TOD & Land value capture policy

Presented by: Amal, Akhil, Aviral, Mahima | Monsoon Semester 2022

Master of Urban Transport Systems | CEPT University

Guided by: Hemangi Dalwadi, Shivanand Swamy, Tarun Sharma Teaching Associate: Reshma Mathew
 TOD policy
Year of release: 2017
Under National Urban Renewal Mission (NURM)

2
TOD & Land value capture | MUTS
 Questions
1. Why TOD Policy, Why is it so important in the present Indian scenario?
2. How does it work, Frame Work?
3. Concepts of TOD?
4. What is TOD policy?
5. If TOD zone, what is all needed for its operations (LOS)?
6. What are the components and tools that help in shaping this policy?
7. Existing TOD structure in India?
8. Investigating Delhi TOD Manual?
9. Who prepares TOD policy? Who appoints them?
10. Who Approves a TOD policy?
11. Who finances the TOD development?
12. Initiatives, budget 2021?
13. Challenges during Implementing TOD in India?

TOD & Land value capture | MUTS

 What is TOD Policy

Vision of TOD Policy

• Enable Transformation
• Accessible Public Transport Objectives
• Compact & Walkable Cities • Reduction pollution and congestion
• Reduction in private vehicle ownership
• Basic needs in the influence zone
Who will benefit from the TOD Policy? • Safe and easy movement and connectivity of NMT
• Government Ministries • Inclusive Habitat
• Government Departments • Preventing urban sprawl
• Citizens

- Indian cities with TOD Policy- Ahmedabad, Mumbai, Delhi, Belagavi, Bhopal, Bhubaneswar, Chennai,
Coimbatore, Devanagere, Guwahati, Indore, Jabalpur, Kochi, Chandigard, Raipur, Faridabad, Ranchi, Hubli-
Dharwad.
4
TOD & Land value capture | MUTS Source: National TOD policy
 concept of TOD
“TOD focuses on creation of high density mixed land use development in the
influence zone of transit stations”
1000m 1000m 1000m

Transit Route

Transit Stations

Influence zone

High Density mixed

used development

TOD & Land value capture | MUTS Source: National TOD policy
 Why TOD Policy, Why is it so important in the present Indian scenario?

To support high densities and higher levels of

mixed uses near transit nodes.
• Urban growth centers
• walkable and liveable communes
• high density mixed land-use.

TOD & Land value capture | MUTS

 How
Who prepares TOD policy? Who
appoints them?
The development Authority of the
city appoints a private entity to
create a TOD Policy
TOD & Land value capture | MUTS
Who Approves a TOD Who finances the TOD
policy? development?
Ministry of Urban Land value capture Mechanism
Development, Ministry of PPP Model
Housing & Urban Affairs
7
Source: National TOD policy
 Frame Work
National Urban Renewal Mission (NURM)
Comprehensive improvements in urban infrastructure, committing substantial funds for this purpose and requiring a series of reforms that would make the investments
sustainable

National Urban Transport Policy

Building bye-laws and planning norms should be revised for all cities so as to encourage high FAR and ground coverage along major PT corridors.

National TOD Policy

Based on National Urban Transport Policy, the TOD policy defined

TOD & Land value capture | MUTS

 If TOD zone, what is all needed?
-Operation (LOS)
Mode Level of Service Factors For Operation

Walking Sidewalk/path quality, street crossing conditions, land use conditions, security, prestige.

Cycling Path quality, street riding conditions, parking conditions, security.

Ride sharing Ride matching services, chances of finding matches, HOV priority.

Service coverage, frequency, speed (relative to driving}, vehicle and waiting area comfort , user information ,
Public transit
price, security,prestige.

Automobile Speed, congestion delay, roadway conditions, parking convenience, safety.

Telework Employer acceptance/support of telecommuting, Internet access.

Delivery services Coverage, speed, convenience, affordability.

9
TOD & Land value capture | MUTS Source: National TOD policy
 TOD Components TOD Tools
Multimodal
Street integration Complete PPP
Oriented
streets Street Safety &
building
Oriented Security
building
Informal sector Last mile
integration connectivity

Informal sector Universal

integration accesibility
TOD
Managed
parking
TOD Inclusive
habitat Support
Tools
Managed High quality
Parking Transit system
Traffic Optimised
Calming densities
Right size Technology
NMT Mixed infrastructure integration
network Landuse
Inter connective
Street network
“TOD focuses on compact mixed-use development around
transit corridors such as metro rail, BRTS, etc.”
10
TOD & Land value capture | MUTS Source: National TOD policy
 Implementation Levels

Station Level
Station Accessibility plans and Development Control regulations Indiranagar, Bangalore.

