Urban Land

Economics

Anshita Gupta | 223710004

M.UDD (Sem III)
 Land Value capture in urban Land Economics Instruments of land value capture
What is Land Value Capture ? • The Land value capture
model which works on
• Land value capture is a policy approach that Additional Development
enables communities to recover and reinvest Rights, which allows to
land value increases that result from public generate finance by
investment and government actions. collecting additional
• Land value capture is rooted in the notion taxes from the area of
that public action should generate public influence of infrastructure.
benefit.
• Land Value • Earlier, ULBs are not able
capture (LVC) is a to raise this much amount
way of ensuring of fund, so urban local
that benefits bodies can also raise
generated by fund by taxation in the
infrastructure area of influence by
projects, including laying Additional
increase in Developing Rights (ADRs)
property value, around the infrastructure
help fund those development.
projects.
Source: Global compendium of land value capture policies
Land value capture in India
• India is a federal republic with a two-tier subnational government structure: 28 states and 8 Union Territories.
• In India government works at the regional level and 267 468 local governing entities at the local level, among municipalities and rural local bodies
(Panchayat).
• The state governments are responsible for creating the legal framework for land value capture as they are in charge of land and hence land value capture.
• The central government legislates on behalf of Union Territories.
• The national policy document that guides the use of land value capture instruments is the Value Capture Finance Policy Framework (2017), elaborated by
the Ministry of Urban Development.
• The state is responsible for local laws, including Master Plans.
• Most master plans are prepared by State Town and Country Planning departments or Development Authorities.
• Land is the most fundamental asset that the State and ULBs have which are owned and managed by them, and it can be a resource to generate
revenues.
• The value of land is determined by three variables: demographic factors, regulations, and infrastructure investment.
Types of Land Value capture

• LVC may be classified in macro level, as direct or indirect instruments.

• Macro instruments consist either in land nationalization; substitution of
private property by long-term public leaseholds land banking or land.
• Direct instruments seek to capture rises in real property values, based on
Land Value capture three stage process the rationale that landowners should share with the overall community the
wealth generated by general economic or community conditions, public
infrastructure, or land use plans or development decisions
• Indirect instruments are aimed at capturing unearned increments in order
to fund specific public services.

Direct value capture

• Disposal of land
• Convert land into income generating asset (self or JV)
Indirect value capture
• Improved carrying capacity (additional FSI)
• Improved quality (land value tax,, betterment levy, impact fee, tax
incremental financing, etc.)
Types of Land Value capture Mechanism
LVC mechanisms can be of three types: tax-based, fee-based or development-
based, providing either one-time or recurring revenues.
 Types of Land Value capture Case Study : Nagpur, Maharashtra
FSI and Betterment Levy for TOD zone
Nagpur Population • Maha-Metro
(MMRCL) is
3 Million
“Special Planning
Nagpur Area Authority” for the
metro corridor.
393.5 km² • Property
development
Population Density
spaces (land and
95 person per ha. airspace rights)
have been
identified and
are planned to
be leased for
period of 50
years.

