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Table 6: State based scenario
by __bhumika
Land value tax 6
Tax Increment Financing 1
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Betterment Levy or Tax 5
Development Charges/Impact Fee* 8
Transfer/Sale of Development Rights or Air Rights 6
Premium on Additional FAR 7
Town Planning Schemes (TPS) 10
Note* every beginner city has the potential to implement the complex tools when its reached the moderate or advanced level, so the above suggestion is decided based upon the present study done and matrix no. (Author 2021)
PROGRESSION LEVEL (STATE BASED SCENARIO
Odisha Maharashtra Rajasthan Gujarat Kerala Madhya Pradesh Andhra Pradesh Karnataka
Beginner Advanced Moderate advanced Moderate Moderate moderate Moderate
Delhi Tamil nadu Assam Punjab
beginner Moderate beginner beginner
Table 6: State based scenario
INFERENCE: Maharashtra and Gujarat are most developed in case of Value Capturing compared to other states. Betterment levy tax is lowest so the cities of state on which it is applied it Can Serve as a model so a peek into how the states of Maharashtra , Gujarat ,Andhra Pradesh , Karnataka ,and Assam have
implemented it. (Author 2021)
End Result: SIMULATION AFTER ANALYSIS OF STATE AND TOOL BASED SCENARIO.
After analysis study of, least two applied tools on matrix which are complex is carried out And two states which are advanced level are selected to study the tools to understand how it was successful and what can be done by others to implement it and realise full potential. Questionnaire on the same is prepared based on structure of the tool and what changes or interventions needed ahead for better functioning (smart cities officials and Municipal Corporations within Gujarat are to be targeted to narrow down the scope),
Major Findings: Correlation between the value capture Tool’s Nature and progression of Cities.
Evaluation of Survey Form.
Note* every beginner city has the potential to implement the complex tools when its reached the moderate or advanced level, so the above suggestion is decided based upon the present study done and matrix no. • Advanced city= Complex, fair moderate value capture tools can be applied to realize the potential. • Beginner city= easy value capture tools can be applied to realize the potential (Author 2021)
METHODOLGY
Figure 9: FRAMEWORK OF METHODOLOGY (Author 2021)
Figure 8: SNAPSHOT FROM ARCSURVEY
Survey form was created and floated to Targeted audience: Government officials and Smart city officials of Gujarat Smart cities about 70 respondents were expected out of which about 54 responded back.
1.Betterment levies
Figure 10: DASHBOARD FOR SURVEY QUESTION 1 INFERENCE: Above dashboard depicts that the ready reckoner rates should be more dynamic as 68% of respondents have voted for it while only 7 % are against it, further 24% think that it should or should not.
2. Betterment levies revolve around ready reckoner rates so should Gujarat which has Area based development charge should also adopt VCF system of development charge which is (land +building: 2%+0.5%)
Figure 11:: DASHBOARD FOR SURVEY QUESTION 2
INFERENCE: Above dashboard depicts 50% of respondents agree to adopting value based betterment levy, while 27 % think it has a potential and 22% think, value based betterment levy should not be adopted
INFERENCE: Above dashboard depicts that the if adopted, value based development fee should be (2%+0.5%) land +building which is ranked highest followed by the other two options.
Value based development fee percentage 3.If yes, VCF system should be adopted for the state., what should be percentage of (land +building)
Figure 12: DASHBOARD FOR SURVEY QUESTION 3
Figure 13: DASHBOARD FOR SURVEY QUESTION 4
Figure 14:: DASHBOARD FOR SURVEY QUESTION 5
Figure 15: DASHBOARD FOR SURVEY QUESTION 6
Intervention in Development
4.If no, VCF system should not be adopted but if changes are to be made, should there be increase in the rate of development charges which is presently 1-10 per square metre, if yes how much charges
Set up of Value Capture Fund
5.The value Capture gains that could be attributed to future public infrastructure investment, a dedicated Value Capture fund should be set up
Reducing the high cost for applicability of betterment levies.
6.According to you, if the cost of administering parcel-by-parcel betterment levies could be high compared to the collected revenue, so to
INFERENCE: Above dashboard depicts that if the value based development fee should not be adopted then the betterment fee as per 29 respondents should increase by 1-3% in first priority and followed by other two options.
INFERENCE: Above dashboard depicts that 66% of respondents agree to setting up of a separate value capture fund, while 33% do not support the idea.