Junction Level
Safe Access interventions and better connectivity to transit, MIDC Marcie, Mumbai.

City Level
Parking Norms in India's most transit-rich cities, Mumbai and Delhi.

11
TOD & Land value capture | MUTS Source: National TOD policy
 Case Study of Delhi TOD Manual
• Year : 2014
• Prepared by: WRI, UTTIPEC, EMBARQ (Under
MoU)
• AIM:
• The Manual will be used as a guiding
document for Master Plan of Delhi 2021.
• MPD-21 contains provisions for TOD, this
manual will detail out relevant steps of the
TOD project
• In case of contradictions the norms of TOD
manual shall prevail
• Purpose of Manual
• Establishing rules and regulations
• Important codes of TOD including guidelines,
• Targets,
• Framework for monitoring and evalution.
TOD & Land value capture | MUTS
Chapter 1- TOD Principles
This chapter establishes 6 principles
and 3 redevelopment strategies
Chapter 2- Methodology
This chapter identifies 3 major
authorities and outlines the roles they will play.
1- Delhi Development Authority
2- Competent Authority (CA)
3- Developer Entity (DE)
Chapter 3 - Micro-level guidelines
Influence zone demarcation
Areas exempted from TOD policy
edges
FAR
Landuse
12
Source: National TOD policy
 Delhi TOD Manual
Glimpse of norms that manual covers:
A- FAR
• “The FAR shall be 1.5 times the existing permissible FAR
on the plot or 300, whichever is more.
• The maximum FAR limit for any plot included in TOD
Schemes shall be 500.
• Larger TOD Schemes with an area of 4 Ha and direct
access from roads of 30m RoW, will be eligible for FAR of
500 on all constituent plots, if feasible.” –TOD Manual
B- Ground Coverage
“Ground coverage shall be a maximum of 40% of the entire
TOD Scheme/plot area.” –TOD Manual
C- EWS Housing
“DE shall utilize a mandatory FAR of 15% over and above
the maximum permissible residential FAR for provision of
good quality EWS housing, as per the norms of MPD.” –TOD
Manual
TOD Manual is prepared in clear details and guidelines as it prevails over the development
Plan of the city.
TOD & Land value capture | MUTS
D- The entire development has to be compliant with the
mandatory sustainability provisions given in the UBBL and
prevailing MPD. These include:
• “Water Conservation and Management, including Rain
Water Harvesting (by Recharge), Low Water Consumption
Plumbing Fixtures, Waste Water Recycle and Reuse and
Reduction of hard cape.
• Solar Energy Utilization, including Installation of Solar
Photovoltaic Panels, and Installation of Solar Assisted
Water Heating Systems
• Energy efficiency, including Low Energy Consumption
Lighting Fixtures (Electrical Appliances - BEE Star and
Energy Efficient Appliances) and Energy Efficiency in
HVAC systems
• Waste Management, including Segregation of Waste and
Organic Waste Management”
–TOD Manual
13
Source: National TOD policy
 Delhi TOD Manual
Delhi Development Authority (DDA)
Pre- approval Stage • Providing primary data like geo-spatial
files
• To constitute and notify CA
• Outlining enforcement guidelines
• To set up TOD fund
• Approving TOD schemes and sanction
building plans
Preparation Stage • To ensure TOD policy is acc. to
development codes and norms
• Assistance during preparations of IZP
regarding electricity, water, roads,
transportation etc.
Implementation Stage • Renew approvals if needed
• To ensure existing traffic movement is
kept functional
Certification Stage • Issuing completion certificate
• Conduct quality assurance checks
• Ownership certificate after housing is
handed over
- The TOD Policy was implemented on time by 2020, right now Delhi is working on DP-41.
TOD & Land value capture | MUTS
Competent Authority
(Ministry of Urban Development)
• To fix EDC rates
• Acquiring land for effective TOD
• Amending of Terms and conditions of
TOD policy when necessary
• Clearances and Approvals of Plan
• To examine submitted TOD scheme
• To specify the details of land to be
handed over to DDA post completion of
the project
• To recover penalty from DE in case of
delay
• Granting approvals and extensions
• To ensure existing public area is
retained.
• part/full completion certificate
• To recover FAR charges and EDC from
DE
Source: National TOD policy
Segregation of roles
Developer Entity (DE)
• Identifying land which can be used for
dev. TOD
• To obtain EIA clearance
• To apply for TOD schemes approval
• Pay EDC and FAR charges
• Prepare plans and schemes specifies
under MPD-21 and TOD regulations
document
• Construction completion on time
• To make appropriate site arrangements
• Sell 50% of DUs (EWS) and sell 50%
to DDA
• To Payoff additional FAR and EDC
14
 Initiatives