Source:https://www.sketchbubble.co
m/en/presentation-maharashtra-
map.html
• Nagpur is geographically
located at the central part of
the country.
• It is located equidistance
from various locations ,
having good rail and road
connectivity.
• It has the potential to
become a key logistics hub
of central India.
• Strategically located in the heart of India
• Zero Mile of India located at Nagpur
• Largest city in central India
• Second capital of Maharashtra
• Regional headquarters for Vidarbha Region
• It has one of the highest literacy rates at
92.0%
• Chosen in Round 2 of the Smart Cities
Initiative
• Popularly known as the “Orange City”, for its
orange fruit production
• Due to its central location in India, transit
terminal for trains that connect the country
lengthwise and breadthwise, especially trains
connecting India's major metropolis.
Commercial development at Sitaburdi (land area 5 acre; BUA: 8.5 lakh sqft;
FSI: 4; lease period 60 years)
• The estimated cost of Smart City project is Rs3,577.77 crore (Rs 100 Cr
every year for 5 years) and state government will contribute RS 250 Cr.
• The Nagpur Improvement trust will bear NMC’s share of 250 Cr.
• The remaining cost will have to be raised through land pooling, PPP
projects, Regularization and other charges.
• It also includes the land value tax, fee for changing land use, betterment
levy, premium on relaxation of FSI, Vacant land tax, tax increment
financing, zoning relaxation for land acquisition and land pooling.
• The implementation will be done by ABD town planning scheme.
• State government has increased stamp duty from 6.5% to 7.5%
(additional 1% surcharge – betterment levy) in the Metro Corridor (500
meter on both sides)
Land pooling model for Expressway project Land pooling model for SEZ and MIHAN
Land Pooling Models • The Butibori industrial area is the largest in
• The Mumbai-Nagpur Super Communication Expressway all of Asia in terms of area.
Project LPS • The estate's largest unit is of Indo Rama
• The 710-kilometre-long Mumbai-Nagpur Super Synthetics, which manufactures synthetic
Communication Expressway project proposes to connect polyester yarn
Mumbai and Nagpur through Wardha, Amravati, Washim,
Buldhana, Aurangabad, Jalna, Ahmednagar, Nashik and • Nagpur has developed in this sector
Thane before finally touching Mumbai. after the commencement of "MIHAN
• The total conceptualized land requirement is 20,820 ha, out of project" (Multi-modal International
which 85 percent is private agricultural land. Hub Airport at Nagpur) and "Special
• Out of the total land, 8250 ha is for the highway, 1500 ha, land Economic Zone" in Southern suburbs
for way side amenities and 10,800 ha for node development. of Nagpur City.
• The project will include 24 development nodes which will
• The MIHAN project is
include commercial sites, agro-processing units, information
spread over on
technology services etc.
about 4300 Ha. of
land of which
Airport is on about
1360 Ha. SEZ is on
about 1236.21 Ha.
• The area outside SEZ
comprising of R&R,
PAP, Residential,
Commercial and
others SEZ related
facility on about
1013 Ha.
• For un-built plots, the authority will appropriate 40% and return 60% of the land to the
owner
• In the rare case where a built property is impacted,
• The owner shall be compensated in any of the following manners- land at an
alternate location within the TPS area
• Increased FAR
• Transfer of Development Rights
Types of Land Value capture Case Study : Ahmedabad, Gujarat
DMIC : The Delhi Mumbai Industrial Corridor in Gujarat
Ahmedabad
Population • In the context of the DMIC, making Gujarat a valuable ‘limiting
case’ for Make in India’s corridor-based development strategy.
8.5 million • Industrial estates were established using the principle of eminent
City Area domain within the then existing Land Acquisition Act, 1894.
• Delhi-Mumbai Industrial Corridor, turning spatial planning into a
505 Sq. Km. series of externally-marketed infrastructure investment
District Area opportunities.
• Institutions focused on small-scale industrial development, but has
8087 Sq. Km not resolved underlying contradictions around land acquisition, or
Land readjustment (TP scheme) for building consensus in support of its entrepreneurial vision.
• DMIC Development Corporation coordinate investment while at
Sabarmati Riverfront the State-level, project approval land acquisition are managed by
• By channeling the river to a constant width of 263m, newly-established nodal agencies.
riverbed land of 204.91 hectares has been • the process of land conversion by tabling amendments to the
reclaimed. Right to Fair Compensation and Transparency in Land Acquisition,
• The public riverfront extends up to a length of 11.25 Rehabilitation and Resettlement (RFCTLARR) Act
kilometers within the city on either banks.
• The Sabarmati redevelopment was initiated to
restore public access to the river and reduce the
risk of flooding.
• The project was initiated in 1997 with the formation
of a special purpose vehicle (SPV), the Sabarmati
Riverfront Development Corporation Limited
(SRFDCL), to undertake the development of the
riverfront and to return developed land and public
amenities to Ahmedabad Municipal Corporation
(AMC) in order to recover the project costs.
Land readjustment (TP scheme) for Spatial growth of the city
• TPS has many similarities to land readjustment as it is practiced in countries • All TPS go through
such as Germany, Japan, and China. three stages:
• In TPS the state government initiates the process, while in other countries draft,
municipalities and landowners initiate and manage land readjustment preliminary,
projects.
and final
• TPS is a planning, infrastructure development, implementation, and financing
tool that can be used to define in the details of a development plan schemes.
• TPS is works, as prescribed by the 1976 Gujarat Town Planning and Urban • Each stage needs
Development Act (GTPUDA) and its subsequent amendments (Gujarat to be approved
Legislative and Parliamentary Affairs Department 1976). by the state
government.

• The TPS focuses

on a particular
area (100-150
• This includes hectares in size)
development of and takes a
roads, comprehensive
infrastructure, approach
buildings etc.
• The plan shows the location of proposed roads, which take up 15–20 percent
of the total area under consideration, as well as the location of other
amenities, such as parks, low-income housing, schools, neighborhood
centers, and land to be auctioned by the government, all of which constitute
another 15–20 percent of the area.
• The remaining 60–70 percent of the land is returned to the original owners,
Source:https://www.scribd.com/presentatio
with the same proportion of land having been deducted from each plot of n/597478009/TOD-Land-Value-Capture-18-8-
land. 22
TOD development with increased FSI