INFERENCE: Above dashboard depicts that 81% of respondents agree that self-assessment of properties at regular intervals can help reduce the cost of collecting the betterment levy.
overcome what should be done should Revaluation of properties at regular intervals,
Collection medium for municipal records
7.So in a country India, what medium has the municipal corporation adopted to get the up-to-date property data, recorded land values etc.
Need for Capacity Building
8.Researchers should study, document, and explain the different outcomes of TIF use in various geographic areas, capacity building should be adopted for TIF (Municipal bonds)
Raise in Incentives for promoting TIF
9.The central government had announced incentives for municipal bodies who raise funds through these
Figure 16:DASHBOARD FOR SURVEY QUESTION 7
Figure 17:: DASHBOARD FOR SURVEY QUESTION 8
Figure 18:DASHBOARD FOR SUREVY QUESTION 9
INFERENCE: Above dashboard depicts that the 50% of respondents have responded affirmatively to the option of hardcopy which says it is the most prevalent medium for collection of municipal data.
INFERENCE: Above dashboard depicts that majority which is 53% of respondents agree that capacity building can help cities to implement TIF.
INFERENCE: Above dashboard depicts that majority which is 53% of respondents agree that capacity building can help cities to implement TIF.
Parameter on Value Capture on being innovative
10.Value Capture tools is an innovative because it has the most potential to bear the capital costs, unlike other modes of collection which only bear the O&M
Also the future scope of this study can be to study the least applied/ complex tools in depth and what more changes should happen at policy level so additional revenue can be generated for municipal finances and can be applied in a real time scenario.
Figure 19:: DASHBOARD FOR SURVEY QUESTION 10
INFERENCE: Above dashboard depicts that 31% agree that A dedicated value capture fund should be set up while 48% had a neutral opinion.
FUTURE SCOPE AND LIMITATIONS
The study was focused on advanced state of Gujarat so further it can be expanded to other states to get a holistic approach of value capturing India. It’s at a very nascent stage but has the most potential to add revenues to the municipalities. It’s essential for a self-sustaining any project and also fund other projects which make it a very reliable tool.
CONCLUSION AND RECOMMENDATIONS
This study was able to capture the concept of Value Capture Finance in India and tools related to it the VCF (Value capture Framework Policy) released by Ministry of Housing and Urban Affairs. Apart from the framework, mapping was done for each tool and its applicability in states. A matrix was prepared which categorized that which tools were most and least applicable in Indian states. Two major findings were obtained
1)A correlation was observed that the beginner state usually should opt for least complex tools as they are still developing and have other issues to deal with at the moment.
2)As a result in state based scenario Gujarat and Maharashtra had the highest score in terms of using value capturing tools. In Tool based scenario TIF and Betterment levy were the least applied tools over India.
So to support the results a questionnaire surey was prepared that what interventions can be done in least two applied tools so they can be replicated and used in other states as well. The questionnaire was floated in Gujarat as it being the advanced state as per our previous findings. And to get a more specific outcome targeting the smart cities Rajkot, Ahmedabad and Surat as they have the most potential to capture value. This addressed the changes which can be done in the structure of tools so they can be used efficiently in other states.
Intervention in the model after setting up the value capture fund
1. Ready reckoner rates should become for dynamic compared to being more static 2. Adopting value based ready reckoner rate which is (2+0.5%)land + building for Gujarat. 3. Increase in development charges about 1-3% if value based ready reckoner rates not to be adopted in the state 4. Introduce self-assessment for reducing the cost of gathering data for implementing betterment levy 5. Online structure should be adopted for using betterment levy so cost of assessing the records physically can be avoided. 6. Capacity building should be carried out so state can implement Municipal bonds in their cities and generate revenues over time. 7. Increase in incentives given by government for Municipal bonds(TIF) to 16-20% which is 13% for now this can attract more states to implement the tool 8. Setting up a dedicated value capture finance to ensure the funds are used for funding other infrastructure only, this can be a stellar intervention if applied in real time. As it can be neared that the funds are used only for the infrastructure projects’s CAPEX and no other purpose.
Recommendations
Figure 21: Structure Before intervention Figure 20: Structure After Intervention
Value capture fund
REAL TIME CASE STUDY APPLICATION APPLICATION OF SUITABLE VALUE CAPTURE TOOL :SILVASSA
(The Potential of Land Value capture 2017)
INTRODUCTION
The main objective of these case studies is to analyse the feasibility of using land value capture instruments to finance the public interventions. To this end, we describe interventions and their impact areas, detail the costs of each project, estimate the initial value of the of land and buildings, and project the potential impact of interventions on valuation. Finally, we assess the financial prefeasibility and affordability of land value capture, and provide guidelines to assist in project implementation.
