The state-owned company, Shiv Shahi Punarvasan Prakalp Limited (SSPPL), could be given the task of redeveloping slum clusters falling in coastal areas.
On Monday, at the board meeting of the company, Chief Minister Prithviraj Chavan asked senior housing officials to work out a proposal to ascertain whether and how SSPPL could partner with private developers to redevelop the nearly 146 slum clusters that fall in the coastal regulatory zone (CRZ).
The housing department had put up a note on the issue asking whether SSPPL could offer a 51% stake, mandatory to redevelop the slums in coastal areas.
The Union Environment ministry lifted vertical restrictions on coastal areas in the city last year, giving a fresh lease for redevelopment in nearly 46% of the city, which falls in the CRZ. But, as a safeguard, the environment ministry had called for a mandatory 51% stake by public agencies to redevelop the shanties.
The state government has been unable to take this policy forward for the last one year. Chavan has now asked directors on SSPPL to brainstorm on the issue and work out what could be offered as equity by the public agency for the project.
“The modalities have not been finalised but we are checking whether SSPPL can be the public agency instead of setting up a separate Special Purpose Vehicle (SPV). One of the options suggested was that land cost should be offered as equity but this will not make the project attractive to the private developer. So, other options are being explored,” said Sachin Ahir, minister of state for housing.
If the cost of the land becomes the equity, then the developer will not have to pay up 25% of the ready reckoner cost for the encroached land to the state. However, as Ahir pointed out, in exchange the developer will have to share incentive FSI (Floor Space Index) of 3 with the state. FSI of just 1.5 may not lure the developers to partner the project. Another option is that instead of constructed tenements, the developer could give a plot with 1.5 FSI to the government, where SSPL could construct affordable homes.
An FSI is the amount of construction allowed on a particular plot. Higher the FSI, more the number of floors that can be added. However, SSPPL’s record leaves much to be desired. Since it was formed in 1996, to build free houses for the slum dwellers, it has been able to complete only 10 projects, constructing 111 buildings and 10,673 houses. The company has also been mired in controversy with the Comptroller and Auditor General (CAG) slamming it for extending undue profits to developers.
“SSPPL has not been able to really scale up or address housing issues in the state. However, now it has been decided that in certain projects where private contractors have been sitting on projects for years, the agreements will be cancelled. Also, where projects have languished because of the 70 % consent clause, it will be relaxed,” said Ahir. Perhaps, the only good news for SSPPL has been that the loss-making company has been turned around in the last two years. On Monday, the company presented a dividend cheque of around Rs 11 crore to the chief minister.