Residential
Dwelling units
built up area
(Sq.mt.)
Up to 50

More than 50
and up to 66

More than 66
and up to 80
• TPS have been used to provide road connectivity (e.g., the Bus Rapid
Transit System-BRTS, Sardar Patel ring road of about 76 km, build in
2002-2006).
• Infrastructure- sewerage, storm water drainage, street lightning etc.
are also provided by TPS.
• Due to the establishment of Gujarat Industrial Development peripheral
development which was unplanned, resolved by TPS.
• Affordable Housing means residential development for providing Affordable
Housing of dwelling units up to 80 sq.mts along with ancillary commercial use
up to 10% of the total utilized FSI.
• Minimum density for any proposed Residential Affordable Housing shall be
225 dwelling units per hectare and part thereof Floor Space Index (FSI) shall
be regulated as under:
• To avail the benefits of “RAH”, minimum FSI of 1.8 shall be utilized and
maximum 2.7 would be permitted.
• In addition to the provision other provisions, the areas of staircase,
passages and corridors shall also be exempted for the computation of
FSI.
• Common plot for affordable housing shall be 10%.
• Provision of solar panel and percolation well is compulsory for all type of
development projects.
References
• https://events.development.asia/system/files/materials/2018/11/201811-station-area-development-mumbai-ahmedabad-high-speed-rail-project.pdf
• http://rnbgujarat.org/document/vol_1B_summary_2020.pdf
• https://timesproperty.com/news/post/casagrand-partners-with-saurav-ganguly-blid5452?offset=1
• https://www.teriin.org/sites/default/files/2020-08/Background%20Paper.pdf
• Amirtahmasebi, R., Orloff, M., Wahba, S., & Altman, A. (2016). Regenerating Urban Land: A Practitioner’s Guide to Leveraging Private Investment. In
Regenerating Urban Land: A Practitioner’s Guide to Leveraging Private Investment. World Bank, Washington, DC. https://doi.org/10.1596/978-1-4648-
0473-1
• Angel, Shlomo. (2012). Planet of cities. Lincoln Institute of Land Policy.
• Barthakur, A. (2017). Urban Resilience Workshop Bangkok, Thailand November, 2017 Global Best Practices to Raise Capital Through Land Value Capture-
Use of Public Assets.
• Capacity Building for Improving the Implementation of Affordable Housing in Indian Cities. (n.d.).
• Comprehensive Mobility Plan for Nagpur-Draft Final Report Comprehensive Mobility Plan for Nagpur Comprehensive Mobility Plan for Nagpur-Executive
Summary. (n.d.).
• Delhi Mumbai Industrial Corridor Delhi Mumbai Industrial Corridor (DMIC) Project. (n.d.).
• Development Bank, A. (2022). ASIAN DEVELOPMENT BANK REALIZING INDIA’S POTENTIAL FOR TRANSIT-ORIENTED DEVELOPMENT AND LAND VALUE
CAPTURE A QUALITATIVE AND QUANTITATIVE APPROACH.
• Economic and Social Commission for Asia and the Pacific Empowering cities to implement the 2030 Agenda for Sustainable Development and the New
Urban Agenda: mobilizing municipal finance for sustainable infrastructure in the Asia-Pacific region. (2018).
• Game Changers in Transit Oriented Development. (2017). www.niua.org
• Habitat International Coalition. Housing and Land Rights Network. (n.d.). India’s smart cities mission : smart for whom? cities for whom? : update 2018.
• INDIA SMART CITY MISSION INDIA SMART CITY MISSION THE SMART CITY CHALLENGE STAGE 2 SMART CITY PROPOSAL SMART CITY CODE. (n.d.).
• Joint Feasibility Study for Mumbai-Ahmedabad High Speed Railway CR(5) Joint Feasibility Study for Mumbai-Ahmedabad High Speed Railway Corridor
FINAL REPORT. (2015).
• Land Value Capture. (n.d.).
• Land Value Capture Financing for Implementing Transit Oriented Development in Indian Cities. (n.d.).
• Peterson, G. E. (n.d.-a). Unlocking Land Values to Finance Urban Infrastructure.
• Peterson, G. E. (n.d.-b). Unlocking Land Values to Finance Urban Infrastructure.
• REFORMS IN URBAN PLANNING CAPACITY IN INDIA Final Report. (2021).
• srfd-feasibility-report-epc. (n.d.).
• The primary sector of the economy includes any industry involved in the extraction and production of raw materials, such as farming, logging, hunting,
fishing, and mining. (n.d.).
• VALUE CAPTURE FINANCING vis-a-vis TRANSIT ORIENTED DEVELOPMENT Case of Nagpur and Hyderabad Metro. (n.d.).
• Value Capture From Infrastructure Investments for Smart Cities. (2016).