(The Potential of Land Value capture 2017) In this way, this section seeks to answer the following questions: • To what extent can the capture of the value generated by public investments and land use regulations help finance infrastructure projects of Silvassa? • How can we make value capture affordable? • Which could be the most effective land value capture instruments for financing the Inner ring road project of Silvassa Smart city?
General context
At the same time, 50% of the ring road is converted intoational highway. Based on the National Highway the adjacent plot cannot be directly accessed from the national highway51. So in future one also needs to think about converting the outer ring road in to the national highway as it could be dangerous for thecitizens of Silvassa when the national Highway would be passing through the part of the city and because of this there will be huge amount of land which will be land locked around the edge of the national highway buffer on both sides (Consultancy 2020)
Silvassa is a Capital of UT Dadra and Nagar Haveli, city of approximately 460,000 inhabitants that is located between Gujarat and Maharashtra. As the capital of UT Dadra and Nagar Haveli, it is where the main political, administrative and cultural activities of the region converge.
Silvis’s strategic location and conducive business environment have led to its emergence as a significant industrial centre. As a consequence, between 2001 and 2011, the city’s population has NOTE
The main objective of these case studies are to analyze the feasibility of using land value capture instruments to finance selected public interventions
Figure 23: MAP OF INDIA
Figure 22: RING ROAD SILVASSA Figure 24: ROADS OF SILVASSA
almost doubled. This rapid development in the city has impacted mobility, public spaces and delivery of basic services. The city also serves as a gateway to other tourist destinations in the district. Accordingly, an area of about 2200 acres (~50% of city area) having an impact on 63% of the population had been identified for retrofitting with three distinct objectives under the smart city vision (Silvassa Smart city vision report July 2020)
Based on an extensive literature review, SWOT analysis,
Discussions with various government departments, and a city level gap analysis, the following key city characteristics along with corresponding issues were identified: • located industrial hub: 1,235 small and medium industrial units employing over 48% of Silvassa’s working population, located towards the north of the city along the PIPARIYAriverfront, with low levels of basic services • Rapidly growing city centre: infrastructure provision has not kept pace with city’s rapid population growth (population has doubled in a decade); city centre with high level of mixed use; confluence of heavy vehicles and city traffic, poor pedestrian facilities; unregulated parking; low last-mile connectivity for water supply and sewerage; insufficient avenues for art, culture and recreation • City with rich tribal heritage: 13.2% of city population is tribal (famous Varli paintings)
CASE STUDY: SILVASSA INNER RING ROAD PROJECT
Application of the methodology project description:11.3 km ring road
Cost-66.6 crores
EPC contract
Pwd public works department.
• City of riverfronts: Damanganga (3.8 km) to the west and Pipariya (5.6 km) to the north; Damanganga riverfront development already underway though low in active use.
Area of the intervention
The impact area is the area over which the Project affects land and building values. The improvements carried out in the Intercultural
LAND USE
Planning Zone Planning Sector Nodal Village /UA Villages and Urban Areas covered I Planning Sector - A Dadra Dadra, Demani, Tighra Planning Sector - B Silvassa Amli UA Silvassa Amli UA, Samarvarni, Athola, Vaghchhipa Planning Sector - C Rakholi Masat, Saily, Karad, Kudacha, Rakholi
The overall growth in population of the territory in the next 20 years shall not exceed 10 to 12 lakhs 10-12 lakhs, differential FSI at this stage shall not be necessary which is based on differential density. Therefore it was recommended that there is no need to micro zone the residential zones in to sub zones based on density. There can be one Residential zone with uniform density and FSI . NOTE
Impact area of the intervention. The impact area is the area over which the Project affects land and building values. The improvements carried out in the have the potential to generate value by making land use more productive in the surrounding areas by providing goods and services to residents and attracting more customers to businesses located in the area
Figure 25: LAND USE PLANNING
Centre have the potential to generate value by making land use more productive in the surrounding areas by providing goods and services to residents and attracting more customers to businesses located in the area NOTE Ward wise bifurcation of the SMC, silvassa municipal corporation.
Figure 26: ZONE MAP SILVASSA
NOTE
The entire inner ring road project is highlighted in the google maps
Figure 27: RING ROAD PROJECT
