Tuesday, September 16, 2008

Case for densification

The last Maharashtra Budget eased the Floor Space Index (FSI) restrictions for Mumbai suburbs from 1 to 1.33. FSI is the ratio between the total plinth area of the building and the total extent of the land. FSI is most Asian cities varies from 5 to 15 and in many western cities go upto even 25, while the highest permissible FSI in any Indian city does not cross 3.

That FSI restrictions have created numerous market distortions. An excellent study of these distortions in Mumbai is documented here.

In many ways the FSI restrictions are a tax on urban residents by forcing up rental and land values, keeping percapita operation and maintenance expenditures on civic infrastructure higher, and preventing the full realisation of the network effects that make cities so vibrant and enterprising. A case for higher FSI is made here.

The commonly held arguments against any FSI relaxation is that it would put unmanageable strains on the local infrastructure. They argue that in any case civic infrastructure in many Indian cities is so poor that, it will not be able to withstand such densification. Policy makers regard densification as being socially undesirable due to perceived social problems that come with it. Comparisons are made with the numerous crime-infested and poverty-stricken housing estates for the poor that dot the suburbs of many American and European cities.

Such arguementa are much like the regular chicken and egg story. It fails to acknowledge that both FSI relaxation and infrastructure improvement should go hand in hand. By refusing to relax the FSI beyond small tinkering, the Government is effectively restricting the development of infrastructure with higher carrying capacity. In fact, the massive civic infrastructure projects being implemented under the Jawaharlal Nehru National Urban Renewal Misions (JNNURM), with project life of 30 to 40 years, are all being built with the exisitng FSI assumptions. They cannot cater to any dramatic FSI revisions.

Further, most of our cities are facing severe land scarcity, driving up land and rental values to stratoshepric heights. Given the reality of increasing urbanization and the impossibility of finding new lands, the only alternative available is to go vertically up or to watch the urban sprawl grow. We need to both permit higher FSI and also incentivize re-development of sub-optimally utilized lands. In this context, one of the most important targets should be in-situ re-development of large urban slums. Such urban renewal projects have siginificant business value and can be more efficiently done on a Public Private Partnership (PPP) mode.

The Andhra Pradesh Government was the first to come up with regulations dispensing off with FSI restrictions and regulating development based on minimum plot size, road width, and setbacks. The regulations permit unlimited height for buildings constructed on large plots abutting 100 ft and above roads, with setbacks of atleast 16 m on all sides. While this will surely incentivize densification in the newer settlements, it is likely to have limited impact on the downtown areas as there are very few large sites which become eligible to utilize these relaxations. It also does not address the issue of redevelopment in any specific manner.

Several State Governments across the country have tried to incentivize redevelopment of old buildings, older areas of cities, and slums, by providing additional FSI. But unfortunately, this incentive has been used mostly for road widening and not for urban renewal projects. Further, many of these efforts face opposition from environmental and other activist opponents and get derailed by court litigation.

The Andhra Pradesh State Government recently decided to amend the building rules in the high value Banjara Hills and Jubilee Hills areas for residential and commercial buildings. The height restrictions were increased from the existing 10 m and 15 m for residential and commercial buildings respectively, to 30 m. While this concession is only for those who have surrendered their lands free of cost for road widenings, it can be extended to other activities so as to incentivize densification.

The aforementioned examples are very limited and have been initiated to address the road widening land acquisition problem. Even the new Building rules of Andhra Pradesh is limited in its sope and does not explicitly address the real obstacles in the way of the densification process. What is remarkable is the persistance of widespread reluctance among policy makers to consider any meaningful enough easing of FSI relaxations.

There are a large number of small residential townships coming up in the suburbs of most Indian cities which are ideal testing grounds for higher FSIs. There is considerable logic in substantially easing FSI restrictions for these townships or colonies, since these are virgin settlements where it is easy to put in place basic infrastructure with higher carrying capacity to support such densification. Even here the FSI remains inefficiently low.

There is an interesting column by Paul Krugman which makes out a case for Americans to move out from car-dependent, suburbs to more densified population centers with good public transport facilities and plenty of local shopping.

Update 1
More on the demise of the suburban culture with its McMansions, in the US.

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