Budget 2021
• No clear mandate for TOD in the county planning act till 2020.
• Central government added TOD-centric development in the financial budget 2021.
• It’ll ensure TOD Development Control Guidelines, which will be integrated during the Master Planning
Process itself.

Policies that tend be restrictive over a long period of time (through master planning exercise) can, in fact,
discourage higher-density living.
Hence having a framework that gives flexibility to city managers to guide the development is undoubtedly
a practical approach.
Singapore and Hong Kong exemplify this approach by varying their densities and floor space index in
response to market demand on an ongoing basis (Bertaud, 2014).

15
TOD & Land value capture | MUTS Source: National TOD policy
 Challenges Implementing TOD- India.
Making stringent off-street parking norms in TOD areas in Mumbai, a reality!
Addressing challenges of aspiration

Most often, we may have the right infrastructure plans, but we lack institutional
capacities!
Steps towards augmenting capacities within local governments

Implementation is the key!

• A proposal needs to be coordinated between line agencies
• Mandates is Town Planning Acts

How do we ensure that TOD models are equitable and inclusive?

Addressing sticky questions around gentrification and affordability.

16
TOD & Land value capture | MUTS Source: National TOD policy
 Land value capture policy
Year of release: 2017

17
TOD & Land value capture | MUTS
 Questions
1. What is value capture policy & why is it important?
2. What are the different methods of LVC?
3. What is the process of value capture?
4. What are the benefits of LVC?
5. On what basis an LVC method is selected?
6. Which is the most used method in LVC?
7. How is it ensured that the LVC funds are not misused?
8. At what stages of a feasibility study does LVC has a role?
9. How has LVC performed in India & other countries?
10.What are the limitations of LVC?

18
TOD & Land value capture | MUTS
 What is land value capture and why is it important?

LVC is a financial policy mechanism that helps

governments to:

• Finance public investment in infrastructure to reduce physical vulnerabilities due to floods, environmental degradation,
etc, thereby unlocking land values that are then captured by the city.

• Secure upfront infrastructure funding by regaining real estate value gains generated by infrastructure upgrades.

• Unlock additional funding in conditions where funds are lacking.

• Incentivize wider policy measures that increase land value.

19
TOD & Land value capture | MUTS Source: Value capture finance policy framework
 What are the Methods of LVC?
S. No Value Capture Method Frequency of Incidence Scale of Intervention
Annual rates based on gain in land value
1. Land value tax Area-based
uniformly
Fees for changing land use (agricultural to non- One-time at the time of giving permission for
2. Area/Project-based
agricultural) change of land use
One-time while applying for project
3. Betterment levy Area/Project-based
development rights
4. Development charges (Impact fees) One-time Area-based
5. Transfer of Development Rights Transaction-based Area/Project-based

Area (Roads, railways)/Project

6. Premium on relaxation of rules or additional FSI One-time
(Metro)

7. Vacant land tax Recurring Area-based

8. Tax increment financing Recurring and for a fixed period Area-based

9. Land Acquisition and Development One-time upfront before project initiation Area/Project-based

10. Land Pooling System One-time upfront before project initiation Area/Project- based

20
TOD & Land value capture | MUTS Source: Value capture finance policy framework
 What is the process of LVC?
• Project objectives
Initiation • Legislations & regulations

• Project area of influence

Planning • Land value impact analysis
• Stakeholder identification

• Identify value capture mechanism & establish funding structure

Design • Agreement od the states & ULBs

• Value capture implementation tools

Execution & • Fund management
operations • Monitoring & evaluation

21
TOD & Land value capture | MUTS Source: Value capture finance policy framework
 What are the benefits of LVC?

Helps recover capital Infrastructure becomes self- Increase in land values Enhanced monitory resources for
investment faster financed & tax revenues newer infrastructure goals

