former advocate general V R Manohar, has however argued that “restriction on the transfer of tenements is governed by provisions of Maharashtra Rent Control Act, only till a cooperative housing society is formed”.
The government had initially toyed with the idea of referring the matter to current advocate general Sunil Manohar, who is Manohar’s son.
The town planning office has further said allowing transfer of tenancies would encourage “anti-social elements to acquire old tenancies in Mumbai”.
Government agencies have also questioned the developer’s move to seek incentives provided for residential rehabilitation for these tenements, arguing that this was a “ploy to bestow undue benefits to the developer.” Agarwal has however claimed that the revised policy already provided for such a conversion and that this was needed. “We could not accommodate all commercial tenements on the ground floors. Moving to a higher floor results in loss of business since the value of a ground floor commercial unit is higher than the upper floors.
To compensate for this loss, we offered them residential rehabilitation tenements,” Agarwal said, blaming “vested elements” in the government for “blocking his perfectly valid proposal”.
Agarwal has also approached the government for allowing FSI perks to regularise extra areas such as balcony, elevation, features etc constructed, without premium payment, for the rehabilitation tenements. While Kunte had objected to it claiming that “granting such perks would not make any material difference to the tenants while passing on undue benefits to the builder,” Mehta has sought MHADA’s report on this too. Permission to such a move might decrease the surplus area that the developer has to hand over to MHADA.