Thursday, June 8, 2017

Random Thoughts_June 2017

Mayor and Waterlogging in Kochi

Since the monsoon started, many parts of Kochi city is flooded. As usual, the blame game started; between the political parties, among the counsellors and between and among government agencies. Many say it is the failure of the Mayor and she, in turn, blames many other agencies. Both the parties are right and wrong in their arguments at the same time. It shows the lack of power and authority that a mayor and council should enjoy in a city metropolis. Does she enjoy the rights to hire and fire in order to make the system accountable? What we want is a Mayor of executive power and one who is directly elected to the post. When a Mayor is sidelined by DMRC or KMRL or Mobility Hub or PWD or KWA or KSEB, it is not going to do for the city development. The purpose and objective of the operations of these entities in the city limits should be under the direct control of the Mayor. The immediate trust of the citizens and the transparency of the state could be envisioned in a powerful Mayor and not with bureaucrats affiliated to a different system other than the corporation. The long-term success and sustenance of Smart City also depend on the reform in the local government administration giving more power and teeth to the Mayor. Unfortunately, the Smart City Mission initiated by GoI has also overlooked this aspect.

The World Environment Day

All the morning newspapers are brimmed with the Advt given by the Kerala government regarding the planting of 1 crore trees today. in fact, this is the continuation of the advertisement glitterati carried by the government fo the last few weeks. I was wondering how much they have spent for planting a tree. This has also got a past link where the governments of the day kept on the ritual of planting trees every year on World Environment days In the last ten years, they have planted millions of trees that would have converted the state into the wild forest. But nothing happened. I don't think the situation is going to be different this time. Instead, they should have used the money that they spent for advertisements and the local paraphernalia for buying acres of land together and fostering forest there. A focused attempt will help than a scattered one. Money could have also used to encourage the entrepreneurs to sustainable forestry projects.

Saturday, February 4, 2017

Uberisation of Parking

By Madhu S*

Parking has posed several predicaments that never cease to ease for the Government of India. Government after government has tried to fix the problem using various strategies –building more parking spaces, imposing congestion taxes, investing in parking infrastructure etc. However, they fail because policies fails, as the strategies are neither linked with the outcomes nor do they learn from market models. This may also happen to Venkaiah Naidu, the Minister for Urban Development, if his ministry’s proposal to show proof of parking while buying a new vehicle[1] is implemented. The intention is right and countries like Japan have tasted success. The proposal is neither new to India as the states of Sikkim and Mizoram [2] have already implemented it. The issue here is that the government still assumes ownership and responsibility of providing parking. Citizens are still happy to ask (or demand) for room space to fit their air conditioners. The government need to understand the market system better, if itneeds to tackle (or disown) the parking issue.
Experts like Donald Shoup of the University of California (UCLA) and Paul Barter of the National University of Singapore (NUS) stress the need to treat parking space as a valuable space, which is killed by cars. Should we give free space for a private car or should we use the space for, say, housing for the poor or generating state revenue by leasing prime space or giving employment to a tea seller? The question of priority and productive utilisation of space assumes significance in this context. The National Urban Housing Policy mentions that 25 square metre to 30 square metre of land space is required to provide housing for Economically Weaker Sections (EWS) in India[3]. On average, a car takes up 25 square-metre space.How do we justify the use of public spaces for car parking? We have to free public spaces from car parking and bring Uber-model innovations to tackle parking or traffic issues.