22
TOD & Land value capture | MUTS Source: Primary study
 On what basis an LVC method is selected?
CONTEXT PHASE LAND HOLDINGS /
TO BE ACQUIRED
Existing Operational
OR State Leasehold
OR
Greenfield/ New OR
Proposed/ Under-
Development Market Freehold
Construction

EXISTING: - OPERATIONAL: - STATE OWNED: -

Land pooling, TDR & TDR & Additional FSI - Easier to acquire
Additional FSI - Impact Impact Fees & Property land: Property Sales &
Fee & Property Tax Tax Development Rights

GREENFIELD: - PROPOSED OR U/C: - MARKET FREEHOLD: -

Joint Development, Joint Development, Use incentive based LVC
Land lease, Property Land lease, Property schemes:
Sales Sales , TIF Land pooling &
Urban Redevelopment

23
TOD & Land value capture | MUTS Source: Vivek Khurana,Financing Transit Development Through Land Value Capture
 How is it ensured that the LVC funds are not misused?
• In case of the impact fees, it is collected and deposited in a
1 separate account of the Municipality.

2 • The fees must be proportional to the cost of the infrastructure

• The improvement/construction of the infrastructure must be a

3 necessary action.

4 • Those who pay the impact fees must be benefitted by the

improvement, and all data should be transparent.

24
TOD & Land value capture | MUTS Source: Value capture finance policy framework
 At what stages of a feasibility study does LVC has a role?

Evaluation of
Institutional
transport Financing
arrangement
options

LVC will have a role The institutional Detailed LVC

while comparing framework will have to component has to be
financial strategies for include financing developed in the
different options agencies financial framework

25
TOD & Land value capture | MUTS Source: Value capture finance policy framework
 How has LVC performed in India & other countries?
• Delhi metro
• Hyderabad outer ring road
• Sabarmati riverfront, Ahmedabad
• Hong Kong metro

26
TOD & Land value capture | MUTS Source: Value capture finance policy framework
 Case: Delhi metro LVC ATTEMPTS:

Project description PROPERTY DEVELOPMENT (TOD) &

DEVELOPMENT RIGHTS
The Delhi Metro Rail Corporation (DMRC) is India’s first metro
system, extending over 348 km with 255 stations. It has enjoyed
very strong political and financial support from the national
30%
government, which leased land owned by various ministries and LVC Contribution
public agencies to DMRC. (Revenue Share)

The government provided Land for property development. Transit Operations

(11% of the construction costs ) Property Development
External Project Work
Remaining financing, including budgetary support, from Others
various agency by providing a sovereign guarantee. Revenue share for Delhi Metro

DMRC holds all the Decision-making power for metro Funded by Property
PHASE Metro Rail Project
construction and operation. Cost (In Crores) (In Crores) (%)
Delhi has complex governance and regulatory framework.
I ₹ 10,891.00 ₹ 762.37 7%

Difficult in obtaining II ₹ 19,390.00 ₹ 843.46 4.35%

development approvals for Subtotal ₹ 30,291.00 ₹ 1,605.83 5.30%
III ₹ 35,242.00 ₹ 1,586.00 4.50%
Floor Area Ratio Construction
Land Use Change Total ₹ 65,523.00 ₹ 3,191.83 4.87%
Modification Permits
Phase - wise Funding Arrangement for Delhi Metro
27
TOD & Land value capture | MUTS Source: World Bank 2013a / Vivek Khurana,Financing Transit Development Through Land Value Capture
 Case: Impact fee as a resource in Hyderabad
Project Aim

Improve resources

Recover cost

Strengthen financial resource of LGB

LGB:- Greater Hyderabad Municipal Corporation (GHMC)

Project description
In Hyderabad, a 1-kilometre stretch along both sides of the 162 km, eight-lane expressway Outer Ring
Road (ORR) has been designated as a Growth Corridor. Hyderabad Urban Development Authority
(HUDA) had anticipated large-scale development along it.

Special Development Special Impact Fee Is Classified As A Mixed Integrating Land Use
Regulations Along The Levied On Any Land Use Zone And Transport
Growth Corridor Development

28
TOD & Land value capture | MUTS Source: Value capture finance policy framework
 HUDA (Hyderabad Metropolitan Development Authority)
prepared a
The impact fee is collected and deposited in a
Special Development separate account of the Municipality.
Comprehensive Plan
Regulations
It is strictly not to be utilized towards general revenues or
• For the areas falling within the ORRGC. salaries and maintenance works. It should be utilized for

• Classified as a Multipurpose Use Zone, excluding the areas marked

for Roads, Open Space and Recreational, Transportation and Public Road Parallel Roads
Link Roads Slip Roads
Utilities and Amenities Zone. Widening
Junction Lighting Storm Water
Flyovers
Improvements Drains
ONE TIME IMPACT FEE
River-front And
• Collected at the time of granting building permissions. Parks

• Higher for commercial uses and increases with increasing building

height.
• Incentive is given for large projects.
- Large integrated townships - 10-25%
- IT, Institutions/Universities and Hospitals- 20-30%
In order to discourage owners from keeping their land plots
empty/vacant and undeveloped, the Municipality also levies a
Development Deferment Charge, and it is charged @ Rs. 10
per square metre of land per year from the date of
operationalization of traffic on the ORR.

29
TOD & Land value capture | MUTS Source: Value capture finance policy framework
 Case: Sabarmati riverfront, Ahmedabad
Project Aim

Public asset

Flood management

Pollution control

Creating land value

Project description

Urban 2 sqkm Portion of land

20 Km stretch allocated for sale
rejuvenation reclaimed land

30
TOD & Land value capture | MUTS Source: Value capture finance policy framework
 Case: Sabarmati riverfront, Ahmedabad
Existing Initial cost Infra. development Increased value

Poor Well serviced, 0.3 sqkm of

1200 Cr upfront
walkable waterfront reclaimed land for
urban riverfront public investment
sale

• Place for the poor to
build their hutments
• Inaccessible
• No new development
• SPV creation: SRFDCL
• AMC loaned money
• Slums resettlement
• Sewage upgrade
• Land reclamation
• River access open to • 15% of land up for sale.
public • 1700 Cr earned
• 2 sqkm of land has been • 1200 Cr returned to AMC
made available for
modern development • 500 Cr used for O&M
• 50 Cr earnings from
property tax

7-10 years

Using method of land reclamation & development, the government increased the land value & used the earnings to cover capital & operational cost,
making the project self financed.

31
TOD & Land value capture | MUTS Source: Value capture finance policy framework
 Case: Hong Kong metro
Project description

World’s most successful metro system

40 lakh daily ridership

870 million USD profit in 2012

Rail + Property program

218 Km network 10 rail lines 84 stations 3 islands

32
TOD & Land value capture | MUTS Source: Financing transit development through land value capture
 Case: Hong Kong metro Net income share

Original land owner Buys development rights Co-development

13%

MTR
Hong Kong Mass transit railway 34%
+ 15%
government (MTR)
Private party

• Sells development • SPV: MTR • Sells property at after rail

rights at before-rail • Gets cheap development price to capture increased 38%
price rights to develop rail value
infrastructure • Profits are shared
• Co-develops with private • Risk to MTR is reduced Rail operations Property development
party Station commerce Rental business

8-12 years

Using method of Rail + Property development, the government increases the land value around transit corridors, reduce risks & development cost
through PPP and use the profits to cover capital & operational costs of the rail system.

33
TOD & Land value capture | MUTS Source: Financing transit development through land value capture
 What are the limitations of LVC?
Impact fees Land acquisition & development
• Extra charges may hinder development activity • Regulatory /legislative limitations on public asset disposition may delay
• If applied improperly may become a disincentive to develop land to its the process
highest and best use • Public objection and political concerns are there
• Works best for hard and basic infrastructure that has direct impacts • Sale of government land may result in loss of control over future
(transit infra) development from government side

Betterment levies Land pooling

 Requires adoption of special regulations that are out of control of  Land owners’ consensus can be difficult to obtain
municipality  Requires strong project management and technical capacity,
 Delineation of special assessment area often follows jurisdictional borders particularly in negotiation with land owners
which causes imperfection in allocation of cost to actual beneficiaries

Land value tax Sale of development rights

 Needs technical capacity at municipal level for maintaining real estate  May not work in the secondary markets where demand for higher density
maps and land reassessment systems development is not strong enough

34
TOD & Land value capture | MUTS Source: Primary study
 Key Learnings

Land value capture is a very ingenious tool for the government to successfully finance infrastructure projects for many different contexts

35
TOD & Land value capture | MUTS Source: Primary study