What to learn from Uber?
Uberisation has become a synonym for effective utilisation with minimum cost. By connecting cars/taxis with people through technology and utilising it, Uber-like systems have brought a new dimension to the concept of space utilisation. This is exactly what we need to learn from them. First, Uber has killed idle time. Cars no longer need to stop dead, as trip volumes increased in relation to decrease in waiting time. Long-term parking is equal to unproductive utilisation of space. Uber-like systems have reduced the need for parking. Something that cities like New Jersey[4] and Colorado adopted when they decided to subsidise Uber than invest in building parking infrastructure. The ‘roundabout time’, a critical issue of cars hovering around in cities to find parking space, will be an issue of the past, if technology could be integrated to identify vacant parking lots. Google Maps help Uber track its customers and ideally, cars should find the vacant spots.
Second, Uber revolutionalised the concept of ride sharing through pooling and incentivising people to share. Majority of the parking spaces are left vacant at some part of the day, which could have been better utilised. Why not ‘legally’convert a parking space for food vending at night? Shared economy benefits have been considered as the future and so need to be seriously considered.
Third, demand pricing for parking is favoured by experts like Paul Barter, as it makes people realise the value of peak time.Recently, the Central Government proposed to limit surge pricing, and the debate is still on whether it is the right strategy. Parking prices in the form of fees should reflect the realities and the real estate value of the land. Dynamic pricing is a good market proposition working well for innovations and private players. Let cars pay more for parking on prime land at peak time.This will influence people’s decision to use cars and benefit increased usage of public transport.
Fourth, customising for local conditions has been a hallmark of Uber and hence it was able to adapt better in new areas. There is no concept of a universal parking fee or a universal solution for parking issues. The local conditions influence strategies and hence proof of parking should be a choice for local governments to implement based on studies and findings.
Uber-like systems incentivised people to leave their private cars and use taxis for riding to office or market. Governments have started to realise their importance, as the burden to provide parking has been relieved. Yet, the question of congestion remains unanswered and needs further assessment. However, it has helped us understand the benefits of market on public issues like mobility and transport.
Finally, Uber has helped us realise the power of technology and this is exactly what parking management systems require. Technology is currently confined to automation of multilayer parking and needs space for innovation. Parking spaces are still boring and cars are dead items when parked. Smart solutions require effective utilisation of space and meeting the requirements of the passengers. We are still waiting for that innovation, which can only happen through a right parking policy strategy that encourages innovation and limits government intervention. Maybe, the next Uberisation could be in parking!
            Madhu S is Director (Research & Projects ) at CPPR. Views expressed by the author is personal and does not reflect that of CPPR.


Wednesday, December 28, 2016

Land Value Capture for Infrastructure Financing

By Abhishek Das

The concept of Land Value Capture is gaining significance as governments across the world are looking for sustainable modes for financing infrastructure projects. The basic principle behind Land Value Capture is that legitimately created value belongs to its creator. So, if it is evident that there is a rise in the value of immovable properties,due to infrastructure investment by government, the government has the right to capture this increased value.
The requirement of government investment in infrastructure development is rising steadily.More so,in developing countries, which are experiencing massive urban expansion. In the case of India, the budget outlay for infrastructure for the financial year 2016–17 was 2200 billion rupees ($32 billion). The projects include construction of new airports, metro rails and expansion of road networks. This will result in the escalation of land prices in the vicinity of these projects. At present, private developers make use of the benefits of land value increment. The urban local bodies in India are yet to capture this rise in land value.
Land value capture is done in two steps:
  • Value creation (and)
  • Value recovery

Betterment taxes, land pooling, sale of development rights, land readjustment and formation of special assessment districts are some of these practises. The success of the system is dependent on three stages of implementation.
  • Identification of the benefactor
  • Quantification of the increase in property value (and)
  • Collection of the increased value (or a part of the value)

The city of Bogota in Columbia has been successfully implementing Contribucion de Valorizacion – a form of betterment taxation –for almost a century now. Many of the infrastructure projects in the city are financed by this revenue. Mass Transit Railway Corporation (MTRC) of Hong Kong has also implemented the LVC concept successfully. MTRC operates without government subsidy and is highly profitable. Around 80 per cent of the total income of MTRC come from property business.
In Gujarat, betterment tax can be collected by the Gujarat Town Planning Scheme if there is an increment in land value after implementing Town planning Scheme in an area. But this provision in not utilised and no such tax is collected. The local administration of some Indian cities increased the stamp duty to capture the addition in land value. For example, in the case of Nagpur Metro, an additional stamp duty of one percent is to be levied for 25 years on all property transactions. The problem here is that the additional stamp duty falls on the entire residents of Nagpur, whereas,people who have property near the metro corridors are the only benefactors. The Delhi Development Authority (DDA) has prepared a land-pooling scheme, which was approved by the Ministry of Urban Development in 2015.But DDA is yet to implement the scheme.
The urban local bodies in India find it difficult to implement LVC mechanisms because of the lack of capacity to do so. Development activities in Indian cities are carried out by different development authorities of central and state governments. For large projects, such as metro rails, special bodies are created.These special bodies do not have the power to impose tax on land, and often do not coordinate with the urban local bodies. Consecutively, the urban local bodies do not capture the additional land value because the project is not implemented by them. Even if the urban local bodies attempt to do so, the fundamental idea of LVC is questioned, because it is not the developer entity that captures the benefits of the development. What is the solution to this dilemma? The solution is to make the urban local bodies capable of implementing the infrastructure projects. Empower them so that they can implement financing mechanisms and strategies to capture the increment in land value.

Abhishek Das is Research Associate at CPPR- Centre for Urban Studies. Views expressed by the author is personal and does not represent that of CPPR.